**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 20-F**
| **(Mark One)** | ** **                                                                                                         |
|----------------|--------------------------------------------------------------------------------------------------------------------|
| o              | **REGISTRATION STATEMENT PURSUANT TO  SECTION 12(b) OR (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**         |

**Dateof event requiring this shell company report**

**Forthe transition period from ____________________ to ____________________**

**Commission filenumber****001-14960**

****

(Exact name of Registrantas specified in its charter)

**NATIONAL BANK OF GREECE S.A.**

(Translation of Registrant’sName into English)

**THE HELLENIC REPUBLIC**

(Jurisdiction of incorporation or organization)

**86Eolou Street**

**10232 Athens, Greece**

(Address of principalexecutive offices)

Securities registered or to be registered pursuant toSection 12(b) of the Securities Exchange Act of 1934:

| **Title  of each class**   |   | **Name of each exchange on which registered** |
|----------------------------|--------|-----------------------------------------------|
| American Depositary Shares |   | New York Stock Exchange                       |
| Ordinary Shares            |   | New York Stock Exchange*                      |

* Not for trading but only in connection with theregistration of American Depositary Shares, pursuant to the requirements of theSecurities and Exchange Commission.

Securitiesregistered or to be registered pursuant to Section 12(g) of theSecurities Exchange Act of 1934:

None

Securitiesfor which there is a reporting obligation pursuant to Section 15(d) ofthe Securities Exchange Act of 1934:

None

Numberof outstanding shares of each of the Registrant’s classes of capital or commonstock as at December 31, 2006, the close of the period covered by theannual report:

475,287,219 Ordinary shares of nominal value €5.00 per share

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405of the Securities Act.

Yes x No o

Ifthis report is an annual or transition report, indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 or 15(d) ofthe Securities Exchange Act of 1934.

Yes o No x

Note—Checkingthe box above will not relieve any registrant required to file reports pursuantto Section 13 or 15(d) of the Securities Exchange Act of 1934 fromtheir obligations under those Sections.

Indicateby check mark whether the registrant (1) has filed all reports required tobe filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theRegistrant was required to file such reports), and (2) has been subject tosuch filing requirements for the past 90 days.

Yes x No o

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

Large accelerated filer x Acceleratedfiler o Non-accelerated filer o

Indicateby check mark which financial statement item the registrant has elected tofollow.

Item 17 o Item18 x

Ifthis is an annual report, indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

 

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**TABLEOF CONTENTS**
|                                                                                                                                   | ** ** | ** **                                                                    | ** ** | **Page** |
|-----------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------|------------|----------|
| Introduction                                                                                                                      |       | 3                                                                             |       |
| PART I                                                                                                                       |       | 6                                                                             |       |
| Item  1                                                                                                                           |       | Identity of Directors,  Senior Management and Advisers                        |       | 6        |   |
| Item  2                                                                                                                           |       | Offer Statistics and  Expected Timetable                                      |       | 6        |   |
| Item 3                                                                                                                            |       | Key Information                                                               |       | 6        |   |
| Item  4                                                                                                                           |       | Information on the Company                                                    |       | 20       |   |
| Item  4A                                                                                                                          |       | Unresolved Staff Comments                                                     |       | 109      |   |
| Item  5                                                                                                                           |       | Operating and Financial  Review and Prospects                                 |       | 109      |   |
| Item  6                                                                                                                           |       | Directors, Senior Management  and Employees                                   |       | 136      |   |
| Item  7                                                                                                                           |       | Major Shareholders and  Related Party Transactions                            |       | 149      |   |
| Item 8                                                                                                                            |       | Financial Information                                                         |       | 150      |   |
| Item 9                                                                                                                            |       | The Offer and Listing                                                         |       | 152      |   |
| Item  10                                                                                                                          |       | Additional Information                                                        |       | 161      |   |
| Item  11                                                                                                                          |       | Quantitative and Qualitative  Disclosures About Market Risk                   |       | 172      |   |
| Item  12                                                                                                                          |       | Description of Securities  Other than Equity Securities                       |       | 179      |   |
| PART II                                                                                                                      |       | 180                                                                           |       |
| Item  13                                                                                                                          |       | Defaults, Dividend  Arrearages and Delinquencies                              |       | 180      |   |
| Item  14                                                                                                                          |       | Material Modifications to  the Rights of Security Holders and Use of Proceeds |       | 180      |   |
| Item  15                                                                                                                          |       | Controls and Procedures                                                       |       | 181      |   |
| Item  16A                                                                                                                         |       | Audit Committee Financial  Expert                                             |       | 185      |   |
| Item 16B                                                                                                                          |       | Code of Ethics                                                                |       | 185      |   |
| Item  16C                                                                                                                         |       | Principal Accountant Fees  and Services                                       |       | 186      |   |
| Item  16D                                                                                                                         |       | Exemptions from the Listing  Standards for Audit Committees                   |       | 187      |   |
| Item  16E                                                                                                                         |       | Purchases of Equity  Securities by the Issuer and Affiliated Purchasers       |       | 187      |   |
| PART III                                                                                                                     |       | 189                                                                           |       |
| Item 17                                                                                                                           |       | Financial Statements                                                          |       | 189      |   |
| Item 18                                                                                                                           |       | Financial Statements                                                          |       | 189      |   |
| Item 19                                                                                                                           |       | Exhibits                                                                      |       | 189      |   |
| CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31,  2005 AND 2006 AND FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006 |       | F-1                                                                           |       |
| INDEX  TO FINANCIAL STATEMENTS                                                                                                    |       | F-2                                                                           |       |
| REPORT OF INDEPENDENT  REGISTERED CERTIFIED PUBLIC ACCOUNTANTS                                                                    |       | F-3                                                                           |       |
| Consolidated Balance Sheets                                                                                                       |       | F-5                                                                           |       |
| Consolidated Statements of Income and Comprehensive  Income                                                                       |       | F-7                                                                           |       |
| Consolidated Statements of Changes in Shareholders’  Equity                                                                  |       | F-9                                                                           |       |
| Consolidated Statements of Cash Flows                                                                                             |       | F-10                                                                          |       |
| Notes to Consolidated Financial Statements                                                                                        |       | F-12                                                                          |       |

 

2

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**INTRODUCTION**

**InformationRegarding National Bank of Greece S.A. and the National Bank of Greece Group**

Historically, Greek law prohibited banks from engagingdirectly in financial service activities outside their traditional deposit andloan functions. Therefore, specialized financial institutions were establishedin Greece, each for the provision of a particular type of financial service. AGreek bank that sought to provide multiple financial services to its customerswould establish several subsidiaries, each a specialized institution within thebank’s integrated group of diverse financial services companies. As aconsequence of this historical practice, the Greek financial services sectortoday is characterized by a group of specialized companies established around aprincipal bank. National Bank of Greece S.A. is such a principal bank, aroundwhich our consolidated subsidiaries are organized.

All references in thisannual report on Form 20-F (the “Annual Report”) to the “Bank” or “NBG”are to National Bank of Greece S.A. without its subsidiaries. The Bank and itsconsolidated subsidiaries, collectively, are referred to in this Annual Reportas the “NBG Group” or the “Group”. All references in this Annual Report to “we”,“us” or “our” are, as the context requires, to the Bank or to the NBG Group asa whole.

**Currency andFinancial Statement Presentation**

The NBG Group operates in many countries and earnsmoney and makes payments in many different currencies. All references to “Greekdrachmas”, or “GRD” are to Greek drachmas, all references to “$”, “U.S. dollars”,“USD” or “US$” are to United States dollars and all references to “€”,“EUR” or to “euro” are to the lawful currency of the member states of theEuropean Union that have adopted the single currency in accordance with theTreaty Establishing the European Community, as amended by the Treaty onEuropean Union and the Treaty of Amsterdam. References to “EMU” are to theEuropean Economic and Monetary Union. All references to “R” are to SouthAfrican rand, all references to “CYP” are to Cyprus pounds, all references to “BGN”are to Bulgarian leva, all references to “RON” are to Romanian Lei, allreferences to “TRY” are to Turkish new lira, all references to “CSD” are toSerbian dinars, all references to “CHF” are to Swiss francs, all references to “JPY”are to Japanese YEN and all references to “MKD” are to Macedonian denars.

Greece adopted the euro as its national currency on January 1,2001, at which time the drachma ceased to exist as a separate legal currency.From January 1, 2001, the Greek drachma became the national denominationof the euro in Greece and was fixed against the euro at a rate of €1.00 =GRD 340.750. On January 1, 2002, euro bank notes and coins wereintroduced in the EMU countries and on March 1, 2002, drachmas (and allother national denominations of the euro) ceased to be legal tender and werereplaced entirely by euro notes and coins. Financial statements for the NBGGroup are therefore expressed in euro in this Annual Report.

Solely for convenience, this Annual Report containstranslations of certain euro amounts into U.S. dollars at specified rates.These are simply convenience translations and you should not expect that a euroamount actually represents a stated U.S. dollar amount or that it could beconverted into U.S. dollars at the rate suggested, or any other rate. In thisAnnual Report, the translations of euro amounts into U.S. dollars, whereindicated, have been made at the noon buying rate for cable transfers of eurointo U.S. dollars of US$1.00 = €0.7486,as reported by the Federal Reserve Bank of New York (the “Noon Buying Rate”) onJune 11, 2007. Similar convenience translations, such as translations ofSouth African rand, Cyprus pounds, Macedonian denars, Bulgarian leva, Romanianlei, Serbian dinar and Turkish new lira into U.S. dollars, where indicated,have been made at the respective rates of South African rand 7.2230 perU.S.$1.00, Cyprus pounds 0.4369 per U.S.$1.00, Macedonian denars 45.8137 perU.S.$1.00, Bulgarian leva 1.4645 per U.S.$1.00, Romanian lei 2.4467 perUS$1.00, Serbian dinar 61.0915 per US$1.00 

3

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and Turkish new lira1.3398 per US$1.00. These are the respective Noon Buying Rates for the statedcurrencies on June 11, 2007.

Thetable below sets out the highest and lowest exchange rate between the euro andthe U.S. dollar, for each of the completed six months preceding the filing ofthis Annual Report:

| ** **                               | ** ** | ** ** | ** ** | **Euro**     | ** ** |
|------------------------------------------|------------|------------|------------|--------------|------------|
| **Month**                                | ** ** | ** ** | ** ** | **US$1.00=** | ** ** | **High** | ** ** | **Low** | ** ** |
| January, 2007                            |       |       |       | 0.7756       |       | 0.7536 |   |
| February, 2007                           |       |       |       | 0.7737       |       | 0.7559 |   |
| March, 2007                              |       |       |       | 0.7644       |       | 0.7490 |   |
| April, 2007                              |       |       |       | 0.7490       |       | 0.7327 |   |
| May, 2007                                |       |       |       | 0.7452       |       | 0.7344 |   |
| June, 2007 (through  June 11, 2007) |       |       |       | 0.7486       |       | 0.7393 |   |
|                                          |            |            |            |              |            |  |  |  |  |

 

Thefollowing table sets forth the average exchange rates between the euro and theU.S. dollar for each of the five years ended December 31, 2002, 2003,2004, 2005 and 2006 and for the current annual period through June 11,2007. The following exchange rates have been calculated using the average ofthe Noon Buying Rates for euro during each of the past five annual periods, andfor the current period through June 11, 2007. 

| **Annual Period**             | ** ** | ** ** | ** ** | **US$1.00=** | ** ** | **Euro** | ** ** |
|------------------------------------|------------|------------|------------|--------------|------------|----------|------------|
| 2002                               |       |       |       | 1.0578       |       |
| 2003                               |       |       |       | 0.8833       |       |
| 2004                               |       |       |       | 0.8039       |       |
| 2005                               |       |       |       | 0.8033       |       |
| 2006                               |       |       |       | 0.7960       |       |
| 2007 (through  June 11, 2007) |       |       |       | 0.7527       |       |

 

**Special NoteRegarding Forward-Looking Statements**

This Annual Reportincludes forward-looking statements. Such items in this Annual Reportinclude, but are not limited to, statements under Item 3.D, *“Risk Factors”*, Item 4.B, *“BusinessOverview”* and Item 5, *“Operating and Financial Review and Prospects”*.Such statements can be generally identified by the use of terms such as “believes”,“expects”, “may”, “will”, “should”, “would”, “could”, “plans”, “anticipates”and comparable terms and the negatives of such terms. By their nature, forward-lookingstatements involve risk and uncertainty, and the factors described in thecontext of such forward-looking statements in this Annual Report couldcause actual results and developments to differ materially from those expressedin or implied by such forward-looking statements. We have based theseforward-looking statements on our current expectations and projectionsabout future events. These forward-looking statements are subject torisks, uncertainties and assumptions about the Group, including, among otherthings:

·       ourability to develop and expand our business;

·       ourability to expand into new markets;

·       ourability to profit from synergies from past and planned acquisitions;

·       ourability to reduce costs;

·       ourability to integrate new information technology systems into our operations andto use these new systems to enhance profitability;

·       ourability to take advantage of new technologies;

4

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·       theadequacy of our current provisions against problem loans, as well as futurecharges for non-performing loans;

·       overalleconomic conditions in Greece;

·       politicaland economic conditions in the countries outside Greece in which we operate,particularly in Turkey and in South Eastern Europe (“SEE”);

·       volatilityin the world’s securities markets;

·       theeffects of regulation (including tax regulations and capital adequacyrequirements) in Greece and other jurisdictions where we operate;

·       theeffects of European Economic and Monetary Union;

·       theeffects of litigation;

·       capitalspending and financial resources;

·       ourfuture revenues; and

·       otherfactors described under Item 3.D, *“Risk Factors”*.

We undertake no obligation to publicly update orrevise any forward-looking statements, whether as a result of newinformation, future events or otherwise. In light of these risks, uncertaintiesand assumptions, the forward-looking events discussed in this Annual Reportmight not occur. Any statements regarding past trends or activities should notbe taken as a representation that such trends or activities will continue inthe future.

Readers are cautioned not to place undue reliance onsuch forward-looking statements, which are based on facts known to usonly as of the date of this Annual Report.

5

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**PART I**

**ITEM 1**                   IDENTITYOF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

**ITEM 2**                   OFFERSTATISTICS AND EXPECTED TIMETABLE

Not applicable.

**ITEM 3**                   KEYINFORMATION

**A.   SelectedFinancial Data**

The following information as at, and for the yearsended, December 31, 2002, 2003, 2004, 2005 and 2006 has been derived fromthe consolidated financial statements of the Group. These financial statementshave been prepared in accordance with United States generally acceptedaccounting principles (“U.S. GAAP”) and have been audited by our principalauditors Deloitte Hadjipavlou Sofianos & Cambanis S.A. The financialstatements of our significant subsidiary Finansbank S.A. have been audited byKPMG Akis Bagimsiz Denetim ve SMMM A.S. The selected financial and operatingdata should be read in conjunction with Item 5 in this Annual Report and withthe Group’s audited U.S. GAAP financial statements and the notes thereto as at December 31,2005 and 2006 and for the years ended December 31, 2004, 2005 and 2006(the “U.S. GAAP Financial Statements”) included elsewhere in this AnnualReport.

The following tables setforth selected financial information for the Group for the years ended December 31,2002, 2003, 2004, 2005 and 2006. 

| ** **                                                             | ** ** | **Year ended December 31,**                         | ** ** |
|------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| ** **                                                             | ** ** | **2002**(1)  EUR                                                   | ** ** | **2003**(1)  EUR | ** ** | **2004**(1)  EUR | ** ** | **2005**(1)  EUR | ** ** | **2006  EUR** | ** ** | **2006  USD** | ** ** |
| ** **                                                             | ** ** | **(in thousands, except per share data)** | ** ** |
| **CONSOLIDATED STATEMENT OF INCOME  DATA**                        |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| **Continuing operations**                                              |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Total Interest  Income                                                 |       | 2,257,361                                                          |       | 1,995,487 |   | 2,074,616 |   | 2,390,388 |   | 3,502,774 |   | 4,679,100 |   |
| Total Interest  Expense                                                |       | (1,123,235                                                         | )          | (777,138 | ) | (661,907 | ) | (837,121 | ) | (1,402,419 | ) | (1,873,389 | ) |
| Net Interest Income                                                    |       | 1,134,126                                                          |       | 1,218,349 |   | 1,412,709 |   | 1,553,267 |   | 2,100,355 |   | 2,805,711 |   |
| Provision for loan  losses                                             |       | (133,925                                                           | )          | (139,061 | ) | (201,234 | ) | (225,013 | ) | (261,603 | ) | (349,456 | ) |
| **Non-interest  Income**                                               |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Credit card fees                                                       |       | 57,393                                                             |       | 64,561 |   | 75,220 |   | 79,675 |   | 126,981 |   | 169,625 |   |
| Service charges on deposit accounts                                    |       | 28,358                                                             |       | 42,027 |   | 43,293 |   | 38,218 |   | 40,941 |   | 54,690 |   |
| Other fees and commissions                                             |       | 274,627                                                            |       | 324,158 |   | 336,438 |   | 369,730 |   | 457,269 |   | 610,832 |   |
| Net trading profit/(loss)                                              |       | (228,342                                                           | )          | 107,780 |   | 5,451 |   | 5,933 |   | 6,369 |   | 8,508 |   |
| Net realized gains/(losses) on sales of available-for-sale  securities |       | 3,753                                                              |       | (98,046 | ) | 16,305 |   | 119,523 |   | 116,872 |   | 156,121 |   |
| Equity in earnings/(losses) of investees                               |       | 5,787                                                              |       | 21,748 |   | 3,822 |   | 36,823 |   | 26,890 |   | 35,920 |   |
| Other income                                                           |       | 794,522                                                            |       | 811,606 |   | 807,745 |   | 816,871 |   | 981,961 |   | 1,311,730 |   |
| Total non-interest income                          |       | 936,098                                                            |       | 1,273,834 |   | 1,288,274 |   | 1,466,773 |   | 1,757,283 |   | 2,347,426 |   |

 

6

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|                                                                                                 | ** ** | **Year ended December 31,**                         | ** ** |
|-------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| ** **                                                                                      | ** ** | ** **2002(1)  EUR                                             | ** ** | ** 2003**(1)  EUR | ** ** | ** 2004**(1)  EUR | ** ** | **2005**(1)  EUR | ** ** | **2006  EUR** | ** ** | **   2006**(2)

**USD** | ** ** |
| ** **                                                                                      | ** ** | **(in thousands, except per share data)** | ** ** |
| **Non-Interest Expense**                                                                        |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Salaries and employee  benefits                                                                 |       | 846,468                                                            |       | 798,444 |   | 956,871 |   | 893,368 |   | 1,037,474 |   | 1,385,886 |   |
| Depreciation of premises  and equipment                                                         |       | 75,281                                                             |       | 70,972 |   | 73,403 |   | 60,209 |   | 74,276 |   | 99,220 |   |
| Amortization of intangible  assets                                                              |       | 40,011                                                             |       | 28,855 |   | 31,774 |   | 23,898 |   | 24,404 |   | 32,600 |   |
| Other than temporary  impairment in available-for-sale securities      |       | 35,537                                                             |       | — |   | 7,980 |   | — |   | — |   | — |   |
| Impairment of Goodwill and  equity method investments                                           |       | —                                                             |       | 210,762 |   | — |   | 16,162 |   | 52,860 |   | 70,612 |   |
| Minority Interest, net of  tax                                                                  |       | (64,431                                                            | )          | 12,869 |   | (13,629 | ) | 40,625 |   | 96,150 |   | 128,440 |   |
| Summary other(3)                                                                                |       | 1,036,653                                                          |       | 1,042,191 |   | 1,270,597 |   | 1,001,068 |   | 1,296,295 |   | 1,731,626 |   |
| Total non-interest expense                                                                      |       | 1,969,519                                                          |       | 2,164,093 |   | 2,326,996 |   | 2,035,330 |   | 2,581,459 |   | 3,448,384 |   |
| Income from continuing  operations before income tax expense and extraordinary item             |       | 66,780                                                             |       | 189,029 |   | 172,753 |   | 759,697 |   | 1,014,576 |   | 1,355,297 |   |
| **Discontinued operations**                                                                     | ** ** |                                                               |       |   |   |   |   |   |   |   |   |   | ** ** |
| Income from discontinued  operations before income tax expense and extraordinary item           |       | 49,836                                                             |       | 44,443 |   | 51,878 |   | 46,773 |   | 69,326 |   | 92,608 |   |
| Extraordinary item(4)                                                                           |       | 96,105                                                             |       | — |   | — |   | — |   | — |   | — |   |
|                                                                                            |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Net income                                                                                      |       | 126,873                                                            |       | 127,496 |   | 210,270 |   | 555,194 |   | 858,064 |   | 1,146,224 |   |
| Net income per share from continuing operations  (after extraordinary item)                     |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Basic(5) and Diluted                                                                       |       | 0.29                                                               |       | 0.30 |   | 0.53 |   | 1.52 |   | 1.92 |   | 2.56 |   |
| Net income per share from continuing operations  (before extraordinary item)                    |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Basic(5) and Diluted                                                                       |       | —                                                             |       | 0.30 |   | 0.53 |   | 1.52 |   | 1.92 |   | 2.56 |   |
| Net income per share (after extraordinary item)                                                 |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Basic(5) and Diluted                                                                       |       | 0.38                                                               |       | 0.38 |   | 0.62 |   | 1.61 |   | 2.06 |   | 2.75 |   |
| Net income per share (before extraordinary item)                                                |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |
| Basic(5) and Diluted                                                                       |       | 0.09                                                               |       | 0.38 |   | 0.62 |   | 1.61 |   | 2.06 |   | 2.75 |   |
| Cash dividends declared per share(6)                                                            |       | 1.10                                                               |       | 0.45 |   | 0.65 |   | 1.00 |   | 1.00 |   | 1.34 |   |

 

Thenumber of shares as adjusted to reflect changes in capital is presented in thefollowing table:

| ** **                                                               | ** ** | **Weighted average number of shares outstanding** | ** ** |
|--------------------------------------------------------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                               | ** ** | **Year ended December**                                          | ** ** |
| ** **                                                               | ** ** | **2002**                                                                   | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| As reported in  previous years                                           |       | 313,005,466                                                                |       | 317,317,496 |   | 318,324,795 |   | 323,803,543 |   | — |   |
| As restated based on the  share capital increase with pre-emptive rights |       | 334,262,033                                                                |       | 338,866,898 |   | 339,942,604 |   | 345,793,420 |   | 417,341,186 |   |

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(1)             Certain amounts in prior periods have beenreclassified to conform to the current presentation and to reflect the disposalof Atlantic Bank of New York and NBG Canada. See Note 19 to the U.S. GAAPFinancial Statements included in this Annual Report. Also, certain amountsin prior periods have been re-expressed in euro.

(2)             Solely for the convenience of the reader, thetranslation of euro into U.S. dollars has been made at the Noon Buying Rate ofUS$1.00 = €0.7486 on June 11, 2007. For information regarding the historicalrates of exchange between the euro and the U.S. dollar, refer to “*Introduction—Currency and Financial StatementPresentation*” inthis Annual Report.

(3)             “Summary other” comprises (i) occupancyexpenses, (ii) equipment expenses, (iii) deposit insurance premiumsand (iv) other non-interest expenses.

7

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(4)             Certain employee benefit plans which werepreviously accounted for as defined benefit plans were accounted for in 2002and onwards either as defined contribution plans or plans no longer sponsoredby the Bank.

(5)             The weighted average number of common sharestakes into account the merger of the Bank with the National Bank for Investmentand Industrial Development (“ETEBA”), our former investment banking subsidiary,in December 2002, the capitalization of reserves in May 2003, thecapitalization of reserves in May 2004, the merger of the Bank withNational Investment Co. in December 2005, the merger of the Bank withNational Real Estate S.A. in April 2006, the rights issue of four newshares for every ten shares in June 2006 and the share capital increasedue to the exercise of stock options (adjustment effective as atJanuary 25, 2007).

(6)             The cash dividends declared per shareinformation reflects dividends declared and paid in the year indicated inrespect of net profits of the previous completed financial year, in accordancewith the Bank’s dividend policy. See “*—Dividends*” inthis Item 3.A.

|  

** **                                                          | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                  | ** ** | **2002**(1)  EUR                           | ** ** | **2003**(1)  EUR | ** ** | **2004**(1)  EUR | ** ** | **2005**(1)  EUR | ** ** | **2006  EUR** | ** ** | **2006**(2)  USD | ** ** |
| ** **                                                                  | ** ** | **(in thousands)**                    | ** ** |
| **CONSOLIDATED BALANCE SHEET  DATA**                                        | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **ASSETS**                                                                  |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Cash and due from banks                                                     |       | 764,512                                    |       | 789,920 |   | 703,408 |   | 1,510,972 |   | 1,863,974 |   | 2,489,947 |   |
| Deposits with central bank                                                  |       | 203,036                                    |       | 530,424 |   | 390,768 |   | 1,184,383 |   | 2,110,191 |   | 2,818,850 |   |
| Federal funds sold and securities purchased under  agreements to resell     |       | 4,744,943                                  |       | 3,458,270 |   | 3,784,470 |   | 2,495,733 |   | 2,398,097 |   | 3,203,442 |   |
| Interest bearing deposits with banks                                        |       | 5,486,932                                  |       | 5,068,936 |   | 4,859,268 |   | 1,322,015 |   | 2,272,043 |   | 3,035,056 |   |
| Money market investments                                                    |       | 125,448                                    |       | 92,955 |   | 150,023 |   | 179,073 |   | 367,653 |   | 491,121 |   |
| Trading assets                                                              |       | 15,278,098                                 |       | 13,788,871 |   | 10,555,535 |   | 13,663,419 |   | 12,682,153 |   | 16,941,161 |   |
| Securities:                                                                 |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale, at fair value and  Held to maturity           |       | 3,843,962                                  |       | 5,514,615 |   | 3,548,381 |   | 2,627,876 |   | 4,155,066 |   | 5,550,449 |   |
| Loans                                                                       |       | 20,631,325                                 |       | 22,933,040 |   | 27,175,405 |   | 30,674,173 |   | 43,756,843 |   | 58,451,567 |   |
| Less: Allowance for loan losses                                             |       | (1,011,145                                 | )          | (1,047,493 | ) | (1,115,212 | ) | (1,092,545 | ) | (1,224,757 | ) | (1,636,063 | ) |
| Net loans                                                                   |       | 19,620,180                                 |       | 21,885,547 |   | 26,060,193 |   | 29,581,628 |   | 42,532,086 |   | 56,815,504 |   |
| Assets classified as held for sale(3)                                       |       | —                                     |       | — |   | — |   | 2,754,517 |   | — |   | — |   |
| Summary other assets(4)                                                     |       | 5,179,106                                  |       | 4,198,361 |   | 4,600,734 |   | 4,687,883 |   | 7,332,475 |   | 9,794.917 |   |
| Total assets                                                                |       | 55,246,217                                 |       | 55,327,899 |   | 54,652,780 |   | 60,007,499 |   | 75,713,738 |   | 101,140,447 |   |
| **LIABILITIES AND SHAREHOLDERS’  EQUITY**                              |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Total deposits                                                              |       | 40,288,833                                 |       | 42,042,945 |   | 40,242,676 |   | 45,251,084 |   | 55,885,061 |   | 74,652,766 |   |
| Central bank borrowings                                                     |       | 6,804                                      |       | 6,804 |   | 1,411 |   | 353 |   | 1,024 |   | 1,368 |   |
| Federal funds purchased and securities sold under  agreements to repurchase |       | 8,278,892                                  |       | 6,078,897 |   | 6,664,782 |   | 2,726,817 |   | 3,037,503 |   | 4,057,578 |   |
| Long-term debt                                                              |       | 813,947                                    |       | 1,171,467 |   | 1,648,247 |   | 2,151,942 |   | 4,445,565 |   | 5,938,505 |   |
| Liabilities classified as held for sale(5)                                  |       | —                                     |       | — |   | — |   | 2,255,132 |   | — |   | — |   |
| Summary other liabilities(6)                                                |       | 4,620,578                                  |       | 4,637,331 |   | 4,519,106 |   | 5,248,723 |   | 6,706,028 |   | 8,958,095 |   |
| Total liabilities                                                           |       | 54,009,054                                 |       | 53,937,444 |   | 53,076,222 |   | 57,634,051 |   | 70,075,181 |   | 93,608,312 |   |
| **SHAREHOLDERS’ EQUITY**                                               |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Common stock                                                                |       | 1,043,419                                  |       | 1,147,761 |   | 1,492,090 |   | 1,615,675 |   | 2,376,436 |   | 3,174,507 |   |
| Additional paid-in capital                                                  |       | 408,058                                    |       | 379,450 |   | 19,975 |   | 139,892 |   | 2,413,066 |   | 3,223,438 |   |
| Accumulated other comprehensive income/(loss)                               |       | (89,408                                    | )          | (2,908 | ) | 15,192 |   | 2,322 |   | (48,735 | ) | (65,102 | ) |
| Treasury stock, at cost                                                     |       | (421,035                                   | )          | (348,790 | ) | (210,128 | ) | (1,104 | ) | (26,826 | ) | (35,835 | ) |
| Accumulated surplus                                                         |       | 296,129                                    |       | 214,942 |   | 259,429 |   | 616,663 |   | 924,616 |   | 1,235,127 |   |
| Total shareholders’ equity                                             |       | 1,237,163                                  |       | 1,390,455 |   | 1,576,558 |   | 2,373,448 |   | 5,638,557 |   | 7,532,135 |   |
| Total liabilities  and shareholders’ equity                            |       | 55,246,217                                 |       | 55,327,899 |   | 54,652,780 |   | 60,007,499 |   | 75,713,738 |   | 101,140,447 |   |

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(1)             Certainamounts in prior periods have been reclassified to conform to the currentpresentation and to reflect the disposal of Atlantic Bank of New York and NBGCanada. See Note 19 to the U.S. GAAP Financial Statements included in thisAnnual Report.

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(2)             Solelyfor the convenience of the reader, the translation of euro into U.S. dollarshas been made at the Noon Buying Rate of US$1.00 = €0.7486onJune 11, 2007. For information regarding the historical rates of exchange betweenthe euro and the U.S. dollar, refer to “*Introduction—Currencyand Financial Statement Presentation”* in this Annual Report.

(3)             “Assetsclassified as held for sale” comprise assets of NBG Canada and Atlantic Bank ofNew York which were sold in February 2006 and April 2006,respectively.

(4)             “Summaryother assets” comprises (i) equity method investments, (ii) goodwill,(iii) software and other intangibles, net, (iv) premises andequipment, net, (v) customers’ liability on acceptances, (vi) accruedinterest receivable, (vii) derivative assets, and (viii) otherassets.

(5)             “Liabilitiesclassified as held for sale” comprise liabilities of NBG Canada and AtlanticBank of New York which were sold in February 2006 and April 2006,respectively.

(6)             “Summary otherliabilities” comprises (i) other borrowed funds, (ii) acceptancesoutstanding, (iii) accounts payable, accrued expenses and otherliabilities, (iv) insurance reserves, (v) derivative liabilities and(vi) minority interests.

**SELECTED FINANCIAL RATIOS**

| ** **                           | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------|------------|--------------------------------------------|------------|
| ** **                           | ** ** | **2002**                                   | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                           | ** ** | **(%)**                                    | ** ** |
| Return on assets(1)                  |       | 0.04                                       |       | 0.21 |   | 0.30 |   | 0.96 |   | 1.16 |   |
| Return on equity(2)                  |       | 1.78                                       |       | 8.64 |   | 11.13 |   | 28.74 |   | 19.97 |   |
| Average equity to  average assets(3) |       | 2.48                                       |       | 2.46 |   | 2.66 |   | 3.33 |   | 5.81 |   |

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(1)             Calculatedby dividing net income by average total assets as shown in Item 4.E under thesubsection *“Average Balances and InterestRates”*.

(2)             Calculatedby dividing net income by average total equity. Average total equity is equalto the arithmetical average of total equity at the beginning and at the end ofthe period, these being the only dates for which the Group has calculated netequity according to U.S. GAAP.

(3)             Calculatedby dividing average total equity by average total assets as shown in Item 4.Eunder the subsection “*Average Balances andInterest Rates*”.

For exchange rateinformation, see “*Introduction—Currency and FinancialStatement Presentation*”.

**Dividends**

Under Greek law,the Bank can pay dividends out of:

·       distributableprofits for the year, comprising profits net of tax, losses carried forward,and prior years’ tax audit differences; and

·       retainedearnings, special reserves or ordinary reserves to the extent they exceed the amountrequired to be maintained by law.

Before payingdividends, the Bank, in accordance with our Articles of Association and Greekcorporate law (codified law 2190/20), must allocate between 5% and 20% of ournet profits to an ordinary reserve until this reserve equals at least one-halfof the Bank’s share capital. Under the Bank’s Articles of Association and Greekcorporate law, and subject to the limitations described above and below, eachyear the Bank is required to pay a minimum dividend out of the net profits forthe year, if any, equal to the greater of:

·       6%of the Bank’s share capital; or

·       35%of the net profits of the Bank on a standalone basis for the year (after thededuction of statutory reserves and any profits resulting from the sale of equityparticipations that represent at least 20% of the paid-up share capital of asubsidiary company in which the Bank has held an equity participation for atleast ten years). According to Greek law 3460/2006, unrealized profits from 

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marking securities to marketwill be deducted from net profits in order to determine the minimum dividend.

However, a majority representing at least 70% of theBank’s paid-up share capital may vote that the Bank pay dividends amounting to6% of the Bank’s share capital even in the event that this is not the greateramount.

Calculation of all such amounts is based on thefinancial statements of the Bank prepared in accordance with IFRS.

Any distribution of distributable profits in excess ofthe required dividend payments described above must be approved by a “GeneralMeeting of Shareholders” (the Bank’s annual general meeting, which is referredto in this Annual Report as the “General Meeting”), with ordinary quorum andmajority voting requirements, following a proposal of the Bank’s board ofdirectors (which we refer to in this Annual Report as the “Board of Directors”or the “Board”). No distribution can be effected if, on the closing date of thelast financial year, the total shareholders’ equity is, or will become afterthat distribution, lower than the total of the Bank’s share capital and thereserves, the distribution of which is prohibited by Greek law or the Bank’sArticles of Association. In any event, dividends may not exceed net profits forthe last financial year, as increased by distributable reserves, thedistribution of which is permitted as resolved at the General Meeting, andprofits carried forward from previous years, and as decreased by any loss inthe previous financial year and any compulsory reserves required by law or theBank’s Articles of Association.

In the event that the mandatory minimum dividendpayments equal 35% of the net profits for the year (after the deduction ofstatutory reserves and any profits resulting from the sale of equity participationsthat represent at least 20% of the paid-up share capital of a subsidiarycompany in which the Bank has held an equity participation for at least tenyears), a majority of the Bank’s shareholders representing at least 65% of thepaid-up share capital may vote to pay the lower dividend of 6% of the Bank’sshare capital. The remaining undistributed dividend must then be transferred toa special reserve which must, within four years following the GeneralMeeting, be distributed in the form of a share dividend. However, a majorityrepresenting 70% of the Bank’s paid-up capital may vote to waive this sharedividend.

Once approved, dividends must be paid to shareholderswithin two months of the date on which the Bank’s annual financial statementsare approved. Normally, dividends are declared and paid in the year subsequentto the reporting period. Dividends are forfeited to the Greek Government ifthey are not claimed by shareholders within five years following December 31of the year in which they were declared.

On May 18, 2004, at the Bank’s General Meeting,the Bank’s shareholders approved the distribution of a cash dividend in theamount of €0.65 per share with respect to the year endedDecember 31, 2003. On May 17, 2005, at the Bank’s General Meeting, theBank’s shareholders approved the distribution of a cash dividend in the amountof €0.60per share with respect to the year ended December 31, 2004. On April 27,2006, at the Bank’s General Meeting, the Bank’s shareholders approved thedistribution of a cash dividend in the amount of €1.00 per share withrespect to the year ended December 31, 2005. On May 25, 2007 at theBank’s General Meeting, the Bank’s shareholders approved the distribution of acash dividend in the amount of €1.00 per share with respectto the year ended December 31, 2006.

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Thefollowing table sets forth the actual dividends declared by the Bank for thecorresponding periods and the dividends as a percentage of previous year’s netincome. For financial years up to and including the year ended December 31,2004, dividends declared by the Bank in the following year are based on GreekGAAP, whereas for the financial years ended December 31, 2005 and December 31,2006 dividends are based on IFRS.

| **Year Ended December 31,** | ** ** | ** ** | ** ** | **Amount of  dividends per share,  in EUR** | ** ** | **Amount of  dividends per share,  in US$**(1) | ** ** | **Number of  shares entitled  to dividend** | ** ** | **% of previous  year’s net income  distributed** | ** **  |
|--------------------------------------------|------------|------------|------------|-----------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|------------------------------------------------------------|------------|----------------------------------------------------------------------------|-------------|
| 2003                                       |       |       | 0.45       |                                                            |       |                                                               | 0.60       |                                                       |       |                                                                       | 231,870,986 |   |   |   | 35.2 |   |   |
| 2004                                       |       |       | 0.65       |                                                            |       |                                                               | 0.87       |                                                       |       |                                                                       | 255,050,388 |   |   |   | 40.6 |   |   |
| 2005                                       |       |       | 0.60       |                                                            |       |                                                               | 0.80       |                                                       |       |                                                                       | 330,118,200 |   |   |   | 48.2 |   |   |
| 2006                                       |       |       | 1.00       |                                                            |       |                                                               | 1.34       |                                                       |       |                                                                       | 339,234,412 |   |   |   | 44.4 |   |   |
| 2007, through  June 11                |       |       | 1.00       |                                                            |       |                                                               | 1.34       |                                                       |       |                                                                       | 475,287,219 |   |   |   | 44.6 |   |   |

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(1)             Solelyfor the convenience of the reader, the translation of euro into U.S. dollarshas been made at the Noon Buying Rate of US$1.00 = €0.7486on June 11, 2007.

The Bank currently expects to continue to paydividends in accordance with the formula described above, subject to thefinancial condition of the Bank, the funding needs of our investment programand other relevant considerations.

Normally, dividends aredeclared and paid in the year subsequent to the reporting period. Up to andincluding the fiscal year ended December 31, 2005, dividends are accounted foronce declared. Beginning in 2006, the Group changed its policy and now recordsa liability related to the mandatory minimum dividend payment computed as 35%of the net profits for the year less unrealized gains. The mandatory minimumdividend liability recognized in 2006 amounts to  €210,877 thousand. Theeffect of the mandatory minimum dividend in prior years is immaterial.

**B.   Capitalizationand Indebtedness**

Not applicable.

**C.   Reasonsfor the Offer and Use of Proceeds**

Not applicable.

**D.   RiskFactors**

**General**

*If you are considering purchasing our shares orAmerican Depositary Receipts, you should carefully read and think about all theinformation contained in this document, including the risk factors set outbelow, prior to making any investment decision.*

***Risks Relating to Our Business***

**The state of the political and economic environment,particularly in Greece, significantly affects our performance.**

The majority of ouroperations and loan portfolio are concentrated in Greece. For the financialyear ended December 31, 2006, approximately 55.7% of our total income fromcontinuing operations, and as of December 31, 2006, 73.9% of our loans andadvances to customers, were derived from our operations in Greece. As a result,the state of the Greek economy significantly affects our financial performanceas well as the market price and liquidity of the Bank’s shares. To an increasingextent, our performance is affected 

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by theeconomic conditions and levels of economic activity in other countries in whichwe operate, such as Bulgaria, Romania, the Former Yugoslav Republic ofMacedonia (“FYROM”) and especially Turkey, from which 12.4% of our total incomeand 15.2% of our loan portfolio were derived in 2006. Consequently, an economicslowdown, a deterioration of conditions in Greece or other adverse changesaffecting the Greek economy or the economies of these other countries could resultin, among other things, higher rates of credit defaults on loans or declines innew borrowing, which could adversely impact our business, financial condition,cash flows and results of operations. Moreover, the political environment bothin Greece and in other countries in which we operate may be adversely affectedby events outside our control, such as changes in government policies, EUDirectives in the banking sector and other areas, political instability ormilitary action affecting Europe and/or other areas abroad and taxation andother political, economic or social developments in or affecting Greece and thecountries in which we operate or may plan to expand.

**Operating in Turkeycarries specific macroeconomic and political risks.**

As a result of ouracquisition of Finansbank A.S. (“Finansbank”), we are subject to operatingrisks in Turkey, including the following:

·       Turkeyis a parliamentary democracy, and, although stable, is not free from politicaluncertainty. In particular, Turkey is in the process of seeking integrationinto the EU, and on October 3, 2005, accession negotiations with the EUwere opened. There can be no assurance, however, that Turkey will be able tomeet the criteria applicable to become a member state of the EU or that the EUwill maintain its current approach regarding the candidacy of Turkey. Failureof Turkey to become an EU member state could have a negative impact on theTurkish economy and Finansbank’s operations.

·       Politicalinstability in the Middle East and military operations in neighboring Iraq haveincreased the political and economic risks in the region. The current situationin Iraq may contribute to further tension and may result in terroristactivities in Turkey. These risks may have an impact on the Turkish economy andour operations there.

·       Turkeyhas many characteristics of a developing economy. Over the past two decades,the Turkish economy has undergone a transformation from a highly protected andregulated system to a more free market economy. The Turkish economy has, ingeneral, responded well to this transformation, showing an overall pattern ofgrowth from 1992 to 2006. However, the Turkish economy has experienced asuccession of financial crises, including those in 2000 and 2001, as well asmacroeconomic imbalances, including substantial budget deficits, significantbalance of payments deficits, high inflation rates and high real interestrates. In addition, Turkey has experienced hyperinflation until recently. Therecan be no assurance that Turkey will not face more financial crises, whichcould have a negative impact on Finansbank’s operations.

·       Historically,the Turkish currency has been subject to significant volatility against theeuro and other currencies. For example, the Turkish Lira depreciated by 18%against the euro from May 8, 2006 to June 20, 2006. However, from ouracquisition of Finansbank at August 18, 2006 to June 11, 2007 theTurkish Lira has appreciated by 4.6% against the euro. These fluctuations couldhave a negative impact on the value of our investment in Finansbank and on ouroverall profitability.

·       Relationsbetween Greece and Turkey have gone through periods of tension. As a result ofour acquisition of Finansbank, Finansbank may be adversely affected by negativeperceptions of Greece that may be held by certain of Finansbank’s customers. Asignificant loss of customers could have a material adverse effect on thedevelopment of our business in Turkey and on our overall profitability.

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·       We believe the generallevel of macroeconomic and political risk to be higher in Turkey than in othercountries whose economies and banking markets are more developed and that arealready members of the EU. While we believe there is potential for substantialgrowth in the Turkish banking market, there is no guarantee that such growthwill occur or that Finansbank will be able to benefit from that growth. Adversemacroeconomic and political events, which limit economic growth in Turkey orrestrict the growth of the banking market, would adversely affect Finansbank’sbusiness and could adversely affect the Bank’s business, results of operationsor financial condition.

**We conductsignificant international activities and are expanding in emerging markets.**

Apart from our operations in Greece and Turkey, wehave built up substantial operations in Bulgaria, Romania, FYROM, Serbia andother developing economies. Our international operations are exposed to therisk of adverse political, governmental or economic developments in thecountries in which we operate. In addition, most of the countries outsideGreece in which we operate are emerging markets where we face particularoperating risks. These factors could have a material adverse effect on ourfinancial condition and results of operations. Our international operationsalso expose us to foreign currency risk. A decline in the value of thecurrencies in which our international subsidiaries receive their income or holdtheir assets relative to the value of the euro may have an adverse effect onour financial condition and results of operations.

We are actively pursuingexpansion of our international market position, principally throughacquisitions in SEE, Eastern Europe and the Southeastern Mediterranean region.We are currently evaluating a number of acquisition candidates in these regionsand, consequently, we anticipate that our operations and our shareholders willincreasingly be exposed to risks associated with acquisitions generally, aswell as specific risks relating to business operations in these emergingmarkets.

**Volatility in interest rates may negatively affect ournet interest income and have other adverse consequences.**

Interest rates are highlysensitive to many factors beyond our control, including monetary policies and domesticand international economic and political conditions. As with any bank, changesin market interest rates could affect the interest rates we charge on ourinterest-earning assets differently than the interest rates we pay on ourinterest-bearing liabilities. This difference could reduce our net interestincome. Since the majority of our loan portfolio effectively re-prices in fiveyears or less, rising interest rates may also result in an increase in ourimpairment losses on loans and advances if customers cannot refinance in ahigher interest-rate environment. Further, an increase in interest rates mayreduce the demand for loans and our ability to originate loans. Conversely, adecrease in the general level of interest rates may adversely affect us through,among other things, increased pre-payments on our loan and mortgage portfolioand increased competition for deposits. Likewise, a decrease in interest ratesmay affect our ability to issue mortgage-backed securities, securitize parts ofour balance sheet or otherwise issue debt securities.

**Our lending marginsmay decline.**

The Greek banking industryhas historically enjoyed high loan margins compared to other EU member states.However, as Greece’s economy converges with those of other countries in theEuropean Union, margins have been declining. In addition, the adoption of rules forthe enhancement of transparency in the financial services market by the Bank ofGreece and recent court judgments on consumer protection are expected to resultin lower margins with respect to consumer loans and credits for banks operatingin Greece. A further decline in lending margins would have a negative impact onour results from operations.

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**We face significantcompetition from Greek and foreign banks.**

Deregulation has led toincreased competition in the Greek banking sector. In addition, consolidationamong Greek banks has led to increased competition resulting from the increasedefficiency and greater resources of these combined entities. We also facecompetition from foreign banks, some of which have resources significantlygreater than our own. Notwithstanding our leading position in Greece in certainproducts and services, we may not be able to continue to compete successfullywith domestic and international banks in the future.

**Changes in thecompetitive environment in Turkey may adversely affect Finansbank’s business.**

Increased competition fromexisting competitors or from new entrants to the Turkish market could limitFinansbank’s ability to grow or to maintain its market share and could causedownward pressure on margins, which could adversely affect the Group’s abilityto meet its strategic objectives in Turkey. At the same time, convergence withthe economies of existing EU member states could result in decreasing interestrate levels in Turkey, which could lead to a decline in Finansbank’s interestmargins.

**Our ability toreduce staff in Greece is limited.**

Part of our strategyis to increase profitability by making our operations more efficient. Ourability to realize one component of this, reducing staff, is limited by Greeklabor laws, our company collective agreement, current employment regulation andour desire to maintain good relations with our employees. As a result, we willcontinue to depend on voluntary redundancies and attrition to achieve staffreductions. We will continue to assess whether we will be able to reduce ourstaff. However, we may not always be successful in doing so.

**We could be exposedto significant future pension and post-retirement benefit liabilities.**

In common with other largecompanies in Greece that are, or were, in the public sector, the employees ofthe Bank and certain of our subsidiaries participate in employee-managedpension schemes. The Bank makes significant contributions to these schemes. Inaddition, the Bank and several of our subsidiaries offer other post-retirementbenefit plans, including medical benefit plans. Our consolidated net liabilityunder these plans at December 31, 2006 was €245.7million, determined by reference to a number of critical assumptions that aresubject to potential variation. Such variation may cause us to incursignificantly increased liability in respect of these obligations. For moreinformation on these assumptions and our current obligations under pensionplans, see Note 38 to the U.S. GAAP financial statements for the year ended December 31,2006, included in this Annual Report.

Legislation passed in 1992provides that state-controlled employers, as well as employers that had beencontrolled by the state in the past (including the Bank), are not liable forannual operating deficits of their company-specific main pension funds inexcess of the amount of the annual operating deficit recorded in 1992. Under thislegislation, the Bank is responsible for operating deficits of its Main PensionFund up to €25.2 million per year. The Bank has not beenrequired to make any relevant payment to the Main Pension Fund up to this date.However, we expect that the Main Pension Fund will experience operatingdeficits in the future and that the Bank may be required to make payments tothis Fund to cover these deficits. In addition, it is currently unclear whateffect new legislation and the potential merger of the Main Pension Fund intothe main state sponsored fund (“IKA”), described below, could have on the Bank’sobligations with respect to these operating deficits.

In recent years, the GreekGovernment has introduced legislation seeking to reform the Greek pensionsystem. In 2002, the Greek Government passed legislation under which itprovided that the plans that operate in the form of public-law entities,including the Bank’s employees’ Main Pension Fund, would merge with the mainstate sponsored Social Security Fund (“IKA”) by 2008. In 2005 and 2006, theGreek 

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Governmentpassed further legislation (Law 3371/2005, as amended) permitting certain bankemployee main pension schemes to merge into IKA earlier than in 2008, andpermitting other bank employee auxiliary pension schemes to merge with the newInsurance Fund of Bank Employees (“ETAT”). The new law provides that, inconnection with the merger of auxiliary schemes with ETAT, the relevantemployer shall make a payment to ETAT solely in an amount to be determined byan independent economic study commissioned by the Ministry of Finance pursuantto this legislation.

In April 2006, theBank applied under Law 3371/2005, as amended, to merge its Auxiliary PensionFund into ETAT, and to merge the Main Pension Fund with IKA earlier than 2008.It is possible that we may make a significant cash payment to ETAT inconnection with the merger of the Bank’s employee pension schemes with ETAT.

The foregoingdevelopments, as well as future interpretations of existing laws and any futurelegislation regarding pensions and pension liabilities or other post-retirementbenefit obligations, may increase the liability of the Bank or its subsidiarieswith respect to pension and other post-retirement benefit plan contributions tocover actuarial or operating deficits of those plans.

**The Greek bankingsector is subject to strikes.**

Most of our employees belong to a union and the Greekbanking industry has been subject to strikes, such as in June 2005 whenthe Union of Greek Bank Employees went on strike for 23 days over pensionreform legislation then under consideration by the Greek Parliament. Moreover,strikes over issues such as pensions and wages occur sporadically. Accordingly,labor unrest could have a material adverse effect on the Bank’s operations.

**Our accounting policies relating to the treatment ofdelinquent loans in Greece and in some of our non-Greek subsidiariesdiffer from those followed by banks in certain other countries.**

Pursuantto Greek law, the Bank ceases to accrue interest on commercial loans in Greecewhen they are delinquent for 180 days, and on consumer and credit card loanswhen they are delinquent for 100 days. This is longer than would be the case ifsuch loans were extended in some European countries and in the United States,where loans are generally considered non-performing if they are delinquent for90 days. Consequently, there is a risk our financial statements may understateour level of non-performing loans and overstate our interest income relative tobanks in other countries.

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**Non-performingloans have had a negative impact on our operations and may continue to do so.**

Non-performing loans represented approximately 3.4% ofour total loan portfolio as at December 31, 2006. As a result of certaintax and legal considerations, non-performing loans generally remain on ourbalance sheet significantly longer than for other banks in the EU. See Item4.E, *“Business Overview—Selected Statistical Data—TheGroup’s Treatment of Non-Performing Loans”*.

Our current creditapproval and monitoring procedures focus on the borrower’s cash flow andability to repay in an effort to improve the quality of our loan assets andmitigate future provisions for non-performing loans. However, we cannot assureyou that these credit approval and monitoring procedures will reduce the amountof provisions for loans that become non-performing in the future. Futureprovisions for non-performing loans could have a materially adverse impact onour operating results. In addition, a downturn in the global economy wouldpotentially result in a higher proportion of non-performing loans.

**We are exposed tocredit risk, market risk, operational risk, liquidity risk and insurance risk.**

As a result of ouractivities, we are exposed to a variety of risks, among the most significant ofwhich are credit risk, market risk, operational risk, liquidity risk andinsurance risk. Failure to control these could result in material adverseeffects on our financial performance and reputation.

·       *Credit Risk*.   Credit risk is the risk of financial lossrelating to the failure of a borrower to honor its contractual obligations.Credit risk arises in lending activities and also in various other activitieswhere we are exposed to the risk of counterparty default, such as our trading,capital markets and settlement activities. Counterparty default can be causedby a number of reasons, which we may not be able to accurately assess at thetime we undertake the relevant activity. Moreover, we cannot assure you if and whena complete and fully reliable database of non-defaulted loans will be availableto us. The database that monitors defaulting customers across the bankingsystem in Greece (“Teiresias”), reliably monitors defaults, but not aggregateamounts of non-defaulted loans outstanding to a debtor. Consequently, the Bankis subject to the risk that its counterparties may have borrowed unsustainablylarge amounts from other banks. While Teiresias is in the process of setting upa database for non-defaulted loans, this database is incomplete, and we cannotassure you if and when a reliable database of non-defaulted loans will beavailable to us.

·       *Market Risk*.   Market risk includes, but is not limitedto, interest rate, foreign exchange rate, bond price and equity price risks.Changes in interest rate levels, yield curves and spreads may affect our netinterest margin. Changes in currency exchange rates affect the value of assetsand liabilities denominated in foreign currencies and the value of our assetsin foreign currencies and may affect income from foreign exchange dealing. Theperformance of financial markets may cause changes in the value of ourinvestment and trading portfolios. We have implemented risk management methodsto mitigate and control these and other market risks to which we are alsoexposed. However, it is difficult to predict with accuracy changes in economicor market conditions and to anticipate the effects that such changes could haveon our financial performance and business operations.

·       *Liquidity Risk*.   The inability of any bank, includingus, to anticipate and provide for unforeseen decreases or changes in fundingsources could have consequences on such bank’s ability to meet its obligationswhen they fall due.

·       *Operational Risk*.   Operational risk corresponds to therisk of loss due to inadequate or failed internal processes, or due to externalevents, whether deliberate, accidental or natural occurrences. Internalprocesses include, but are not limited to, employees and information systems.External events include floods, fires, earthquakes or terrorist attacks, fraudby employees or others, errors by 

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employees, failure tocomply with regulatory requirements and conduct of business rules orequipment failures.

·       *InsuranceRisk*.   Insurance risk is the risk to earnings due to mismatchesbetween expected and actual claims. Depending on the insurance product, thisrisk is influenced by macroeconomic changes, changes in customer behavior,changes in public health, pandemics and catastrophic events (earthquake,industrial disaster, terrorism, etc.).

**We may incursignificant losses on our trading and investment activities due to marketfluctuations and volatility.**

We maintain trading andinvestment positions in debt, currency, equity and other markets. Thesepositions could be adversely affected by volatility in financial and othermarkets, creating a risk of substantial losses. Volatility can also lead tolosses relating to a broad range of other trading and hedging products we use,including swaps, futures, options and structured products. For furtherinformation on market risk exposures in those portfolios, you should refer toItem 4.E, “*Selected Statistical Data—Credit Quality—RiskManagement*” below.

**Our hedging may notprevent losses.**

If any of the variety ofinstruments and strategies that we use to hedge our exposure to various typesof risk in our businesses is not effective, we may incur losses. Many of ourstrategies are based on historical trading patterns and correlations. Unexpectedmarket developments therefore may adversely affect the effectiveness of ourhedging strategies. Moreover, we do not hedge all of our risk exposure in allmarket environments or against all types of risk. In addition, the manner inwhich gains and losses resulting from certain ineffective hedges are recordedmay result in additional volatility in our reported earnings.

**An interruption inor a breach of security in our information systems may result in lost businessand other losses.**

As most other banks do, werely on communications and information systems provided by third parties toconduct our business. Any failure or interruption or breach in security ofthese systems could result in failures or interruptions in our customerrelationship management, general ledger, deposit, servicing and/or loanorganization systems. We cannot provide assurances that such failures orinterruptions will not occur or, if they do occur, that they will be adequatelyaddressed. The occurrence of any failures or interruptions could result in aloss of customer data and an inability to service our customers, which couldhave a material adverse effect on our financial condition and results ofoperations.

**State-relatedentities may have an important influence on the Bank.**

Although the Greek Government does not directly ownany of our shares, it may exercise a degree of indirect influence on us,through certain state-related entities (primarily pension funds, most of whoseboards of directors are appointed by the Greek Government), which on June 11,2007, owned shares representing approximately 17.9% of our issued sharecapital. See Item 7.A, *“Major Shareholders andRelated Party Transactions—Major Shareholders—State Interests”*.

Our Articles ofAssociation do not provide any special voting rights to any class of shares orshareholders and there is no law in Greece that gives control over the Bank tothe Greek Government. However, if there is not a full voting participation byall of our shareholders at a given shareholders’ meeting, these state-relatedentities, despite holding a minority of our total shares, may have a votingmajority at such meeting. For instance, this could allow them to influence theelection of members of our Board of Directors.

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**Future acquisitionsmay result in unexpected losses.**

Typically, when we acquirea banking business, we acquire all of its liabilities as well as its assets.Our acquisition procedures may fail to identify all actual or potentialliabilities of a company prior to its acquisition, and we may be unable toobtain sufficient indemnities to protect ourselves against such acquiredliabilities. For example, the failure to identify and accurately determine thelevel of credit risk or market risk to which an acquired bank is exposed priorto its acquisition may lead to unexpected losses following the acquisition,which may have a significant adverse effect on our results of operations andfinancial condition.

***Risks Relating to Our Industry***

**Regulation of theGreek banking industry is changing.**

Regulation of the bankingindustry in Greece has changed in recent years pursuant to changes in Greeklaw, largely to comply with applicable EU Directives. In addition, the Bank ofGreece, the central bank in Greece, has in recent years introduced regulatory changesin the Greek banking sector. In January 1999, the Bank of Greeceintroduced new provisioning policies that require Greek banks to makeprovisions depending on the status and the type of a given loan and the numberof days the loan has been in arrears. These provisioning policies were amendedin January 2003 and January and November 2005 and generallyrequire Greek banks, including us, to increase their provisions for capitaladequacy purposes. We cannot predict what regulatory changes may be imposed inthe future, either as a result of regulatory initiatives in the European Union,by the Bank of Greece or by U.S. securities regulators. If we are required tomake additional provisions or increase our reserves, as may result from theproposed New Basel Capital Accord (discussed below) and other potentialregulatory changes, this could adversely affect our financial condition orresults of operations.

**Our capitaladequacy requirements may change as a result of the New Basel Capital Accord.**

In 1988, the Basel Committee on Banking Supervisionadopted capital guidelines (which are referred to in this Annual Report as the “Baselguidelines”) based on the relationship between a bank’s capital and its creditrisks. The Basel guidelines have been implemented by banking regulators in mostindustrialized countries, including Greece. The Basel guidelines are intendedto strengthen the soundness of the international banking system and reducecompetitive inequality among international banks by harmonizing the definition ofcapital and the basis for the evaluation of asset risks and by establishing auniform target capital adequacy ratio of capital to risk-weighted assets.

In October 2005, theCouncil of the European Union published the final proposal for the re-castingof Directive 2000/12/EC of March 20, 2000, relating to the taking up andpursuit of the business of credit institutions, and Directive 1993/6/EEC of March 15,1993, on the capital adequacy of investment firms and credit institutions. Thefinal Directives 2006/48/EC and 2006/49/EC of the European Parliament and ofthe Council, which introduced the Basel II Capital Adequacy Framework (“the NewBasel Capital Accord”), have been finalized and were published in June 2006.As a result of the adoption of these Directives by the Bank of Greece, the Bankmay be required to maintain higher levels of capital, which could decrease ouroperational flexibility and increase our financing costs. Consequently, wecannot assure you that the New Basel Capital Accord will not have amaterial adverse effect on our financial condition or results of operations.

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***Risks Relating to the Markets***

**Exchange ratefluctuations could have a significant impact on the value of our shares.**

The market price of ourshares traded on the ATHEX is denominated in euro. Fluctuations in the exchangerate between the euro and other currencies may affect the value of the Bank’sshares in the local currency of investors in the United States and othercountries that have not adopted the euro as their currency. Additionally, cashdividends on our shares are paid in euro and, therefore, are subject toexchange rate fluctuations when converted to an investor’s local currency,including US dollars.

**The ATHEX is lessliquid than other major exchanges.**

The principal trading market for our shares is theATHEX. The ATHEX is less liquid than major stock markets in Western Europe andthe United States. As a result, shareholders may have difficulty assessing thepast performance of the shares based on our prior trading record on the ATHEX.In 2006, average daily trading value on the ATHEX was approximately €343million, while in the first three months of 2007 it was approximately €460million. In comparison, average daily trading value on the London StockExchange was approximately €23,772 million in 2006 and approximately €31,800million in the first three months of 2007.

As at December 31,2006, the aggregate market value of all shares listed on the ATHEX wasapproximately € 158 billion. The marketvalue of our shares listed on the ATHEX on that date was €16.6billion, representing approximately 10.5 % of the capitalization of allcompanies listed on the ATHEX. We cannot make assurances about the futureliquidity of the market for our shares.

**Our share price hasbeen, and may continue to be, volatile.**

The market price ofour shares has been subject to volatility in the past, and could be subject towide fluctuations in response to numerous factors, many of which are beyond ourcontrol. These factors include the following:

·       actualor anticipated fluctuations in our operating results;

·       resultsof operations of our competitors;

·       thecondition of the Greek economy and other economies in the Eurozone;

·       potentialor actual sales of large amounts of the Bank’s shares into the market;

·       ourcompetitors’ positions in the market;

·       changesin financial estimates by securities analysts;

·       conditionsand trends in the banking sector in Greece and elsewhere in Europe; and

·       the general state of thesecurities markets (with particular emphasis on the Greek and financialservices sectors).

**The exercise ofpre-emptive rights may not be available to US holders of the ordinary sharesand ADRs.**

Under Greek law and our Articles of Association, priorto the issuance of any new shares, we must offer holders of our existing sharespre-emptive rights to subscribe and pay for a sufficient number of shares tomaintain their existing ownership percentages. These pre-emptive rights aregenerally transferable during the rights trading period for the relatedoffering and may be traded on the ATHEX.

U.S. holders of theordinary shares and ADRs may not be able to receive (and trade) or exercisepre-emptive rights for any such offering of shares unless a registrationstatement under the Securities Act is 

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effectivewith respect to such rights or an exemption from the registration requirements ofthe Securities Act is available. Our decision to file a registration statementwith respect to any future offering will depend on the costs and potentialliabilities associated with any such registration statement, as well as theperceived benefits of enabling U.S. holders of ordinary shares and ADRs toexercise their pre-emptive rights and any other factors we may considerappropriate at the time.

If U.S. holders of theordinary shares and ADRs are not able to receive (and trade) or exercisepre-emptive rights granted in respect of their ordinary shares in any rightsoffering by us then they might not receive the economic benefit of such rights.In addition, their proportional ownership interests in the Bank will bediluted.

**ITEM4**                   INFORMATION ONTHE COMPANY

**A.**   History andDevelopment of the Company

National Bank of GreeceS.A. was founded in 1841 and incorporated as a *sociétéanonyme* pursuant to Greek law as published in the Greek GovernmentGazette number six on March 30, 1841. Our current corporate form willexpire on February 27, 2053, but may be further extended by a resolutionof the General Meeting of Shareholders. The Bank’s headquarters and ourregistered office are located at 86 Eolou Street, 10232 Athens, Greece.The telephone number of the Bank is (+30) 210 334 1000. The Bank’s agent forservice in the United States is Corporation Service Company, 1133 Avenue of theAmericas, Suite 3100, New York, NY 10036.

The Bank has operated acommercial banking business for 166 years. In that time, the Bank has expandedto become a large, diversified financial services group that today comprisesthe NBG Group. As part of our diversification, the Bank founded the EthnikiHellenic General Insurance Company in 1891 and the National Mortgage Bank ofGreece S.A. (“NMB”) in 1927. Until the establishment in 1927 of the Bank ofGreece as the central bank of Greece, the Bank, in addition to commercialbanking activities, was responsible for issuing currency in Greece. The Bankexpanded its business further when, in 1953, it merged with Bank of Athens S.A.On October 2, 1998, the Bank merged into NMB to enhance revenuegeneration, realize cost-saving efficiencies and provide more integratedmortgage lending services to the Bank’s customers. In December 2002, theBank fully acquired and integrated the operations of the National Bank forInvestment and Industrial Development (“ETEBA”), an investment bank that was amajority-owned subsidiary of the Bank. As part of our ongoing effort to improveour portfolio structure and effectively respond to changes in the domestic andinternational markets, in December 2005 the Bank fully acquired andintegrated the operations of our subsidiary the National Investment CompanyS.A., a securities portfolio management company. The Bank’s efforts tointegrate further our operations and enhance our overall structure also led tothe full acquisition and integration on March 31, 2006, of our subsidiaryNational Real Estate SA (“National Real Estate”).

The Bank intends to expandthrough organic growth, and to continue to evaluate acquisition, joint ventureand partnership opportunities as they arise. In keeping with this strategy, wehave expanded our presence in SEE. In October 2003, we acquired BancaRomaneasca in Romania, and in 2005 we acquired Eurial, a Romanian automobileleasing company, as well as Alpha Romania Insurance, which we acquired fromAlpha Bank. These acquisitions followed on the expansion of our bankingactivities through the acquisitions of Stopanska Banka AD in FYROM and 89.9% ofthe share capital of United Bulgarian Bank AD in Bulgaria in 2000.

In February 2006 wesold our subsidiary NBG Canada, and in April 2006 we sold our subsidiaryAtlantic Bank of New York.

In 2006 we undertook ourlargest international acquisition to date. On August 18, 2006, we acquired46% of the ordinary shares and 100% of the founder shares in Finansbank, acommercial and retail bank in Turkey, from Fiba Holding A.S. (“Fiba Holding”),Fina Holding A.S. (“Fina Holding”), Girisim 

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Factoring A.S.(“Girisim Factoring”) and Fiba Factoring Hizmetleri A.S. (“FibaFactoring”) (together, the “Fiba Sellers”) for a consideration of USD 2,323million and USD 451 million, respectively. As at December 31, 2006,Finansbank was the fifth largest privately-owned bank in Turkey in termsof its consolidated assets and equity. In order to finance our acquisition ofFinansbank, we increased our share capital through a rights issue in July 2006by payment in cash with preemptive rights to our existing shareholders at aratio of four new shares for every ten shares. FIBA Sellers retained a residualstake of 9.68% in the ordinary share capital of Finansbank, which is subject tocertain put and call agreements, as provided for in the shareholders’ agreementbetween the Bank and FIBA Sellers, exercisable for a two-year period commencingon August 18, 2008, at a multiple of between 2.5 and 3.5 times the bookvalue of Finansbank’s ordinary share, subject to certain performance criteria. Thesellers also agreed and undertook to attend any general meetings of Finansbankand to vote such number of shares they then own as is equal to the differencebetween 50.01% of the ordinary shares and the total number of ordinary sharesthen owned by the Bank in accordance with the instructions and directions ofthe Bank. Based on that, it was deemed that the Bank obtained a controllinginterest on August 18, 2006 and as such this acquisition was within the scopeof FAS 141 Business Combinations. As a result of Turkish Capital Marketslegislation, NBG made a mandatory offer to minority shareholders. During themandatory tender offer period between January 8 and January 29, 2007,the Bank acquired a further 43.44% of Finansbank’s outstanding ordinary shares.On April 5, 2007, we sold 5% of Finansbank’s share capital to theInternational Finance Corporation (“IFC”). This stake is subject to certain putand call agreements, as provided in the shareholder’s agreement between NBG andIFC, exercisable in seven years. Following the completion of the mandatorytender offer and the sale of shares to the IFC, we have proceeded to acquirefurther outstanding ordinary shares in Finansbank. Up to June 11, 2007(the most recent practicable date), we had acquired 2,488,042 shares ofFinansbank, 0.2% of its outstanding share capital, for a consideration of €7.7million (TRY 14.3 million).

On September 12, 2006, we entered into anagreement with the Republic of Serbia for the acquisition of 99.4% of the sharecapital of Vojvodjanska Banka a.d. NoviSad (“Vojvodjanska”) for the cashconsideration of  €360million. The acquisition was effected on December 31, 2006. We have alsodeposited a further €25million in an escrow account until December 2007. The escrow is setagainst certain expected recoveries from Vojvodjanska’s fully providednon-performing loan portfolio and will be released to us on a €to €basis against any shortfall in recovery.

On March 21, 2007, we acquired 100% of P&KInvestment Services SA, a large Greek investment services company, from itsselling shareholders (“P&K Sellers”), for a consideration of  €48.7 million, €43.9million of which was paid to the P&K Sellers upon closing. The remainingconsideration will be released to the P&K Sellers on March 21, 2010,conditional on the attainment of key targets set out in the pre-agreed businessplan. On May 10, 2007, P&K Investment Services SA sold its subsidiaryP&K Mutual Fund Management SA to Millennium Bank AE for €1.68 million.

On April 19, 2007, we signed an agreement for thesale of our minority shareholding in AGET Heracles to majority shareholdersLafarge Group. Pursuant to this agreement, we sold 18,480,899 shares,representing 26% of the share capital of AGET Heracles. This sale is consistentwith our stated strategy to focus on our core banking activities and exit fromnon-financial participations. The sale price was agreed at €17.40per share, or €321.6million in total and was in line with the average closing price of the last 30trading days preceding the transaction.

The increased demand for individual pensions andmortgages in Turkey has created a rapidly growing insurance business for theseproducts. In May 2007, Finansbank applied to the General Directorate ofInsurance in Turkey and has received permission to establish Finans Emeklilikve Hayat A.S. (“Finans Pension”). This new company will complete itsorganizational preparations and obtain a licence to conduct life, personalaccident and pension insurance business, and is expected to commence operationsshortly. Finans Pension will be headed by highly experienced management in theTurkish insurance industry, and 

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its board of directorswill include members of the parent insurance company of the Group, whoseknow-how will assist with the rapid development of the new company.

Thetable below sets out the Bank’s principal items of capital expenditure for2004, 2005 and 2006. 

| ** **                                             | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------------------------|------------|--------------------------------------------|------------|
| **Type of Capital Expenditure**         | ** ** | ** **                                 | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                             | ** ** | **(EUR in thousands)**           | ** ** |
| Interests in  other companies                          |       | 53,468                                     | (1)        | 268,460 | (2) | 2,642,887 | (3) |
| Information  technology and other electronic equipment |       | 19,230                                     |       | 17,185 |   | 23,261 |   |
| Furniture,  fixtures and fittings                      |       | 1,574                                      |       | 844 |   | 1,352 |   |
| Other capital  expenditures(4)                         |       | 38,313                                     |       | 44,717 |   | 67,414 |   |
| Total                                                  |       | 112,585                                    |       | 331,206 |   | 2,734,914 |   |
|                                                        |            |                                            |            |  |  |  |  |  |  |

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(1)             Principallyrepresenting the acquisition of additional shares in National InvestmentCompany (September 2004), Banca Romaneasca (March 2004) and UnitedBulgarian Bank (July 2004).

(2)             Principallyrepresenting the participation in Ethniki Insurance, National InvestmentCompany and Banca Romaneasca’s share capital increase

(3)             Principallyrepresenting the acquisitions of Finansbank and Vojvodjanska and theparticipation in Banca Romaneasca’s capital increase.

(4)             “Othercapital expenditures” domestically and abroad principally representreorganization expenses, branch renovation expenses, expenses relating to establishmentof new branches and expenses relating to reallocation of existing branches.

The acquisition ofFinansbank was funded by the proceeds of the issuance of 135,707,764 newordinary shares of the Bank at the price of €22.11per share. No third party financing was required in relation to any of ourcapital expenditures.

Also,as part of a strategy to streamline our operations, we continue to divestnon-core equity investments and real estate that are unrelated to our principalfinancial services businesses, and to commit the released resources to moreprofitable activities. As part of our program of disposing of non-core assets,we have made significant domestic divestitures in the last four years, assummarized in the table below. In 2006 we also disposed of our subsidiariesAtlantic Bank of New York and NBG Canada as part of our program to focus ondeveloping markets.

| ** **                        | ** ** | ** **                      | ** ** | **Amount**                      | ** ** |
|-----------------------------------|------------|---------------------------------|------------|---------------------------------|------------|
| **Type of Divestiture** | ** ** | ** **                      | ** ** | **Group Companies**        | ** ** | ** ** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                        | ** ** | ** **                      | ** ** | **(EUR in millions)** | ** ** |
| Investments(1)                    |       | The  Bank                       |       | 25.3                            |       | 58.1 |   | 369.8 |   |
| Real Estate(2)                    |       | The Bank and Ethniki  Kefalaiou |       | 39.3                            |       | 17.3 |   | 97.7 |   |
|                                   |            |                                 |            |                                 |            |  |  |  |  |  |  |  |  |

 

For further information ondisposals of non-core assets, see Item 5—*“Key FactorsAffecting Our Results of Operations—Disposals of Non-core Assets.”*

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(1)             In 2004, we made adisposal of €12.5 millionof our equity investment in OTEnet, approximately €7 million of ourequity investment in the Central Securities Depository and approximately €5.5 millionin the cement, leasing, security and saltworks sectors. During 2005 the Bankmade disposals of €28 millionin ELTECH and €1.7 millionin Hellascom, sold all of its holding in Lykos Paperless Solutions SA for €982 thousandand also sold 7.07% of Eviop Tempo SA for €854thousand, decreasing its participation to 21.21% from 28.28%. During 2006, theBank made a disposal of  €6.5million of our former subsidiary Astir Alexandroupolis AXE, CAD 71.3million in NBG Canada, US$388.4 million in Atlantic Bank of New York, €2.5million in AGRIS and other smaller disposals of total value €0.8million.

(2)             Representsdisposals of real property that was acquired by the Bank primarily throughforeclosure proceedings. These properties were located primarily in Greece.

No public takeover offersfor our shares have been made by third parties during the 2006 financial yearor the current financial year, as at the date of this Annual Report.

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**B.**   BusinessOverview

**Introduction**

We are the largestfinancial institution in Greece in terms of loans to customers and marketcapitalization, according to an internal review of published financialstatements of Greek banks. Our core focus outside Greece is in Turkey and SEE,where we currently operate in Bulgaria, Serbia, Romania, Albania, Cyprus andFYROM. Altogether, we have a presence in 12 countries outside Greece. We offerour customers a wide range of integrated financial services, including:

·       commercialand retail banking services (including mortgage lending);

·       investmentbanking, capital markets, venture capital and advisory services;

·       assetmanagement; and

·       insurance.

In addition, we are involved in various otherbusinesses, including the hotel business, property management and real estateand business and IT consulting.

The Bank is our principal operating company,representing 71.6% of our total assets as at December 31, 2006.

The Bank’s liabilities measured under U.S. GAAP,represent 78% of our total liabilities as at December 31, 2006. While theBank conducts most of our banking activities, it is supported by seven foreignbanking subsidiaries: Finansbank AS, United Bulgarian Bank AD, VojvodjanskaBanka a.d. Novi Sad, Banca Romaneasca SA, Stopanska Banka ad Skopje, NBG CyprusLtd. and South African Bank of Athens. We intend to continue to expand ouroperations in SEE, Eastern Europe and the Southeastern Mediterranean region.

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The followingtable summarizes our relative assets, revenues, net income before tax, incometax expense and depreciation and amortization expense under U.S. GAAPattributable to our banking and other operations, showing the relativecontributions of Greek and foreign activities. Our business and revenues arenot materially affected by seasonal variations.

| ** **                                   | ** ** | **Total  Assets** | ** ** | **(%)** | ** ** | **Interest  income** | ** ** | **(%)** | ** ** | **Interest  expense** | ** ** | **(%)** | ** ** | **Non  interest  income** | ** ** | **(%)** | ** ** | **Non  interest  expense** | ** ** | **(%)** | ** ** | **Net  income  before  taxes** | ** ** | **Income  tax  (expense)/  benefit** | ** ** | **Depreciation  &  Amortization  expense** | ** ** | **Revenue from  transactions  with other  segments** | ** ** | **(%)** | ** ** |
|----------------------------------------------|------------|-------------------|------------|---------|------------|----------------------|------------|---------|------------|-----------------------|------------|---------|------------|---------------------------|------------|---------|------------|----------------------------|------------|---------|------------|--------------------------------|------------|--------------------------------------|------------|------------------------------------------------|------------|----------------------------------------------------------------|------------|---------|------------|
| December 31, 2004:                      |       |              |       |    |       |                 |       |    |       |                  |       |    |       |                      |       |    |       |                       |       |    |       |                           |       |                                 |       |                                           |       |                                                           |       |    |       |   |   |   |   |   |   |
| Banking—Greek                           |       | 42,620,962        |       | 78.0    |       | 1,695,176            |       | 76.7    |       | 494,252               |       | 70.3    |       | 415,339                   |       | 31.6    |       | 1,159,620                  |       | 48.4    |       | 313,670                        |       |                                 | (76,739    | )                                              |       |                                                           | 72,390     |    |       |   | (102,813 | ) |   | 57.1 |   |
| Banking—Foreign                         |       | 6,965,987         |       | 12.7    |       | 347,520              |       | 15.7    |       | 160,353               |       | 22.8    |       | 115,161                   |       | 8.9     |       | 185,193                    |       | 7.7     |       | 58,665                         |       |                                 | (26,090    | )                                              |       |                                                           | 22,030     |    |       |   | (49,831 | ) |   | 27.7 |   |
| Investment Banking                           |       | 260,868           |       | 0.5     |       | 5,262                |       | 0.2     |       | 4,185                 |       | 0.6     |       | 26,300                    |       | 2.0     |       | 15,340                     |       | 0.7     |       | 12,036                         |       |                                 | (2,757     | )                                              |       |                                                           | 392        |    |       |   | (3,458 | ) |   | 1.9 |   |
| Global Investment & Private Banking |       | 273,121           |       | 0.5     |       | 7,197                |       | 0.4     |       | —                |       | —  |       | 50,305                    |       | 3.8     |       | 12,875                     |       | 0.6     |       | 44,627                         |       |                                 | (4,471     | )                                              |       |                                                           | 789        |    |       |   | (3,637 | ) |   | 2.0 |   |
| Insurance                                    |       | 1,517,332         |       | 2.8     |       | 18,598               |       | 0.9     |       | 2,557                 |       | 0.4     |       | 637,414                   |       | 48.5    |       | 913,394                    |       | 38.1    |       | (259,730                       | )          |                                 | 73,641     |                                           |       |                                                           | 6,469      |    |       |   | (13,820 | ) |   | 7.7 |   |
| Other—Greek(1)                          |       | 329,764           |       | 0.6     |       | 863                  |       | 0.0     |       | 560                   |       | 0.1     |       | 43,755                    |       | 3.3     |       | 40,574                     |       | 1.7     |       | 3,485                          |       |                                 | 42,451     |                                           |       |                                                           | 3,107      |    |       |   | (6,021 | ) |   | 3.4 |   |
| Continuing operations                        |       | 51,968,034        |       | 95.1    |       | 2,074,616            |       | 93.9    |       | 661,907               |       | 94.2    |       | 1,288,274                 |       | 98.1    |       | 2,326,996                  |       | 97.2    |       | 172,753                        |       |                                 | 6,035      |                                           |       |                                                           | 105,177    |    |       |   | (179,580 | ) |   | 99.8 |   |
| Discontinued  operations                     |       | 2,684,746         |       | 4.9     |       | 134,468              |       | 6.1     |       | 41,017                |       | 5.8     |       | 25,289                    |       | 1.9     |       | 68,255                     |       | 2.8     |       | 51,878                         |       |                                 | (20,396    | )                                              |       |                                                           | 7,906      |    |       |   | (383 | ) |   | 0.2 |   |
| Total                                        | ** ** | 54,652,780        |       | 100.0   |       | 2,209,084            |       | 100.0   |       | 702,924               |       | 100.0   |       | 1,313,563                 |       | 100.0   |       | 2,395,251                  |       | 100.0   |       | 224,631                        |       |                                 | (14,361    | )                                              |       |                                                           | 113,083    |    |       |   | (179,963 | ) |   | 100.0 |   |
| December 31,  2005                      |       |              |       |    |       |                 |       |    |       |                  |       |    |       |                      |       |    |       |                       |       |    |       |                           |       |                                 |       |                                           |       |                                                           |       |    |       |   |   |   |   |   |   |
| Banking—Greek                           |       | 46,975,406        |       | 78.3    |       | 1,965,193            |       | 77.7    |       | 617,964               |       | 69.8    |       | 488,964                   |       | 32.9    |       | 1,074,221                  |       | 51.0    |       | 571,328                        |       |                                 | (176,583   | )                                              |       |                                                           | 55,933     |    |       |   | (111,278 | ) |   | 70.9 |   |
| Banking—Foreign                         |       | 8,035,375         |       | 13.4    |       | 399,568              |       | 15.8    |       | 217,340               |       | 24.6    |       | 189,267                   |       | 12.7    |       | 210,185                    |       | 10.0    |       | 126,942                        |       |                                 | (16,247    | )                                              |       |                                                           | 19,441     |    |       |   | (9,445 | ) |   | 6.0 |   |
| Investment Banking                           |       | 265,454           |       | 0.4     |       | 1,331                |       | 0.1     |       | 40                    |       | —  |       | 44,389                    |       | 3.0     |       | 22,135                     |       | 1.1     |       | 23,545                         |       |                                 | (7,376     | )                                              |       |                                                           | 315        |    |       |   | (3,569 | ) |   | 2.3 |   |
| Global Investment & Private Banking |       | 28,865            |       | 0.0     |       | 929                  |       | 0.0     |       | —                |       | —  |       | 9,455                     |       | 0.6     |       | 9,109                      |       | 0.4     |       | 1,274                          |       |                                 | (2,365     | )                                              |       |                                                           | 63         |    |       |   | (3,884 | ) |   | 2.5 |   |
| Insurance                                    |       | 1,604,622         |       | 2.7     |       | 23,286               |       | 0.9     |       | 1,646                 |       | 0.2     |       | 685,800                   |       | 46.0    |       | 672,655                    |       | 31.9    |       | 34,785                         |       |                                 | (23,871    | )                                              |       |                                                           | 6,133      |    |       |   | (22,469 | ) |   | 14.3 |   |
| Other—Greek(1)                          |       | 343,260           |       | 0.6     |       | 81                   |       | —  |       | 131                   |       | 0.0     |       | 48,898                    |       | 3.3     |       | 47,025                     |       | 2.2     |       | 1,823                          |       |                                 | (6,344     | )                                              |       |                                                           | 2,222      |    |       |   | (6,084 | ) |   | 3.9 |   |
| Continuing operations                        |       | 57,252,982        |       | 95.4    |       | 2,390,388            |       | 94.5    |       | 837,121               |       | 94.6    |       | 1,466,773                 |       | 98.5    |       | 2,035,330                  |       | 96.6    |       | 759,697                        |       |                                 | (232,786   | )                                              |       |                                                           | 84,107     |    |       |   | (156,729 | ) |   | 99.9 |   |
| Discontinued  operations                     |       | 2,754,517         |       | 4.6     |       | 139,069              |       | 5.5     |       | 47,738                |       | 5.4     |       | 22,764                    |       | 1.5     |       | 71,828                     |       | 3.4     |       | 46,773                         |       |                                 | (18,490    | )                                              |       |                                                           | 7,865      |    |       |   | (223 | ) |   | 0.1 |   |
| Total                                        | ** ** | 60,007,499        |       | 100.0   |       | 2,529,457            |       | 100.0   |       | 884,859               |       | 100.0   |       | 1,489,537                 |       | 100.0   |       | 2,107,158                  |       | 100.0   |       | 806,470                        |       |                                 | (251,276   | )                                              |       |                                                           | 91,972     |    |       |   | (156,952 | ) |   | 100.0 |   |
| December 31,  2006                      |       |              |       |    |       |                 |       |    |       |                  |       |    |       |                      |       |    |       |                       |       |    |       |                           |       |                                 |       |                                           |       |                                                           |       |    |       |   |   |   |   |   |   |
| Banking—Greek                           |       | 52,490,658        |       | 69.3    |       | 2,339,366            |       | 66.3    |       | 877,068               |       | 62.0    |       | 591,820                   |       | 32.5    |       | 1,222,410                  |       | 47.1    |       | 606,337                        |       |                                 | (136,068   | )                                              |       |                                                           | 56,313     |    |       |   | (161,870 | ) |   | 67.8 |   |
| Banking—Foreign                         |       | 10,066,336        |       | 13.3    |       | 597,798              |       | 16.9    |       | 253,411               |       | 17.9    |       | 158,484                   |       | 8.7     |       | 207,450                    |       | 8.0     |       | 272,905                        |       |                                 | (19,353    | )                                              |       |                                                           | 21,556     |    |       |   | (26,352 | ) |   | 11.0 |   |
| Banking Turkey                               |       | 10,706,009        |       | 14.1    |       | 530,900              |       | 15.0    |       | 270,507               |       | 19.1    |       | 120,467                   |       | 6.6     |       | 255,695                    |       | 9.9     |       | 111,674                        |       |                                 | (34,347    | )                                              |       |                                                           | 14,022     |    |       |   | — |   |   | — |   |
| Investment Banking                           |       | 224,552           |       | 0.3     |       | 5,403                |       | 0.2     |       | 84                    |       | 0.0     |       | 66,653                    |       | 3.7     |       | 31,944                     |       | 1.2     |       | 40,028                         |       |                                 | (13,900    | )                                              |       |                                                           | 185        |    |       |   | (10,807 | ) |   | 4.5 |   |
| Global Investment & Private Banking |       | 11,976            |       | 0.0     |       | 573                  |       | 0.0     |       | —                |       | —  |       | 7,509                     |       | 0.4     |       | 9,562                      |       | 0.4     |       | (1,704                         | )          |                                 | (3,001     | )                                              |       |                                                           | 70         |    |       |   | (12,431 | ) |   | 5.2 |   |
| Insurance                                    |       | 1,938,699         |       | 2.6     |       | 28,726               |       | 0.8     |       | 1,349                 |       | 0.1     |       | 773,952                   |       | 42.4    |       | 809,940                    |       | 31.1    |       | (8,611                         | )          |                                 | (7,759     | )                                              |       |                                                           | 5,742      |    |       |   | (23,532 | ) |   | 9.9 |   |
| Other—Greek(1)                          |       | 275,508           |       | 0.4     |       | 8                    |       | —  |       | —                |       | —  |       | 38,398                    |       | 2.1     |       | 44,458                     |       | 1.7     |       | (6,053                         | )          |                                 | (271       | )                                              |       |                                                           | 792        |    |       |   | (3,859 | ) |   | 1.6 |   |
| Continuing operations                        |       | 75,713,738        |       | 100.0   |       | 3,502,774            |       | 99.2    |       | 1,402,419             |       | 99.1    |       | 1,757,283                 |       | 96.4    |       | 2,581,459                  |       | 99.4    |       | 1,014,576                      |       |                                 | (214,699   | )                                              |       |                                                           | 98,680     |    |       |   | (238,851 | ) |   | 100.0 |   |
| Discontinued  operations                     |       | —            |       | —  |       | 29,732               |       | 0.8     |       | 12,672                |       | 0.9     |       | 65,979                    |       | 3.6     |       | 14,288                     |       | 0.6     |       | 69,326                         |       |                                 | (11,139    | )                                              |       |                                                           | 1,300      |    |       |   | (16 | ) |   | 0.0 |   |
| Total                                        | ** ** | 75,713,738        |       | 100.0   |       | 3,532,506            |       | 100.0   |       | 1,415,091             |       | 100.0   |       | 1,823,262                 |       | 100.0   |       | 2,595,747                  |       | 100.0   |       | 1,083,902                      |       |                                 | (225,838   | )                                              |       |                                                           | 99,980     |    |       |   | (238,867 | ) |   | 100.0 |   |

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(1)             Includes,non-financial services subsidiaries in Greece.

According to our analysis of publicly availablefinancial statements of Greek commercial banks, the Bank is the largestcommercial bank in Greece in terms of assets, deposits, loans and number ofbranches. As at December 31, 2006, the last date for which suchinformation is publicly available, approximately 25% of all deposits with, andapproximately 20% of all loans made by, Greek commercial banks (excludingspecialized credit institutions) were held or made by the Bank.

We are one of the most diverse financial servicesgroups in Greece according to our analysis of the published financialstatements of Greek banks. According to this report, in addition to our bankingactivities, we are currently the largest and most active participant by volumein the national electronic dealing system of Greek Government bonds. Weestimate that we have approximately 11.8% duration-weighted participation inthe primary market while we handle approximately an 18.0% of the average dailyvolume in the secondary market for Greek government securities. Also, on December 31,2006, we had approximately €7.2 billion in assetsunder management, and we are currently the largest asset manager in the Greekmarket, according to data published by the Association of Greek InstitutionalInvestors.

We are also a leader inproviding many other financial services in Greece. For example, we are thelargest mortgage lender and the largest insurance operator (in terms ofrevenues), the leading provider of securities trading services, following theacquisition of P&K Group of Companies in March 2007 and one 

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of theleading Greek underwriters of domestic equity securities. For more informationregarding the acquisition of P&K Group of Companies see the section on *“Stock Brokerage”*in this Item 4.B.

We use a variety ofmarketing and distribution channels to maintain and enhance our marketposition, including telemarketing (particularly for credit card sales), radio,television and press advertising and distributing promotional informationbrochures in our branches. As part of our marketing strategy, we seek tocapitalize on our existing relationships with individual customers throughcross-selling efforts aimed at increasing such customers’ awareness of otherproducts that are offered by Group companies. For instance, our mortgagecustomers are informed of our insurance products, through which they may insureagainst damage to their property and against events and circumstances thatmight cause them to default on their mortgage loans. Our marketing strategyalso includes indirect marketing, pursuant to which we have entered into agencyagreements with retailers, such as automobile dealers, who agree to offer ourconsumer loan products to their customers in connection with purchases ofconsumer goods. In addition, we employ various alternative distributionmethods, such as cooperation with real estate agents and constructionbusinesses in the sale of mortgage loans. We have also entered into contractualarrangements with mobile telephone service providers in Greece that enable usto offer to our customers certain banking services, such as balance inquiries,through their mobile telephones. We provide basic banking services over theinternet, including the transfer of funds between accounts, balance inquiries,bill payments, stock brokerage and subscription to initial public offerings onthe ATHEX.

**Overview of the Banking Services Sector in Greece**

The banking sector hasexpanded rapidly in recent years, due to both deregulation and technologicaladvances. As at December 31, 2006, there were 46 domestic and foreignbanks and other credit institutions operating in Greece (excluding cooperativebanks). Domestic banks in Greece can be grouped into one of two principalcategories: universal banks (commercial and/or investment banks) andspecialized credit institutions.

***Universal Banks***

Traditionally, commercialbanks have dominated the Greek financial services market. However, specializedcredit institutions have expanded into commercial banking as a result ofsignificant liberalization of the Greek financial services industry, therebyincreasing competition in the market. The distinction between commercial andinvestment banks ceased to exist formally and the Bank of Greece classifies allbanks operating in Greece as “universal banks”, with the exception of theConsignment Deposits and Loans Fund (which is a legal entity of public law,fully owned and controlled by the Greek Government). The Postal Savings Bankhas recently received a general banking license and has become a universalbank.

There are currently twobanks that are controlled, directly or indirectly, by the Greek Government:Bank of Attica and ATE Bank (formerly the Agricultural Bank of Greece). Overthe last few years, the Greek Government proceeded to privatize a large numberof credit institutions. For example, in 1998, the Greek Government privatizedthe Bank of Central Greece and Creta Bank, in early 1999, Ionian Bank, and, in March 2002,ETBA, an ATHEX listed industrial development bank. Additionally, a portion ofthe Greek Government’s indirect shareholding of General Hellenic Bank was soldto private investors in April 1998 and a majority stake was sold toSociété Générale in early 2004. The Bank of Macedonia—Thrace was also formerlystate-controlled until the Group and the Hellenic Postal Savings Bank sold 37%of its total equity to Bank of Piraeus, a private commercial bank, in April 1998.In 2000, France’s Crédit Agricole purchased a 6.7% interest in Emporiki Bank,which was further increased to 9.0% in 2002, in connection with the GreekGovernment’s privatization project. In August, 2006 Crédit Agricole acquired a71.97% interest in Emporiki Bank. Moreover, the Greek Government proceeded withthe partial privatizations of the Postal Savings Bank and ATE Bank through thelisting of their shares on the ATHEX.

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Although there arecurrently 19 private banks incorporated in Greece, there has been a recenttrend towards consolidation. For example, Ergobank S.A. and EFG Eurobank S.A.merged in July 2000 to form EFG Eurobank Ergasias. EFG Eurobank Ergasiasmerged with Telesis Bank in early 2002 and with UnitBank in December 2003.Similarly, Bank of Macedonia-Thrace, Bank of Piraeus and Xios Bank merged in June 2000,creating the Piraeus Group. The Piraeus Group subsequently acquired a 57.8%interest in ETBA, in March 2002, which was previously a majoritystate-owned industrial development bank listed on the ATHEX. ETBA was mergedentirely into the Piraeus Group in December 2003. In December 2002,the Bank merged with ETEBA (our investment banking arm). In addition, since September 2000,Banco Commercial Portuguese, a Portuguese bank, has been active in the Greekmarket through Millenium Bank. In 2006, Egnatia Bank and Marfin Bank, alongwith Laiki Bank, a Cyprus-based bank with a Greek subsidiary, formed a newunified group.

In recent years, most ofthe major Greek banks have expanded internationally, establishing or enhancingtheir presence in SEE. In addition to the Bank’s acquisition of controllingstakes in Finansbank and Vojvodjanska during 2006 and the first months of 2007,other Greek Banks have proceeded with acquisitions of banks in the region.Eurobank became the 100% shareowner of Nacionalna Stedionica Banca in Serbia inMarch 2007 and took control of over 90% of DZI Bank in Bulgaria in December 2006.Also, in March 2007, EFG concluded the purchase of a 99% stake ofUniversal Bank in Ukraine, and at the same time completed the acquisition of a70% stake in Tekfenbank in Turkey. Alpha Bank acquired 50% of the TurkishAlternatifbank, a member of Anadolu Group. ATE Bank made its first expansionsteps in SEE by acquiring a 20% stake in AIK Bank in Serbia in October 2006and a 69% stake of MindBank in Romania in January 2007.

***Specialized CreditInstitutions***

There is currently onesuch specialized institution, following the reclassification of ATE Bank, thePostal Savings Bank and Aspis Bank as universal banks in keeping with theexpansion of the ranges of their services.

The only remainingspecialized credit institution is the Consignment Deposits and Loans Fund,which is an autonomous financial institution, organized as a public law entityunder the supervision of the Ministry of Finance. Its activities mainly consistof the acceptance of consignments (in cash or in kind), the granting of housingloans to qualifying borrowers (primarily civil servants) and the support ofregional development.

We do not consider theConsignment Deposits and Loans Fund to be our competitor for commercial bankingcustomers.

***Foreign Banks***

There are 24 foreign-ownedor incorporated credit institutions that are well established in the Greekbanking market. The principal participants in the industry, and our principalforeign competitors in Greece, include Citibank, Bank of Cyprus, Royal Bank ofScotland and HSBC. With the exception of Bank of Cyprus, Citibank and HSBC, themajority of foreign banks operating in Greece have little presence in retailbanking services.

***Competition***

Domestic universal bankscontrolled a market share of approximately 83% of total assets in the Greekbanking sector, amounting in total to €270 billion as at December 31,2006, the last date for which such information is currently available,according to our analysis of publicly available information.

Foreign banks controlled amarket share of approximately 14% of Greek banking assets at that date, whilespecialized institutions had a market share of approximately 3%, andstate-controlled universal 

26

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bankscontrolled approximately 9% of the Greek universal banks’ total assets as at December 31,2006, according to our analysis of publicly available information.

As of April 2002,Greek law allows non-banking institutions that are licensed by the Bank ofGreece in accordance with the Act of the Governor of the Bank of Greece No. 2485/31.1.2002,to extend consumer credit or loan facilities. These institutions are in directcompetition with universal banks in the consumer credit sector.

Thetable below shows the breakdown of assets, loans outstanding and deposits inthe universal banking sector for the Bank and our six main competitors inGreece as at December 31, 2006. These figures exclude one specializedcredit institution and have been compiled by the Bank based on publiclyavailable information. This table also excludes specific market shares offoreign banks, as no official information with respect to the year ended December 31,2006, is available to date for such banks.

| ** **                             | ** ** | **As at and for the year ended December 31, 2006** | ** ** |
|----------------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|
| **Banks**                              | ** ** | ** **                                                                                      | ** ** | **Assets** | ** ** | **% of total  market** | ** ** | **Loans** | ** ** | **% of total  market** | ** ** | **Deposits** | ** ** | **% of total  market** | ** ** |
| ** **                             | ** ** | **(**€ in millions, except percentages)                                | ** ** |
| 1.   National Bank of Greece |       | 61,306                                                                                          |       |   | 22.7 | % |   | 32,755 |   |   | 19.9 | % |   | 44,565 |   |   | 25.3 | % |   |
| 2.   EFG Eurobank Ergasias   |       | 50,057                                                                                          |       |   | 18.6 | % |   | 30,183 |   |   | 18.3 | % |   | 30,363 |   |   | 17.2 | % |   |
| 3.   Alpha Bank .            |       | 46,769                                                                                          |       |   | 17.3 | % |   | 28,238 |   |   | 17.2 | % |   | 20,373 |   |   | 11.6 | % |   |
| 4.   Piraeus Group .         |       | 27,942                                                                                          |       |   | 10.4 | % |   | 18,729 |   |   | 11.4 | % |   | 14,606 |   |   | 8.3 | % |   |
| 5.   Emporiki Bank .         |       | 21,805                                                                                          |       |   | 8.1 | % |   | 16,158 |   |   | 9.8 | % |   | 16,375 |   |   | 9.3 | % |   |
| 6.   ATE Bank                |       | 20,588                                                                                          |       |   | 7.6 | % |   | 13,625 |   |   | 8.3 | % |   | 18,198 |   |   | 10.3 | % |   |
| **Total**                              | ** ** | **228,467**                                                                                     | ** ** | ** ** | **84.7** | **%** | ** ** | **139,688** | ** ** | ** ** | **84.9** | **%** | ** ** | **144,480** | ** ** | ** ** | **82.0** | **%** | ** ** |
|                                        |            |                                                                                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Thefollowing table shows the assets, deposits and loans of the Greek bankingsystem as at December 31, 2006, the last date for which such informationis currently available, according to our analysis of publicly availableinformation:

| ** **                            | ** ** | **As at December 31, 2006** | ** ** |
|---------------------------------------|------------|-------------------------------------------------|------------|
| ** **                            | ** ** | **Assets**                                      | ** ** | **Loans** | ** ** | **Deposits** | ** ** |
| ** **                            | ** ** | **(**€ in millions)              | ** ** |
| **Universal Banks**                   |       |                                            |       |   |   |   |   |
| Domestic                              |       | 269,904                                         |       | 164,431 |   | 176,079 |   |
| Foreign                               |       | 44,311                                          |       | 15,159 |   | 19,409 |   |
| **Total**                             | ** ** | **314,215**                                     | ** ** | **179,590** | ** ** | **195,488** | ** ** |
| Other credit  institutions(1)         |       | 10,246                                          |       | 4,892 |   | 7,089 |   |
| **Total**                             | ** ** | **324,461**                                     | ** ** | **184,482** | ** ** | **202,577** | ** ** |
| **The Bank as a percentage of Total** | ** ** | **18.9**                                        | **%**      | **17.8** | **%** | **22.0** | **%** |

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(1)             This figure includesthe Consignment Deposits and Loans Fund

**Overview of the Banking Services Sector in SEE &Turkey**

In 2006, the macroeconomicpicture of SEE countries (Albania, Bulgaria, Romania, Serbia, and FYROM) andTurkey further improved, despite adverse external conditions, such as increasesin interest rates and oil prices. In particular, economic activity posted animpressive acceleration in SEE, with real GDP growth rate at 6.9% in 2006compared to 4.7% in 2005, and remained robust in Turkey, with real GDP growthrate at 6.1% in 2006 compared to 7.4% in 2005. In both cases, the high growthrates were predominantly due to the rebound in economic activity in the euroarea and the expansion of financial intermediation. In addition, the inflationrate declined significantly in SEE to 5.2% in 2006 compared to 8.8% in 2005, asa result of the strengthening and/or stabilization of the local exchange ratesagainst the euro and the adoption of restrictive monetary policies. In Turkey,inflation was 9.7% in 2006, compared to 9.3% in 2005, despite the depreciationof the Turkish lira in May 2006.

27

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In contrast, the alreadyhigh current account deficit in SEE widened further from 9.3% to 11.2% of GDP,and in Turkey from 6.2% to 7.9% GDP, mainly on the back of strong domesticdemand and higher oil and commodity prices. However, the financing of thecurrent account gap did not entail an increase in the external debt as it waslargely covered by higher FDI inflows. FDI stood at record high levels in bothSEE (the cover ratio increased to 101% in 2006 compared with 80% in 2005) andTurkey (the cover ratio increased to 60% in 2006 from near 0% in previousyears) due to an improving macroeconomic outlook and accelerating integrationto the EU. 

***Financial Intermediation in SEE***

In 2006, despite therestrictive credit measures and high interest rates, financial intermediationexpanded further in SEE, mainly on the back of strong economic activity and thesuccessful restructuring of the banking sector. Indeed, loans and depositsrecorded impressive growth rates of 30.9 and 46.7%, respectively, while thecorresponding penetration rates stood at 31.9 and 29.6%. Retail lendingcontinued to be the main driver, with loans to households recording an averageannual growth rate of 96% during the past six years (to 12.1% of GDP at December 31,2006 from 1.1% of GDP in 2000).

***Developments in the Turkish Banking System***

In 2006, financialintermediation expanded further in Turkey, despite a slowdown in economicactivity and higher interest rates. This was mainly due to the significantprogress in institutional and structural reforms and increased consumer andinvestor confidence in the banking system. Indeed, bank deposits and loansincreased by 22.1% and 40.7%, respectively, while their penetration rates stoodat 51.6% and 36.1% of GDP compared to 49.3% and 29.9% of GDP in 2005.

**Banking Activities in Greece**

Most of our bankingbusiness is domestic and includes retail, commercial and investment banking. Asat December 31, 2006, approximately 91.4% of the Bank’s total assets weredomestic banking-related assets. The Bank’s domestic operations account for92.4% of our total lending activities as at December 31, 2006. Totaldomestic gross loans extended by the Bank were €31,113million as at December 31, 2006, a 19.4% increase compared to €26,067million at December 31, 2005.

Thefollowing table sets forth details of the Bank’s domestic operations (in termsof loans and deposits) as stated at December 31, 2006:

| ** **                | ** ** | **Loans**                       | ** ** | **Deposits**             | ** ** |
|---------------------------|------------|---------------------------------|------------|--------------------------|------------|
| ** **                | ** ** | **Amount**                      | ** ** | **% of Total** | ** ** | **Amount** | ** ** | **% of Total** | ** ** |
| ** **                | ** ** | **(EUR in millions)** | ** ** |
| Commercial and  Retail(1) |       |                            | 29,622     |                     |       |   | 88.7 |   |   |   | 39,423 |   |   |   | 90.4 |   |   |
| Public Sector(2)          |       |                            | 1,465      |                     |       |   | 4.4 |   |   |   | 2,220 |   |   |   | 5.1 |   |   |
| Interbank                 |       |                            | 2,297      |                     |       |   | 6.9 |   |   |   | 1,969 |   |   |   | 4.51 |   |   |
| Total                     |       |                            | 33,384     |                     |       |   | 100.0 |   |   |   | 43,612 |   |   |   | 100.0 |   |   |

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(1)             Retail includesconsumer loans, personal loans, residential mortgages, automobile financing andcredit cards.

(2)             Comprises publicutilities and entities governed by Greek public law.

Webelieve that the Bank has a strong competitive advantage in attracting domesticdeposits from retail and corporate clients due to the:

·       widecoverage of the Bank’s domestic branch network;

·       prominenceof the Bank’s brand name to a large segment of the population; and

·       broadrange of services and products the Bank offers.

28

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The tables below show theincreases in domestic loans and domestic deposits attributable to the Bank fromDecember 31, 2004 through December 31, 2006.

**Domestic Loans**

****

**DomesticDeposits**

****

The growth in the Bank’slending activities in Greece in 2006 relates primarily to retail loans.

As at December 31,2006, 12.7% of total deposits held by the Bank and 4.7% of total loans made bythe Bank were in currencies other than the euro.

29

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***GreekBanking Distribution Channels***

As at December 31, 2006, the Bank operatedthroughout Greece through 557 branches, one private banking unit, one unit forfinancial institutions and nine specialized banking units that deal exclusivelywith troubled and non-performing loans. As at December 31, 2006, the Bankhad 1,370 ATMs, situated mainly in our own branches, but also at other keylocations such as supermarkets, metro stations, shopping centers, hospitals andairports (326 of our ATMs are equipped with cash deposit devices). The Bank hasapproximately 2 million ATM cards active for use in both our own distributionnetwork and the Greek interbanking system. We also operate approximately 70,000point of sale (“POS”) system terminals in Greece at which our cards areaccepted, of which the Bank installed approximately 7,000 in 2004, 3,000 in2005 and another 10,000 in 2006. The Bank is in the process of replacing itsfirst and second generation ATMs with technologically more advanced models. Inaddition, the Bank has developed alternative distribution channels, such as ane-banking platform targeted at both corporate and retail clients.

In addition we have established “Fast Line”, atelephone service unit of consumer lending, through which loan requests of up to€50,000may be instantly addressed by phone.

The Bank’s branches are located in almost every majorcity and town in Greece. Approximately 45% of the Bank’s branches are locatedin Athens, Piraeus and Thessaloniki, which are the major population centers in Greece.The Bank is engaged in a continuous process of rationalizing the organizationof our branch network in order to reduce costs, primarily by centralizingback-office functions to free more employees to work on sales activitiesdirectly with customers. The first phase of the reorganization, which wascompleted in 2003, aimed at turning branches into product-focused sales outletsto improve customer service. In addition, the Bank is continuing to consolidateredundant branches in order to maintain equivalent geographic coverage at alower cost. As at December 31, 2006, the Bank operated 231 full bankingbranches and 326 retail banking branches.

We participate in DIASInterbanking Systems S.A., which currently has 39 banks asshareholder-participants, including the Bank. DIAS Interbanking Systemsprovides interbank services such as check clearing, ATM networking, fundtransfers, payroll and pension services for the benefit of customers ofshareholder-participants.

***Retail banking***

*General*

All of our retail banking activities in Greece areconducted by the Bank. The Bank offers retail customers a number of differenttypes of deposit and investment products, as well as a wide range oftraditional services and products.

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The following tableillustrates our estimated market share in Greece for certain categories ofretail banking activities as at December 31, 2005 and 2006, the latestdate for which official statistics are available.

***OurApproximate Retail Market Share in Greece***

| ** **             | ** ** | **As at December 31,**        | ** ** |
|------------------------|------------|----------------------------------------------|------------|
| ** **             | ** ** | **   2005   ** | ** ** | **   2006   ** | ** ** |
| Mortgage lending       |       |                                         | 25.3       | % |   |   | 24.2 | % |   |
| Consumer loans         |       |                                         | 18.9       | % |   |   | 17.8 | % |   |
| Credit cards           |       |                                         | 19.6       | % |   |   | 17.2 | % |   |
| Funds under management |       |                                         | 24.6       | % |   |   | 29.0 | % |   |
| Core deposits(1)       |       |                                         | 29.7       | % |   |   | 28.8 | % |   |

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(1)             Coredeposits consist of sight deposits and savings accounts and exclude repos andtime deposits.

Despite decreases in market share in retail, the Bankmaintained a strong market position and profitability. The Bank’s managementbelieves that we have significant competitive advantages over other banksoffering retail banking services in Greece, including our strong corporateimage and name recognition in Greece, our large customer base and our extensivenetwork of branches and ATMs. In addition, the Bank continues to developother channels of distribution, such as mobile telephone banking and internetbanking. These advantages help the Bank to access the largest and most diversedepositor base in Greece, providing the Bank with a large, stable and low-costsource of funding.

The Bank placesparticular emphasis on continuing to improve the speed and flexibility of ourservices to our retail customers. The Bank’s strategy for accomplishing thesegoals has included:

·       investingsignificantly in information systems;

·       reorganizingand consolidating operations; and

·       developingnew retail investment products, in co-ordination with other companies in theGroup, to meet our customers’ needs.

The Bank has maintained afavorable market position, according to the Bank of Greece, maintainingdeposits in a competitive interest rate environment due to the loyalty of ourcustomers, our widespread presence throughout Greece providing customers withaccess to branches and ATMs and our favorable brand recognition.

*Products*

The Bank offers a widerange of products for retail customers, including savings accounts, currentaccounts and time deposits. The Bank expects full implementation within thenext couple of years of our Customer Relationship Administration system, acomputer system also known as “CRA”, designed to improve our services to retailcustomers in the mortgage and consumer loan segments. We believe that the CRAsystem will enhance our cross-selling capabilities by enabling the Bank totarget specific retail customers in marketing our complementary products and services,such as bancassurance, as we do for our corporate customers.

*Savings andInvestment Products*

Our savings and investmentproducts are offered in both euro and foreign currencies. Domestically, we had €44.1billion of total deposits as at December 31, 2006. In response to customerdemand, the Bank has increasingly begun to offer new investment products withhigher yields. These products include repurchase agreements between the Bankand our clients (backed by Greek Government bonds), Greek 

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Governmentbonds from the Bank’s proprietary portfolio, capital guaranteed-principalproducts and a wide range of mutual funds and unit trust products provided byDiethniki Mutual Fund Management S.A., which is 100% owned by Group companies.See “*—MutualFunds*”*,* in thisItem 4.B.

*Consumer CreditProducts*

The Bank holds a leading position in consumer retailbanking in Greece, according to data published by the Bank of Greece. Throughour Consumer Credit Division and our subsidiary, the National Management andOrganization Company S.A. (“NMOC”), established in 1972, the Bank offers ourcustomers a wide range of credit cards, personal and consumer loans and offerspersonal lending arrangements through third party retailers.

The consumer credit sector has grown significantly inrecent years. The Bank’s portfolio of consumer credit products amounted to €4,793.4million at December 31, 2006, compared with €4,115 million at December 31,2005, and accounted for approximately 14.67% of the Bank’s loan portfolio in2006, compared to approximately 14.9% of the Bank’s loan portfolio as at December 31,2005

In 2004, the Bank of Greece removed maximum limits onconsumer credit, enabling the Bank to offer a wider variety of consumer andpersonal loans to private individuals. In addition, the Bank increased theamount and variety of revolving credit facilities (unsecured loans andoverdrafts) and special purpose fixed term loans (such as vacation loans andcar loans) available to retail customers. As a result, the Bank has focusedincreasingly on consumer and personal lending, which accounted for 10.0 % ofits total loan portfolio as at December 31, 2006, compared to 9.6% as at December 31,2005. Although the amount of consumer loan and personal loan balances grew,their share of total loan percentage stayed constant due to 19.3% growth in theBank’s total loan portfolio. At December 31, 2006, the Bank’s portfolio ofconsumer and personal loans amounted to €3,288million, compared to €2,646 million in 2005.

Fast Line, the newly established telephone serviceunit of consumer lending, managed more than 350,000 calls in 2006 and initiatedmore than 20,000 new loans. The success of the unit has been instrumental inthe growth of consumer lending both in terms of new acquisitions but also as aservice and information center for consumer lending customers.

Despite significant competition, we continue tomaintain a strong position in the Greek credit card market by managing a creditcard portfolio totaling €1.5 billion as at December 31,2006, approximately the same amount as at December 31, 2005.

The Bank, through NMOC, is the main issuer of creditcards under the MasterCard brand in Greece. The Bank also issues credit cardsunder the VISA brand through NMOC. The total number of new cards issued in 2006amounted to 170,000 compared to 237,000 in 2005.

The Bank was the first Greek bank to introducechip-based technology credit cards in the Greek market by launching newMasterCard & VISA credit cards, and replacing existing ones, under thename “go” together with the parallel introduction of a multi-merchant “customerloyalty” program named “go National”. A total number of 581,000 “go” cards werein circulation at December 31, 2006, and a full conversion of the Bank’sexisting classic and Gold credit card portfolios (MasterCard & VISA)is scheduled by the end of 2007, at which time a total number of approximately1 million “go” cards are expected to be in circulation.

The Bank also offers Goldand Platinum MasterCards, both of which target high profile customer segments.The Bank has sought to reach a broader group of customers by increasingofferings of co-branded and private label credit cards (which bear the NBG nameas well as that of another entity, such as a supermarket) and also by promotingcredit cards through new channels such as telemarketing companies (callcenters) or promoters based at hyper-markets. On January 25, 2007 the Boards ofDirectors of the Bank and NMOC decided the merger of the two companies throughabsorption of the latter by the Bank. 

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The dateof the Merger Balance Sheets has been set as 31 March 2007. The bank holds 100%of NMOC shares, so that NBG’s share capital will not increase following thecompletion of the merger.

*Mortgage Lending*

The Bank is the leading mortgage lender in Greece,with a market share of 24.2% in 2006. As at December 31, 2006, the Bank’soutstanding mortgage balances amounted to €13,368million, compared to €11,147 million as at December 31, 2005,and constituted 40.92% of its total lending to enterprises and households. Thevolume of new loan disbursements outperformed -albeit by only 1.1%-, the figureof 2005, reaching €3,538million in spite of the fact that 2005 was an exceptional year, registering anincrease of 34% compared to 2004, an increase driven by the anticipatedproperty tax reforms, that were expected to take place at the beginning of2006. Mortgage products are offered mainly through the Bank’s extensive branchnetwork, although great emphasis is placed in expanding the use of alternativedistribution channels like real estate agents, construction companies andinsurance brokers. In May 2006, there was an agreement with EthnikiInsurance, the Group’s insurance company, to use its network of agents in orderto widen our distribution base. In the first quarter of 2007, loans generatedthrough third parties had reached almost 16% of new disbursements, compared toonly 7.2% for the same period in 2006.

The Bank offers a wide range of mortgage products,with floating, fixed, or a combination of fixed and floating interest rates.All floating rate products are indexed, based on the European Central Bank’s (“ECB”)base rate, plus a fixed spread, depending mostly on the customer’s creditprofile and the amount borrowed. They are also offered with the option of agrace period, with interest payments only, for up to five years.

With interest rates rising in 2006, we placed agreater emphasis on the promotion of fixed rate mortgages, following an overalltrend in the Greek mortgage market towards loans with an initial fixed rateperiod of up to 6 years. In the first quarter of 2006, variable rate loans(including loans with an initial 1 year fixed rate period) accounted forapproximately 92% of our newly issued mortgage loans. In the first quarter of2007 approximately 73% of all new loan disbursements had a fixed rate period of3 years or more.

Currently the two most successful products offered bythe Bank are “ESTIA 1+3” and “ESTIA 1+5”, both of which offer a low triggerrate for the first year and a higher, but still very competitive, fixed ratefor an extra 3 or 5 years, respectively, turning to a variable rate for theremaining duration of the loan. These two products combined accounted forapproximately 56% of all new loan disbursements in the first quarter of 2007.

Mortgages in Swiss francs were introduced in January 2007that have similar characteristics to the “ESTIA” loans in Euros, with a verylow trigger rate for the first year, and a higher fixed rate for the next3 or 5 years. After the fixed period, the interest rate becomes floating,using the 1M-Libor in Swiss francs as the reference rate, plus a spread. “ESTIACHF” products offer protection for up to 6 years against parity changes inexcess of 5%, at a premium of 20 basis points. Loans denominated in Swissfrancs carry much lower interest rates than those in Euros.

An important development regarding the quality ofmortgage credit is the option offered to all customers to obtain a lifeinsurance plan together with their mortgage. This new plan has been verysuccessful, with approximately two-thirds of new mortgages in 2006 carrying alife insurance plan.

The Bank’s mortgage loans are now offered withmaturities of up to 40 years. Loans guaranteed and/or subsidized by the GreekGovernment to special minority groups and victims of natural disasters, forwhich maturity is determined by law, range from 15 to 22 years. The overallaverage duration for new loans is around 25 years.

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The Bank’s mortgage operations have been furtherenhanced by the upgrading of its credit evaluation process to a more elaboratecredit-scoring model in line with Basel II requirements. Consequently, creditquality will be closely monitored and is expected to further improve. The periodrequired for mortgage approval has been shortened through the use of electronictransfer of applications between our branches and the credit-processing centerof the Mortgage Credit Division.

The mortgage underwritingprocess, including credit approval and granting procedures, is centralizedunder the Mortgage Credit Division. The rationale behind this organizationalstructure is to ensure the correct application of credit policy, through auniform, accurate and consistent decision-making process.

*Small and MediumEnterprises Division*

In 2002, we establishedthe Small Business Credit division, which was renamed to Small and MediumEnterprises (“SMEs”) Division on February 15,2005. The division’s purposeis to enhance and personalize services offered to our business clients andparticularly to increase the Bank’s penetration in the professional and smallbusiness segment. The Small Business Credit division administers creditunderwriting of loans to professionals and small businesses with turnover of upto €2.5million and is part of the Bank’s retail banking operations. It comprises threecredit centers in Athens, Thessaloniki and Patras. Since its inception, theSmall Business Credit division has launched lending products for SMEs andprofessionals, including the “Open Professional Plan” offering a revolvingcredit facility to borrow up to 100% of total annual turnover. In 2006, theBank introduced “AMESOS”, a same day approval loan application process, whichcovers a wide range of a SME’s financing needs up to €50,000,with a longer repayment period and a wider choice of interest rates. Inaddition, the Bank continued the promotion of financing products to a widervariety of business categories, including restaurant and rented holidayaccommodations, wedding and christening accessories businesses. Further, theSMEs Division offers medium-to-long term loans geared towards medium-to-longterm working capital needs or financing of fixed assets, such as equipment andoffice renovations.

***Commercial banking***

***General***

The Bank’s commercial loanportfolio in Greece comprises approximately 50,000 corporate clients, includingSME’s, including most of the largest corporate groups in Greece. As a Group, weare able to offer our corporate clients a wide range of products and services,including financial and investment advisory services, deposit accounts, loans(denominated in both euro and other currencies), foreign exchange, insuranceproducts, custody arrangements and trade finance services.

*Lending activities*

The Bank lends to all sectors of the economy. As at December 31,2006, domestic commercial lending (including to the public sector) accountedfor 42.23%, or €13,126 million, of theBank’s total domestic loan portfolio. Traditionally, the Bank has focused onlending to large- and medium-sized domestic corporations,especially industrial corporations, which accounted for approximately 7.86% ofits total domestic loan portfolio as at December 31, 2006. The Bank hasseveral clients to which it has lent significant amounts; its ten largestindividual performing loan exposures totaled €2,361 million as at December 31,2006, and accounted for approximately 18% of the Bank’s total domesticcommercial loan portfolio.

The Bank offers:

·       corporateaccounts with overdraft facilities;

·       foreigncurrency loans;

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·       variablerate loans; and

·       currencyswaps and options (mostly Euro-related) for corporate customers.

The Bank lends primarily in the form of credit lines,which are generally at variable rates of interest with payment terms of up to12 months. In addition, the Bank provides letters of credit and guarantees forour clients. See Item 5.E “*Operating and Financial Review* and *Prospects—Off Balance Sheet Arrangements*”. At December 31, 2005 and2006, the Bank had outstanding letters of credit and guarantees amounting inaggregate to €5.7 billion. Most loans are collateralized toa certain degree, although Greek law imposes significant delays in foreclosingon collateral. See Item 4.E, “*Assets—Loan Portfolio*” and “*CreditQuality—Risk Management—Loan Approval Process*”. As at December 31,2006, the Bank’s commercial loan portfolio totaled €14.5 billion, or 44.3% ofthe total amount of loans outstanding.

Reducedinflation and increased competition in the Greek market have resulted in asignificant decline in interest rates over the past few years. While the ECBcontrols the prime-lending rate, which is the effective minimum interest rate,the Bank has often played a leading role in setting interest rates in the Greekmarket. The table below sets forth certain key interest rates charged and thesavings rate paid by the Bank following the most recent interest rate cuts bythe European Central Bank on May 20, 2002, December 10, 2002, March 17,2003 and June 12, 2003. Following the ECB rate increases at the end of2005 and the first half of 2006, the Bank raised its savings rate accordingly.

| **Interest rate on:**        | ** ** | ** **    | ** ** | **As at  May 20,  2002** | ** **    | **As at  December 10,  2002** | ** ** | **As at  March 17,  2003** | ** ** | **As at  June 12,  2003** | ** ** | **As at  May 1,  2005** | ** ** | **As at  March 17,   2006** | ** ** | **As at  June 28,  2006** | ** ** | **As at  April 2,  2007** | ** ** |
|----------------------------------------|------------|---------------|------------|------------------------------------|---------------|-----------------------------------------|------------|--------------------------------------|------------|-------------------------------------|------------|-----------------------------------|------------|--------------------------------------------|------------|-------------------------------------|------------|-------------------------------------|------------|
| Prime lending rate for working capital |       | 6.25%         |       |                               | 6.00%         |                                    |       | 5.90%                                |       | 5.75%                               |       | 5.75%                             |       | 5.75%                                      |       | 6.00%                               |       | 7.00%                               |       |
| Prime lending rate for fixed assets    |       | 6.50%         |       |                               | 6.25%         |                                    |       | 6.15%                                |       | 6.00%                               |       | 6.00%                             |       | 6.00%                                      |       | 6.25%                               |       | 7.25%                               |       |
| Variable rate mortgages                |       | 5.60%         |       |                               | 5.60%         |                                    |       | 5.60%                                |       | 5.50%                               |       | 5.50%                             |       | 5.50%                                      |       | 5.50%                               |       | 6.15%                               |       |
| Savings rate                           |       | 0%–2.25% |       |                               | 0%–1.90% |                                    |       | 0%–1.70%                        |       | 0%–1.40%                       |       | 0.30%–1.40%                  |       | 0.50%–1.40%                           |       | 0.50%–1.65%                    |       | 0.65%–2.15%                    |       |
| Personal loans                         |       | 10.20%        |       |                               | 9.95%         |                                    |       | 9.95%                                |       | 9.95%                               |       | 9.95%                             |       | 11.00%                                     |       | 11.00%                              |       | 12.25%                              |       |
| Consumer loans                         |       | 9.50%         |       |                               | 9.50%         |                                    |       | 9.50%                                |       | 9.25%                               |       | 9.25%                             |       | 9.25%                                      |       | 9.25%                               |       | 10.75%                              |       |

 

We also participate in,advise on and arrange large syndicated loans with both domestic and foreignbanks. Generally, these loans finance large domestic and internationalinfrastructure projects and borrowings by large corporations andstate-controlled entities. For example, the Bank participated as co-arrangerand underwriter in the financing of the Athens ring-road and the Rion-Antirrionbridge in Greece, the Birmingham Northern Relief Road in Britain, the HighSpeed Line Railway and the Rijnmond Power Plant in Holland, the Maritsa EastPower Plant in Bulgaria and the Stendal Pulp Mill in Germany. NBGI, the Bank’sLondon-based investment banking subsidiary, is also active in arranginginternational syndicated loans and acting as an advisor on projects in privatesector transactions.

*Shipping finance*

Greece is a maritime nation with a long tradition inship-owning and is one of the world’s largest ship-owning andship-flagging nations. Shipping remains an important sector of the Greekeconomy and the Bank is one of the most active participants in the localmarket, as well as one of the strongest competitors to foreign banks involvedin shipping finance in Greece, according to an analysis of shipping financemade by Petrofin SA. The Bank has traditionally provided financing for many ofthe largest Greek shipping companies. As at December 31, 2006, outstandingshipping loans were approximately €1,258.6 million,representing approximately 3.9% of the Bank’s total loan portfolio as at thatdate.

The Bank’s shipping finance activities are carried outboth through its Piraeus and London branches, the former of which is dedicatedexclusively to shipping finance. Loans originating in London accounted for20.9% of the Bank’s loans in this sector as at December 31, 2006. The Bankplans to continue with its 

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strategy of targetingfirst-tier shipping groups with respect to both our conventional shipping financeand our syndicated loan activities in order to improve quality, spread risk andenhance the profitability of our shipping loan portfolio. Most of our shippingloans are secured by vessels.

The shipping industry is highly cyclical, experiencingvolatility in revenues and cash flows resulting from changes in the demand andsupply of vessel capacity. The demand for vessels is influenced by, among otherfactors, global and regional economic conditions, developments in internationaltrade and changes in seaborne and other transportation patterns. None of thesefactors is within our control. Nevertheless freights are expected to bemaintained in a high level for 2007.

The Bank’s portfolio of loans to the shipping industryhas been adversely affected by loans originated in the early 1990s. As at December 31,2006, 2.2%, or €27.7 million, of the Bank’sloans to the shipping sector were non-performing. Most of the Bank’snon-performing loans to this sector originated in the beginning of the 1990s orearlier. Non-performing loans to the shipping sector accounted forapproximately 2.4% of the Bank’s total non-performing loans as at December 31,2006, compared to 4.4% in 2005 and 4.8% in 2004. The Bank has experienced asignificant decrease in non-performing loans attributable to this sector since1998, when new credit controls were implemented. See Item 4.E, “*—Credit Quality*”.

The Bank has adoptedstrategies and procedures to more effectively evaluate shipping credits. Eachexisting shipping loan is subject to periodic (at a minimum, annual)performance reviews. This approach has delivered positive results and the Bank’smanagement believes that it will result in continued improved performance inthis sector in the next few years. Loans related to the ferry business, represent22.2% of our shipping loan portfolio as at December 31, 2006.

*Non-PerformingLoans*

The Bank’s management hasfocused on reducing the level of the Bank’s non-performing loans, definedgenerally as those loans where principal or interest is more than 180 daysin arrears. In recent years, management has taken steps to reduce the level ofnon-performing loans. Our policy for writing off non-performing loans, inconjunction with growth in the Bank’s total loan portfolio, has resulted in thelevel of non-performing loans on our balance sheets declining fromapproximately 18.3% of total loans as at December 31, 1995 toapproximately 3.5% of total loans as at December 31, 2006.

***Investment Banking and Brokerage-Related Activities***

The Bank andcertain of our subsidiaries (principally NBGI, National Securities SA and NBGIPrivate Equity) offer a wide range of capital markets and advisory services,including:

·       corporatefinance advisory services;

·       underwriting;

·       venturecapital;

·       privateequity;

·       equityand debt financing;

·       stockbrokerage;

·       custodianservices; and

·       privatebanking.

The provision of capitalmarkets and advisory services in Greece has become increasingly competitive,with a number of banks and brokerage houses participating actively in thisarea. However, we believe that 

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our planto reorganize our business to combine all of the investment banking activitiesof the Group and our existing presence in the marketplace will enable us tocapture a significant share of any growth in the Greek market for investmentbanking and brokerage services.

***InvestmentBanking Activities***

In recent years, the Bank has maintained one of theleading market shares in capital markets activities in Greece, according to ouranalysis of data published by the Bank of Greece, particularly with regard topublic offering activity. Over the past five years, the Bank has acted asunderwriter in 40 out of 48 domestic private sector IPOs. During the sameperiod, the Bank has participated in all of 7 privatization offerings in Greece,while being one of the lead managers in the largest offerings in Greece.According to the Bank’s internal statistics, the Bank’s market share ofunderwritten offerings of equity securities by Greek issuers, in terms ofunderwritten amount, was approximately 26% in 2006, representing anunderwritten amount of €75.4million, andapproximately 21% in 2005, representing an underwritten amount of €123.5million.

In addition to our domestic activities, we alsoconduct investment banking business in London and New York through NBGI, whichalso has a private equity and venture capital business conducted in its Londonand Athens offices.

During 2006, NBGI developed its position as a leadingadvisor in the Greek corporate finance advisory investment banking business,according to our analysis of publicly available information. NBGI has acted asa leading advisor to the Greek Government on major international transactions,and has also undertaken a series of successful advisory projects with Greek andinternational corporate clients, advising Unilever on its acquisition of theElais minorities, Delta Holdings on the merger with Chipita and the absorptionof Goody’s and General Frozen Foods, and Athens International Airport on itscapital restructuring. NBGI also acted as lead advisor to the Greek Governmenton the €1.8 billion IPO of Postal Savings Bank. NBGI’sCorporate Finance team was involved in most key tender offers of 2006, actingeither on behalf of the offeror (for example with Nestle and Unilever) oradvising the target company (for example Hyatt and Egnatia Bank). In 2006, NBGI’sEquity Capital Markets team took advantage of its unique placing power andpositive market conditions to firmly establish NBGI as one of the leadinginternational investment banks for Greek equity offerings. NBGI participated inmost key Greek transactions during the year, including the secondary offeringof Motor Oil, and the rights issue of the Bank and Forthnet. NBGI had revenuesof €14.7and €27.3million in 2005 and 2006 respectively.

The Bank is also active inproject finance, and has provided project finance advisory services to theGreek Government in a number of major infrastructure projects over the past 10years, including the Athens International Airport, the Athens Ring Road, theRion-Antirrion Bridge, the Thessaloniki Metro Project and the Greek MotorwaysConcession Projects.

***StockBrokerage***

National Securities SA is our brokerage arm and is amember of the ATHEX. Its customers are able to execute securities purchaseorders through on-line connections in the Bank’s branch network that allow forrapid execution (subject to market conditions and rules). Over the last threeyears, National Securities SA. has attracted institutional clients in Greeceand abroad. As at December 31, 2006, National Securities SA had a marketshare of 11.62% of trades brokered by total trading volume on the ATHEX,ranking third in terms of total trading volume, compared with a 17.08% marketshare held by its largest competitor, EFG Securities and 12.25% of P&KSecurities. In 2005, its market share was 12.88%.

On March 21, 2007 the Bank completed theacquisition of P&K Investment Services SA including its brokeragesubsidiary P&K Securities SA and its mutual funds subsidiary P&K MutualFunds Management SA which was subsequently sold in May 2007, for a totalconsideration of €48.7 million. Togetherwith 

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National Securities SA,this acquisition will form the leading brokerage company in the Greek equity capitalmarkets, which will also focus on playing an active role in the SEE region.

P&K Securities SA is amember of the ATHEX, the Athens Derivatives Exchange (“ADEX”) and EUREX.Located in Athens, it operates 9 branches in major Greek cities. Its customersconsist of individuals as well as foreign and Greek institutional investors. Individualinvestors are offered an option of advisory or shelf-directed brokerage, whichis feasible through an online package giving access to up-to-the-minuteresearch and account information in addition to trades execution. As a memberin ADEX P&K Securities SA is qualified to operate as a market maker.

***CustodianServices***

The Bank offers custodian services to our foreign anddomestic institutional clients who hold securities listed on the ATHEX, as wellas remote settlement and custody services on the Cyprus Stock Exchange (“CSE”).The Bank offers trade settlements, safekeeping of securities, corporate actionprocessing, income collection, proxy voting, tax reclamation, brokerageservices, customized reporting, regular market flashes and informationservices. The Bank also acts as global custodian to our domestic institutionalclients who invest in securities outside Greece.

The Bank acts as an agentfor approximately 105 domestic institutional clients (4 mutual funds,1 investment company, 1 financial services company, 27 insurance companiesand 72 pension funds) and 37 foreign institutional clients, includingseveral leading global custodians, as at December 31, 2006. The Bank alsooffers custodian services to private Greek investors, and had approximately155,203 active custody accounts as at December 31, 2006. In addition, theBank has approximately 24,000 customers having only government debt in theirportfolio and approximately 195,000 customers maintaining only Mutual FundUnits in their portfolios.

***Paymentservices***

The Bank offers paymentservices to our clients participating in all local interbank payment channels.The Bank is also a member of the euro interbank channels of TARGET, EBA forEuro 1, Step 1 and Step 2 services. As a member of Step 2, the Bank is themain Greek entry point for Eurozone payments. For payments, especially outsidethe Eurozone, the Bank maintains a global network of correspondent banks. TheBank is currently in the process of implementing a major program to centralizeits payment operations.

***VentureCapital***

In 2006, NBGI implemented a number of structuralchanges, increasing its funds under management to €420million from €320million in 2005 (including undrawn amounts). Its activities focused on threemain investment areas: the UK and Western Europe, Greece and other SEEcountries, and technology.

During 2006, the UK fundmade its third successful exit, selling an investment it had held since January 2001.The UK fund also made its final two new investments during the year. A secondfundraising was initiated in 2006, which is expected to hold a first close inearly 2007. In Greece and the SEE region, NBGI Private Equity Ltd. (“NBGIPrivate Equity”), a subsidiary of NBGI, now manages targeted funds of €200million and has organically grown teams in London and Athens. NBGI PrivateEquity has established representative offices in both Romania and Bulgaria tosource and take advantage of the buy-out and expansion capital opportunitiesthat these markets provide. The NBG Technology Fund completed its firstsuccessful exit in 2006, with the sale of 54% of its holding in its investmentin Direct Energie. The fund was also active in making two new investments,under its brand “NBGI Ventures”.

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***Mutual Funds***

Our domestic fundmanagement business is run by Diethniki Mutual Fund Management S.A. (“Diethniki”)which is 100% owned by Group companies. Diethniki manages funds which are madeavailable to our customers through the Bank’s extensive branch network.

As at December 31,2006, Diethniki’s total assets directly under management were €7.2billion, a 5% increase from 2005. Diethniki’s market share in Greece was 29% asat December 31, 2006, compared to 24.6% as at December 31, 2005,according to the Association of Greek Institutional Investors.

Diethniki offers a totalof 41 mutual funds, 28 under the Delos brand name which Diethniki managesdirectly, and 13 under the NBG SICAV brand name which are managed throughintermediaries NBG Luxembourg Holding and Lux Finance Holding, which combinedinclude securities in both the Greek and leading international markets with arange of investment products. In 2005, Diethniki expanded its range of mutualfunds with the introduction of NGB Synesis Growth Strategy II, a productcombining potentially higher returns and initial capital guarantee, and DelosRegular Income for investors wishing to invest over the long-term whilereceiving any gains at preset intervals in the form of regular income. During2006 Diethniki strengthened its position among the Mutual Fund ManagementCompanies in the Greek market. More specifically the company increased itsmarket share to 29% on December 31, 2006 from 24.6% on December 31,2005 and managing approximately one-third of the assets in the Greek mutualfund market.

Diethniki released sevennew innovative products in 2006 which exceeded €413million in sales (6% of its total sales), despite their late release to themarket. These products are characterized by high quality standards and competitiveness.The Bank’s management believes that this qualitative shift will deliverbenefits for our profitability in the years ahead, as well as substantiallyenhance customer retention. The following products are in included among ournew releases.

*Delos Synthesis - Fund of Funds*

Delos Synthesis iscomposed of selected mutual funds from all over the world which fulfillspecific high quality standards regarding the long term returns, the risk ratioand their high ranking.

DelosSynthesis consists of four separate mutual funds (Fund of Funds) which aredifferentiated depending first on their investment category and second on theirinvestment objective and which cover almost the whole range of investors’ needsand goals.

·       DelosSynthesis Best Blue—Fund of Funds Bond

·       DelosSynthesis Best Green—Fund of Funds Balanced

·       DelosSynthesis Best Yellow—Fund of Funds Balanced

·       DelosSynthesis Best Red—Fund of Funds Equity

*Delos Delta*

In thefinal quarter of 2006, the following two innovative mutual funds wereintroduced in the Greek market:

·       DelosDelta Sky—Domestic Bond Fund

·       DelosDelta Smart—Foreign Bond Fund

These funds offer a newinvestment concept as they combine high returns (depending on the course ofselective stock index) and initial capital protection.

Morningstar Inc. evaluated the quality of Delos MutualFunds & NBG Funds SICAV in 2006, and 35% of the mutual funds managedby Diethniki obtained four or five stars.

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We currently intend to expand our fund managementbusiness further into other countries in which we operate.

Thetotal value of the funds we have managed since 2002 is illustrated in the tablebelow.

| **As at December 31,** | ** ** | ** **                       | ** ** | **Funds under  management** | ** ** | **Market share** | ** ** |
|---------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|-----------------------|------------|
| ** **                            | ** ** | **€ in billions** | ** ** | **%**                            | ** ** |
| 2002                                  |       |                             | 4.2        |                             |       |                  | 16.7       |   |   |
| 2003                                  |       |                             | 7.7        |                             |       |                  | 25.3       |   |   |
| 2004                                  |       |                             | 8.5        |                             |       |                  | 27.1       |   |   |
| 2005                                  |       |                             | 6.9        |                             |       |                  | 24.6       |   |   |
| 2006                                  |       |                             | 7.2        |                             |       |                  | 29         |   |   |

 

***Private Banking***

The Bank launched our Private Banking operations in2003, and currently operates both domestically and internationally through ourinternational private banking units in London and Guernsey.

Private Banking provides high net worth clients withhigh quality service and a wide scope of investment choices following ananalytical evaluation of the customer’s investment profile. Our aim is to fullycover the customer’s objectives through the provision of innovative servicesand products.

We have agreed with established investmentinstitutions to distribute investment products to our clientele , such asmutual funds, hedge funds, and structured products. In addition, we providespecialized investment products, such as fund of hedge funds and private equityproducts to a limited number of highly experienced clients.

As at December 31, 2006 Private Banking aggregateassets under management were €2.1 billion, an increaseof 26% compared to €1.7billion in 2005.

Year 2006 was also a year of recognition for NBG’sPrivate banking, as it received the second place in the relevant surveyorganized annually by the Euromoney magazine.

To further improve ourcustomers’ service, we intend to launch three new investment centers as well asthe provision of discretionary investment services, thus completing the scopeof offered investment services.

***Treasury Activities***

The Bank and eachof our banking subsidiaries carry out their own treasury activities. Theseactivities include:

·       GreekGovernment securities trading;

·       foreignexchange trading;

·       interbanktrading in euro and other currency deposits;

·       foreignexchange forwards trading;

·       repurchaseagreements;

·       corporatebonds; and

·       derivativeproducts, such as options and interest rate and currency swaps.

The Group’s Treasury is active across a broad spectrumof capital market products and operations, including bonds and securities,interbank placements in the international money and forex markets, and 

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market-traded and OTCfinancial derivatives. It supplies the branch network with value-added depositproducts, and the client base includes institutions, large corporations,insurance funds and big private-sector investors. In general, the Bankand our subsidiaries enter into derivatives transactions for economic hedgingpurposes or in response to specific customer requirements. The Bank also tradesactively on a proprietary basis, primarily in Euro-denominated Greek Governmentsecurities, and to a lesser extent, in the spot foreign exchange market and isa general clearing member in the Eurex derivatives exchange. In recent years,the Bank’s treasury-related activities have represented a significant source ofrevenues. In 2006, total turnover for foreign exchange trading and money markettransactions by the Bank’s central dealing room in Athens was approximately €118billion and €942billion, respectively.

In addition, our dealing rooms promote and providetreasury products and services. Our principal dealing rooms are located inAthens and London. We also operate small dealing rooms in Sofia, Bucharest, andSkopje. In addition, we have a dealing room in Thessaloniki to provide coverageof our clients in northern Greece.

The Bank is active in theprimary and secondary trading of Greek Government securities, as well as in theinternational Eurobond market. The Bank is a founding member of the Group ofGreek Government Securities Primary Dealers which was established by the Bankof Greece in early 1998. In 2006, according to Bank of Greece data, the Bankranked first in terms of volume traded among 22 primary dealers in governmentbonds traded through the Electronic Secondary Securities Market.

***Other Financial and Related Services***

We also offer awide range of other financial and related services directly through the Bankand indirectly through specialized subsidiary companies. These servicesinclude:

·       leasing;

·       factoring;

·       consultingand professional training; and

·       real estate management andwarehousing.

*Leasing*

We began leasing activities in 1990 through oursubsidiary, Ethniki Leasing S.A. (“Ethniki Leasing”). Ethniki Leasing is activein the leasing of land and buildings, machinery, transport equipment, furnitureand appliances, and computer and communications equipment. As at December 31,2006, Ethniki Leasing had assets of €640 million and revenuesof €32million. In addition to Ethniki Leasing, we own three other leasing companies:Interlease AD in Bulgaria, Eurial Leasing S.A. in Romania and Finans Leasing inTurkey.

Furthermore, on May 30, 2007 the Bank acquired from TBIF FinancialServices BV, the 100% of the share capital of TBI Lizing d.o.o, a leasingcompany, for the amount of EUR 2.5 million.

*Factoring*

We have been offeringfactoring services since 1996, including domestic factoring services such asdebt collection, management and account monitoring and advancing of funds forcompanies’ outstanding claims. Internationally, we offer export credit, creditrisk coverage, monitoring services, management and debt collection services.Factoring services are provided through the Bank’s corporate credit centers,which comprise a specialized division of the Bank. The Bank’s corporate creditcenters also provide lending services to small- and medium-sized enterprises,offering a synergistic complement of services to these clients.

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*Consulting and Professional Training*

Ethnodata S.A. and itssubsidiary, Ethnoplan, both Group companies, provide training and developmentin the area of information systems and software primarily to other companies inthe Group. Ethnodata also provides IT consultancy services within the Group andto third parties. In addition, the Bank runs a training center for itsemployees as well as for other banks in Greece and abroad. The Bank’s trainingcenter offers training courses and participates in programs funded by the EU.

We also engage in businessconsultancy services through Planet S.A., a business consultancy firm based inAthens in which the Bank holds a 31.18% stake.

*Real Estate Management*

The Bank engages in realestate management activities, including warehousing and third-party propertymanagement. As at December 31, 2006, the Bank owned 1,506 real estateunits, 1,072 of which were buildings the Bank acquired for our own businesspurposes or through seizure of collateral on loan foreclosures. The book valueof those assets recorded at historical cost was €335.2million as at December 31, 2006. In addition, Ethniki Kefalaiou S.A., awholly-owned subsidiary of the Bank that is engaged in asset and liabilitymanagement, including asset liquidation, managed 56 properties with anaggregate book value of €16 million as at December 31, 2006. Mostof these properties have been bought in recent years from the Bank, whichacquired them on realization of collateral under non-performing loans. In linewith our strategy of streamlining our activities, we intend to continue todispose of certain non-core real estate holdings through Ethniki Kefalaiou S.A.For the year ended December 31, 2006, proceeds from the sale of land andbuildings by the Bank amounted to approximately €95.4 million and byEthniki Kefalaiou S.A. €2.3 million.

National Real Estateperformed warehousing functions and held real estate property as an independentsubsidiary. By June 2005, we had consolidated the remaining assets in ourreal estate portfolio that were unrelated to our principal financial servicesbusinesses into National Real Estate, with the goal of improving the managementof our real estate portfolio through economies of scale and facilitating ourprofitable development of those properties. On March 31, 2006, the Bankconsolidated the operations of National Real Estate. See Item 4.D, “*Property,Plants and Equipment*” for general information regarding ourreal estate holdings and Item 4.A, “*History and Development of the Company*”for information regarding our principal real estate divestitures in recentyears. The Bank intends to continue to divest real estate holdings.

**International Operations**

We operate, as a Group, in12 countries outside Greece. As at 31 December 2006, our internationalnetwork comprised 863 banking units outside Greece (including Bankbranches, subsidiaries and representative offices), which offer traditionalbanking services and financial products and services. The Bank has sevencommercial banking subsidiaries in Turkey, Bulgaria, Romania, FYROM, Serbia,Cyprus, and South Africa. Our Turkish subsidiary Finansbank also has acommercial banking subsidiary in Malta.

Our presence abroad hastended, in the past, to center on areas with strong concentrations of Greekimmigrants to whom we provide traditional banking services. Our policy, sincethe early 1990s, is to continue to rationalize our international network and tofocus on the Bank’s regional strength in SEE by strengthening our existingnetwork and expanding into growing markets that present low banking penetrationand greater profit margins and also to withdraw from mature markets wheregrowth prospects are limited. The sale of NBG Canada and Atlantic Bank of NewYork are consistent with that policy. We seek to develop, in particular, ourwholesale banking business by targeting major financial centers to which we canoffer Greek and Balkan lending exposure. Our retail banking presence in somegeographical areas may only be justified by our success in niche markets in whichwe have the ability to exploit competitive advantages.

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Since 2000, the Bank hassteadily built up a strong presence in SEE, through acquisitions and greenfieldstart-ups. The Bank’s regional strategy aims at diversifying our operations andenlarging our footprint to cover a region with attractive economic prospects.The Bank offers commercial banking services to customers in the region throughour branches and subsidiaries in Turkey, Bulgaria, Serbia, Romania, FYROM andAlbania.

***Turkish Operations—Finansbank A.S.***

*Overview*

On August 18, 2006, we acquired 46% of theordinary share capital, and 100% of the founder shares of Finansbank A.S. (“Finansbank”)a Turkish commercial bank headquartered in Istanbul. The sellers also agreedand undertook to attend any general meetings of the Finansbank and to vote suchnumber of shares they then own as is equal to the difference between 50.01% ofthe ordinary shares and the total number ordinary shares then owned by the Bankin accordance with the instructions and directions of the Bank. Based on that,it was deemed that the Bank obtained a controlling interest on August 18, 2006and as such this acquisition was within the scope of FAS 141 BusinessCombinations.  As a result of TurkishCapital Markets legislation NBG made a mandatory offer to minorityshareholders. During the mandatory tender offer period, we acquired a further43.44% of Finansbank’s outstanding ordinary shares in public hands. In April 2007,following an agreement signed in January of the same year, we sold 5% ofFinansbank’s shares to IFC. Following the mandatory tender offer and the saleof shares to the IFC, we acquired a further 0.2% of outstanding share capitalof Finansbank as of June 11, 2007. Finansbank’s group of financialcompanies includes FinansLeasing, FinansInvest, Finans Portfolio Management,IBTech and Finansbank Malta (together, “Finansbank Group”).

Finansbank is the fifth largest private bank in Turkeyand offers a wide range of retail, commercial, corporate, private banking andinternational trade finance services. In addition, financial leasing, capitalmarket, corporate finance, portfolio management and brokerage services areprovided by Finansbank’s subsidiaries. On December 31, 2006, Finansbankhad a network of 309 branches, of which 101 were opened during 2006 and 45since our acquisition in August 2006. In 2006, Finansbank’s customer basereached 3.3 million. On December 31, 2006, Finansbank had 7,751employees, a 19.5% increase from December 31, 2005.

In 2006, Finansbankcontributed €77.3 million in net profit to the Group. Asat December 31, 2006, Finansbank’s profits before tax were €111.7million. Total lending was €6,660.9 million on December 31, 2006,while deposits surpassed €5,943.9 million on December 31, 2006.Total assets of Finansbank as at December 31, 2006 were €10.7billion, accounting for 14.1% of our total assets. In 2006, 11% of the Group’sprofit from continuing operations (before taxes) was derived from Turkishoperations.

*Corporate Banking*

Finansbank’s Corporate BankingDepartment serves large scale corporate customers through its 8 branchesin the four largest cities in Turkey. Properly structured and tailor-madesolutions are offered to customers. In 2006, Finansbank’s market share was 40%in tourism, 35% in shipping finance and approached similar levels inconstruction and energy. One of the major accomplishments in 2006 was theimplementation of “Key Account Management”, a strategy based on the effectivecooperation of Finansbank’s different departments to create more opportunitiesto work with large conglomerates.

*Commercial Banking*

Finansbank’s CommercialBanking Department serves middle-size companies located in 21 cities in Turkey.The Commercial Banking Department operates through its Head Office departments,its 4 Regional Management offices (2 in Istanbul, 1 in Izmir and 1 inAnkara) and an extensive distribution 

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networkthat includes 47 branches. In 2006, the Commercial Banking Department continuedproviding advisory services, project finance loans and also all conventionalproducts for short term and long term needs of customers, varied by sectoraland regional requirements. The strategy of the Commercial Banking Department isto serve a wider range of customers as their “House Bank” while obtaining soundand sustainable profitability.

*Investment Banking*

Finansbank’s InvestmentBanking Department consists of Project Finance, Corporate Finance and TechnicalConsulting. The Investment Banking Department acts as a consultant and solutionpartner in its client relations while fulfilling client needs via medium-tolong-term loans and other products. Companies are provided with assistance andconsultancy in such fields as project finance, privatization, contract financeand real estate development, financial valuation, acquisitions, financialrestructuring, debt restructuring, syndication loans (including secondaryloans), country-based strategic market analysis and industrial analysis.

*SME Banking*

The SME Banking Divisionhas been serving Finansbank’s SME clients since 2003. Finansbank was the firstbank in Turkey to provide sector support packages, such as tourism andagriculture support packages, and it also pioneered the “Kobifinans” project toserve its clients’ information and consultancy needs through magazines,internet portals and call centers. By the end of 2006, the SME Banking Divisionwas active in 205 branches serving more than 250,000 clients with a marketshare of 11%. As at December 31, 2006, loans and deposits of the SMEBanking Division were approximately TRY 2.4 billion and TRY 1.5 billionrespectively.

*Retail Banking*

Specialized Retail Bankingservices were provided in 90% of Finansbank’s branches in eleven regions. Thenumber of customers actively using consumer banking products and services(excluding credit card users only) increased by 20% in 2006. In 2006,Finansbank launched the umbrella brand “EasyCredit” to enhance ease, speed andconvenience in application and repayment for all retail loan products. Tosupport this new concept, an innovative multi-channel distribution strategy wasdeveloped, including instant loan applications through mobile phones and theinternet. These “EasyCredit” channels and branches contributed to thesignificant increase in consumer loans in 2006.

Finansbank’s RetailBanking Division recorded significant loan growth in 2006, with retail loans(excluding credit cards) increasing 117% to TRY 2.7 billion, compared to TRY1.2 billion in 2005. Finansbank’s mortgage portfolio increased 123% from TRY0.8 billion in 2005 to TRY 1.7 billion in 2006. This growth resulted in amarket share increase in residential mortgage loans from 7.4% in 2005 to 9.0%in 2006. The car loan portfolio for individuals increased by 42% from TRY0.3 billion in 2005 to TRY 0.5 billion in 2006. The market share forindividual car loans increased from 5.8% in 2005 to 6.8% in 2006, due to thedevelopment of close relationships with distributors and dealers around thecountry through various co-marketing campaigns that offer subsidies and otherincentives. The consumer loan portfolio increased by 330% from TRY 0.1 billionin 2005 to TRY 0.4 billion in 2006, while the market share in consumer loansincreased from 1.05% to 2.34% during the same period.

*Mutual Funds*

In 2006, Finansbank andFinans Portfolio Management introduced several exchange traded funds (“ETF”):Dow Jones Istanbul 20 (“DJIST”); the first ETF in Turkey; Non-FinancialIstanbul 20 (“NFIST”) the first sector ETF in Turkey; Turkish Smaller CompaniesIstanbul 25 (“SMIST”); the first SME ETF in Turkey; and GOLDIST, the first goldETF in Turkey. While there was a considerable 

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decreasein the size of the Turkish mutual funds market, Finansbank’s market share inmutual funds grew due to the introduction of ETFs and the increased mutualfunds volume in OH (Automatic Account), which is a key product for consumerbanking.

*Debit and Credit Cards*

In 2006, Finansbank’sdebit card customers increased by 33%. The Retail Banking Division’s MicroBusiness Department serves professionals and small business groups, andexperienced substantial growth in 2006, increasing its customer base from 3,100in 2005 to 26,900 customers in 2006. The share of Micro Business in RetailBanking’s total loans had increased to 15% on December 31, 2006 from 3% onDecember 31, 2005, posting an average monthly growth of 20%.

As regards the number ofcredit cards, Finansbank maintained its position among the top five issuers in2006, with 2.6 million cards and a market share of 8%. The average netreceivables of credit cards increased 34%, from TRY 1.1 million in 2005 to TRY1.5 million.

*Internet Banking*

As at December 31,2006 Finansbank had 483,705 online banking customers, an increase of 22%compared to December 31, 2005. Unique visitors to Finansbank’s corporatewebsite reached 1,302,903 in 2006, an increase of 36% compared to 2005. In aneffort to inform customers regarding new developments and campaigns, the numberof e-bulletins to customers increased by 42% and the number of customers whoreceived the e-bulletin increased by 53%. Additionally, SMS messaging has grownby 30%.

*Private Banking*

The Private BankingDivision has been providing investment products and asset management servicesto high net worth individuals since mid-2006 through five Private BankingCenters and 32 Private Banking Corners located in Finansbank’s branches in allmajor cities throughout Turkey. As at December 31, 2006, Private Bankinghad TRY 1.5 billion assets under management and 5,000 registered clients.

*Finansbank’s subsidiaries*

The most significantsubsidiaries of Finansbank include the following:

Finans Invest

Finans Invest wasestablished in December 1996, and began operations in January 1997 onthe Istanbul Stock Exchange (“ISE”). The company provides a wide range offinancial services to both individual and institutional investors, includinginvestment counseling and brokerage services, portfolio management, fundinvestment services and corporate finance and international investmentservices. The company ranks fourth in trading volume of stocks on the ISE andhas a 5.42% market share. Finans Invest’s client portfolio was TRY 1,670,121thousand as at December 31,2006. Total assets of Finans Invest on December 31,2006 amounted to TRY 54,675 thousand and its net loss for the period from August 18,2006 to December 31, 2006 was TRY 2,189 thousand.

FinansbankMalta

Finansbank Malta was establishedtwo years ago and currently accounts for 4.5% of the total assets of theMaltese banking sector. Total assets of Finansbank Malta reached TRY 1,595,511thousand as at December 31, 2006 and its net income for the period fromAugust 18, to December 31, 2006 was TRY 15,070 thousand.

Finans Leasing

Finans Leasing wasestablished in March 1990. As at December 31, 2006 Finans Leasingranked third in the leasing sector with a total business volume representing amarket share of 7.9%. Finans Leasing’s 

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targetcustomer segment is SMEs and it was a pioneer in Turkey in identifying theinvestment needs of SMEs, targeting them as a distinct market segment. FinansLeasing has a diversified lease portfolio in terms of industries: construction(20.3%), agriculture (16%), health (13.0%), manufacturing (10.2%), textiles(9.4%), transportation and communication (7.6%) and metallurgy and mining(7,3%) in terms of minimum lease payment receivables as at December 31,2006. In 2006 Finans Leasing grew faster than the leasing sector in Turkey as awhole. Total assets of Finans Leasing reached TRY 678,834 thousand as at December 31,2006, and its net income for the period from August 18, 2006 to December 31,2006 was TRY 14,645 thousand.

Finans PortfolioManagement

Finans PortfolioManagement was established in September 2000. A financial innovator,Finans Portfolio Management currently manages four Exchange Traded Funds, 11Mutual Funds and one Closed-end Fund. Finans Portfolio Management also managesdiscretionary portfolios for high net-worth individuals and selectinstitutions. Finans Portfolio Management’s current market share of the companyincluding ETFs in mutual funds industry is 3.33%. Total assets as at December 31,2006 amounted to TRY 12,321 thousand, and its net income for the periodfrom August 18, 2006 to December 31, 2006 was TRY 798 thousand.

Finans InvestmentTrust

Finans Investment Trustwas established in 1995 and its shares have been traded on the ISE since 1996.It is a closed-end investment company, managing portfolios composed of capitaland money market instruments. Finans Investment Trust’s total assets amountedto TRY 25,508 thousand as at December 31, 2006, and its net income for theperiod from August 18, 2006 to December 31, 2006 was TRY 1,160thousand.

In May 2007,Finansbank applied to the General Directorate of Insurance in Turkey and hasreceived permission to establish Finans Emeklilik ve Hayat A.S. (“FinansPension”). This new company will complete its organizational preparations andobtain a licence to conduct life, personal accident and pension insurancebusiness, and is expected to commence operations shortly.

Selectedfinancial information with respect to Finansbank as at and for the period from August 18,2006 to December 31, 2006 is provided in the table below:

| ** **     | ** ** | **Turkish lira**  | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 19,746     |                   |       |   | 14,738 |   |   |
| Net Loans      |       |                   | 12,559     |                   |       |   | 9,374 |   |   |
| Total Deposits |       |                   | 12,820     |                   |       |   | 9,569 |   |   |
| Net Income     |       |                   | 295        |                   |       |   | 220 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of Turkish lira into U.S. dollarshas been made at the Noon Buying Rate of US$1.00 = 1.3398 Turkish lira asat June 11, 2007.

***SEE and other International Operations***

In addition to Finansbankin Turkey and its subsidiary in Malta, the Bank has six commercial bankingsubsidiaries in seven countries: NBG Cyprus, Stopanska Banka, based in Skopjein FYROM, United Bulgarian Bank AD, with its headquarters in Sofia, Bulgaria,Banca Romaneasca SA based in Bucharest, Romania, in which the Bank acquired a81.65% stake in 2003 (increased to 97.14% in 2005), Vojvodjanska Banka inSerbia in which the bank acquired a 99.4% stake in 2006 and the South AfricanBank of Athens. In 2006, international operations (excluding Turkey)contributed €253.5 million in net profit to the Group. Asat December 31, 2006, the profits before taxes stemming from ouractivities in SEE (Bulgaria, 

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Romania,FYROM, Albania and Serbia) excluding Turkey were €139.4million up 49% from €93.8million in 2005. Likewise total lending was €3.1 billion at December 31,2006, up 61.1% from December 31, 2005, while deposits surpassed €3.1billion at December 31, 2006, up 57.7% from December 31, 2005. At December 31,2006, the Bank’s international activities excluding Turkish operationsaccounted for 13.3% of our total assets. The total assets attributable to the Bank’sinternational operations as at December 31, 2006 were €20.8billion , a 159% increase from €8.0 billion as at December 31,2005. Fluctuation mainly relates to the acquisition of Finansbank during 2006.In 2006, 25% of the Bank’s profits (before taxes) was derived frominternational operations, excluding Turkish operations.

Our other internationalbanking operations include a wide range of traditional commercial bankingservices, such as extensions of commercial and retail credit, trade financing,foreign exchange and the taking of deposits. In addition, we offer shippingfinance, investment banking, leasing and brokerage services through certain ofour foreign branches and subsidiaries.

Our international bankingnetwork, apart from our Turkish network, is described below.

*National Bank ofGreece S.A.: Foreign Branches*

As at December 31,2006, the Bank had 54 foreign branches in five countries, including one in theUnited Kingdom, one in Guernsey, 50 in SEE (36 in Serbia and 14 in Albania),one in Cyprus and one in Egypt. Additionally, we have four overseasrepresentative offices (one in London, two in Australia and one in Turkey). TheLondon branch principally serves large corporate and shipping clients and alsooffers private banking services. The majority of assets and loans of the Bankattributable to our foreign branches are held in London. The Bank’s managementbelieves that SEE represents a significant growth area for our internationaloperations. See Item 4.B, “—*Strategy*”.Due to our close proximity to, and familiarity with, the region, the Bank’smanagement believes we will enjoy significant competitive advantages in SEEover other foreign and Greek banks. Currently, the Bank’s Balkan branches lendprimarily to certain of the Bank’s established Greek corporate clientsoperating in those countries, but also to certain local corporate clients thathave significant liquid assets and other collateral. In February 2007, theBank’s branch network in Serbia became a subsidiary under the name NBG A.D.Beograd.

Thetable below provides selected financial information of the Bank’s foreignbranches as at and for the year ended December 31, 2006, on a total basisbefore consolidation adjustments:

| ** **     | ** ** | **EUR**                | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 5,223      |                   |       |   | 6,977 |   |   |
| Net Loans      |       |                   | 1,859      |                   |       |   | 2,483 |   |   |
| Total Deposits |       |                   | 2,257      |                   |       |   | 3,015 |   |   |
| Net Income     |       |                   | 68         |                   |       |   | 91 |   |   |

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(1)             Solely for convenienceof the reader the translation of euro into U.S. dollars has been made at theNoon Buying Rate of US$1.00 = €0.7486 on June 11,2007.

The table above relatessolely to the Bank’s foreign branches and not to the branches of the Bank’sforeign subsidiaries.

*United BulgarianBank AD*

United Bulgarian Bank AD (“UBB”) is a commercial bankwith headquarters in Sofia, which provides retail and corporate financeservices in Bulgaria. We acquired 89.9% of the share capital of UBB in 2000,and currently hold a 99.9% interest in UBB. In 2006, the UBB branch networkcontinued to expand, opening 28 standalone branches in cities and townsthroughout Bulgaria and 11 in-store branches. At December 31, 2006, UBB’sdistribution network included 173 units (38 full functional branches, 107 basicbranches and 28 in-store branches). In 2006, UBB recorded 33.9% growth in itsloan portfolio compared to 

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2005, due to a 21.5%growth in corporate loans and 49.3% growth in its retail loan portfolio. In2006, UBB’s market share in Bulgaria was 10% for corporate loans, 16.5% forconsumer loans and 17% for mortgage loans, while it maintained its market shareof 11% in non-bank customer deposit base. As at December 31, 2006, UBBoperated 523 ATMs, representing a market share of approximately 15%, and 3,996POS terminals in Bulgaria, representing a market share of approximately 16%.During 2006, UBB was the bank with the highest number of issued internationalcredit cards in Bulgaria under the logos of MasterCard, VISA and VISA Electron,realizing a respective market share of 61%. UBB also holds a 15% market sharewith respect to debit cards in Bulgaria, according to market share data takenfrom statistics published by the Bulgarian National Bank.

Selectedfinancial information with respect to UBB as at and for the year endedDecember 31, 2006 is provided in the table below.

| ** **     | ** ** | **Bulgarian  leva**    | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 3,950      |                   |       |   | 2,697 |   |   |
| Net Loans      |       |                   | 2,701      |                   |       |   | 1,844 |   |   |
| Total Deposits |       |                   | 2,987      |                   |       |   | 2,040 |   |   |
| Net Income     |       |                   | 136        |                   |       |   | 93 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of Bulgarian leva into U.S. dollarshas been made at the rate of US$1.00 = BGN1.4645 , the fixing rate asannounced by the Bulgarian central bank as at June 11, 2007.

*Banca Romaneasca SA*

Banca Romaneasca SA (“Banca Romaneasca”) is auniversal bank, which provides a wide range of retail, SME and corporatebanking services in Romania. We became Banca Romaneasca’s main shareholder inOctober 2003, with an initial shareholding of 81.7%. In order to supportits further development, in February 2006, Banca Romaneasca implemented ashare capital increase of RON 244,958,896, increasing the share capital ofBanca Romaneasca to RON 393,126,028, and increasing our participation in BancaRomaneasca to 88.7%. The European Bank for Reconstruction and Development(“EBRD”) is the second largest shareholder of Banca Romaneasca, with 10.18% ofits share capital.

At the end of 2006, Banca Romaneasca had a countrywidedistribution network consisting of 76 banking units, and it operated anetwork of 95 ATMs. Banca Romaneasca was the first bank in Romania toprovide money-transfer services, currently offering such services in 804locations across the country. Banca Romaneasca launched new products andservices during 2006 primarily dedicated to SME and retail activity andincreased its overall (total assets) market share from 1.8% up to 2.1%according to statistics published by the Central Bank of Romania.

Selectedfinancial information with respect to Banca Romaneasca as at and for the yearended December 31, 2006, is provided in the table below.

| ** **     | ** ** | **Romanian  Lei**      | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 3,563      |                   |       |   | 1,456 |   |   |
| Net Loans      |       |                   | 2,233      |                   |       |   | 913 |   |   |
| Total Deposits |       |                   | 2,804      |                   |       |   | 1,146 |   |   |
| Net Income     |       |                   | 33         |                   |       |   | 13 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of Romanian lei into U.S. dollarshas been made at the rate of US$1.00 = RON 2.4467, the fixing rate asannounced by the Romanian central bank as at June 11, 2007.

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*Stopanska BankaA.D.*

Stopanska Banka A.D. (“Stopanska Banka”) is auniversal bank, headquartered in Skopje and registered in FYROM, that providespayment transfers, brokerage, credit and deposit-taking services in its homecountry and abroad. We acquired a controlling interest in Stopanska Banka, andcurrently hold a 73.0% stake, while EBRD and IFC participate hold a stake of10.8% each, and the remaining 5.4% are held by other small shareholders.Stopanska Banka operates the largest branch network in FYROM, with a densecountry-wide network of ATMs and POSs. Following its latest reorganizationactivities, Stopanska Banka currently has 25 branches, which in turn manage 31sub-branches, and continue the transformation of its branch network into modernsales outlets. Stopanska Banka is also a leader in e-banking within FYROM,promoting Internet and SMS banking and offering its clients highly advancedelectronic payment facilities. Stopanska Banka aims to continue improving itsloan portfolio by targeting highly creditworthy customers, such as SMEs andlarge companies. As at December 31, 2006, Stopanska Banka’s market sharein FYROM was 40% in retail lending , 27% in retail deposits, 22% in corporatelending and 31% in corporate deposits, according to statistics published by theNational Bank of FYROM.

Selectedfinancial information with respect to Stopanska Banka as at and for the yearended December 31, 2006, is provided in the table below:

| ** **     | ** ** | **Macedonian  denars** | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 41,866     |                   |       |   | 914 |   |   |
| Net Loans      |       |                   | 21,504     |                   |       |   | 469 |   |   |
| Total Deposits |       |                   | 33,637     |                   |       |   | 734 |   |   |
| Net Income     |       |                   | 768        |                   |       |   | 17 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of Macedonian denars into U.S.dollars has been made at the rate of US$1.00 = 45.8137 Macedonian denars;the fixing rate as announced by the central bank of the Former YugoslavRepublic of Macedonia as at June 11, 2007.

*National Bank ofGreece (Cyprus) Ltd.*

The National Bank of Greece (Cyprus) Ltd. (“NBG Cyprus”),which has its headquarters in Nicosia, has reduced its total number of branchesfrom 18 to 16 and from six to five foreign exchange bureaus following arationalization of its operations. NBG Cyprus provides a wide range ofcommercial and retail banking services. In 2006, NBG Cyprus maintained itspolicy of growth of its loans and deposits portfolio through the introductionof new mortgage and retail credit products.

Selectedfinancial information with respect to NBG Cyprus as at and for the year ended December 31,2006, is provided in the table below:

| ** **     | ** ** | **Cyprus  pounds**     | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 568        |                   |       |   | 1,300 |   |   |
| Net Loans      |       |                   | 316        |                   |       |   | 723 |   |   |
| Total Deposits |       |                   | 515        |                   |       |   | 1,179 |   |   |
| Net Income     |       |                   | 291        |                   |       |   | 666 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of Cyprus pounds into U.S. dollarshas been made at the rate of US$1.00 = 0.4369 Cyprus pounds determined byreference to the fixing rate as announced by the Cyprus central bank as at June 11,2007.

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*The South AfricanBank of Athens Ltd.*

The South African Bank of Athens Ltd. (“SABA”), whichwe founded in 1947, has 10 branches across South Africa, primarily in urbancenters. SABA offers traditional commercial and retail banking services, withparticular emphasis on retail and commercial banking services for the SMEmarket in South Africa. In 2004, SABA further developed its electronicbanking platform and received MasterCard accreditation, which facilitated thelaunch of its ATM/debit card during the second quarter of 2005. Furthermore,during 2005 and into 2006, the Bank undertook a major re-branding exerciseintended to present a more modern and sophisticated image of SABA. In August 2006,SABA successfully implemented the upgraded version of its core banking systemsthereby giving SABA full 24-7 processing capability. During the fourthquarter of 2006 SABA became MasterCard-certified in respect of ATM acquiringand has introduced Bank of Athens-branded ATMs.

Selectedfinancial information with respect to SABA as at and for the year ended December 31,2006, is provided in the table below:

| ** **     | ** ** | **South African  rand** | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)**       | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                         | 837        |                   |       |   | 116 |   |   |
| Net Loans      |       |                         | 560        |                   |       |   | 78 |   |   |
| Total Deposits |       |                         | 722        |                   |       |   | 100 |   |   |
| Net Income     |       |                         | 32         |                   |       |   | 4 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of South African rand into U.S.dollars has been made at the Noon Buying Rate of US$1.00 = 7.2230 SouthAfrican rand as at June 11, 2007.

*Vojvodjanska Banka a.d.Novi Sad*

In December 2006, we acquired a 99.4% stake inVojvodjanska Banka a.d. Novi Sad (“Vojvodjanska”). Vojvodjanska is the sixthlargest Serbian bank in terms of assets and has the second largest branchnetwork in the country with 168 branches. As a result of this acquisition, ourtotal presence in the Serbian market amounts to 203 branches.

Vojvodjanska’s market shares in customer deposits andloans as at December 2006 were approximately 6% and 4% respectively.Furthermore, Vojvodjanska holds a leading position in the dinar depositsmarket, with a market share of approximately 10%. It runs 168 sales points,servicing over 837,000 private accounts and 70,000 SME and large companyaccounts. Vojvodjanska is also a leading issuer of Visa and DinaCards and has amarket share of approximately 9% of Serbia’s domestic and internationalpayments. In recent years, Vojvodjanska completed an extensive restructuring ofits loans.

Selectedfinancial information with respect to Vojvodjanska as at December 31, 2006,is provided in the table below:

| ** **     | ** ** | **Serbian  dinars**    | ** ** | **US$**(1)             | ** ** |
|----------------|------------|------------------------|------------|------------------------|------------|
| ** **     | ** ** | **(in millions)** | ** ** | **(in millions)** | ** ** |
| Total Assets   |       |                   | 44,475     |                   |       |   | 728 |   |   |
| Net Loans      |       |                   | 19,927     |                   |       |   | 326 |   |   |
| Total Deposits |       |                   | 35,509     |                   |       |   | 581 |   |   |

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(1)             Solely for theconvenience of the reader, the translation of Serbian dinar into U.S. dollarshas been made at the Noon Buying Rate of US$1.00 = 61.0915 Serbian dinarsas at June 11, 2007.

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*Future Expansion*

We are currentlyevaluating other potential acquisitions in SEE, Eastern Europe and theSoutheastern Mediterranean region. See Item 4.B, “—*Strategy*”.

**SelectedNon-Banking Subsidiaries**

***NBGI Private Equity Limited***

NBGI Private EquityLimited (“NBGI Private Equity”), a subsidiary of NBGI, has offices in Londonand Athens and manages the following private equity funds: NBG Private EquityFund LP, with an initial capitalization of €100million, investing in small to mid-size “traditional economy” companies, with ageographic investment focus on the UK and continental Europe; NBG South EasternEurope Fund LP, with a capitalization of €100 million; the NBGI SEEDevelopment Capital Fund LP, also with a capitalization of €100million investing in companies in Greece and in companies which areheadquartered or have a significant part of their activities in Central andEastern Europe (with a focus on Balkan countries), the former Soviet Union,Cyprus and other markets in SEE; and NBG Technology LP, with a capitalizationof €42million, investing in early stage investments in information technology,telecommunications and new media throughout Europe. In 2006 NBGI Private EquityLimited established branches in Romania and Bulgaria to better facilitate itsoperations in the region.

***NBG Private Equity Fund LP***

The NBG Private Equity Fund LP is a €100million fund created in August 2000 to invest in small to medium sizetraditional economy UK companies. The Bank is the sole investor in the fund.

During 2006, the fund made its third successful exit,selling an investment it had held since January 2001 for a gain of 10.1xmoney multiple and an IRR of 70.1%. The fund also made its final two new investmentsduring the year bringing up the number of new investments in the fund as awhole to thirteen in 2006, and its partners approved an extension of theinvestment period by 12 months from August 2006.

NBGI Private Equity hasbeen raising its second fund focusing on the UK lower mid-market as a successorto this fund, and is expected to hold a first close in early 2007. Thissecond fund is expected to eventually raise approximately €150million, with the Bank acting as cornerstone investor, but with externalinvestors also participating for the first time.

***NBG South Eastern Europe Fund LP and the NBGI SEEDevelopment Capital Fund LP***

The NBG Greek Private Equity Fund LP was originallyestablished in February 2004 with a capital commitment of €20million from the Bank. It is an English limited partnership. In 2005 this fundwas restructured and its scope widened in order for it to be allowed to takeadvantage of the opportunities arising in SEE markets. In March 2006 thisfund was renamed the NBG South Eastern Europe Fund LP and the commitment of theBank, the sole investor in the fund, was increased to €100million. As at the end of 2006, the NBG South Eastern Europe Fund LP had notmade any investments.

The NBGI SEE Development Capital Fund LP sitsalongside the NBG South Eastern Europe Fund LP and also has a commitment of €100million from the Bank, the sole investor in the fund. This fund was formallyclosed in March 2007 and will primarily seek to invest in SMEs which areincorporated or whose business operations are in Greece and in companies whichare headquartered or have a significant part of their activities in Central andEastern Europe (with a focus on Balkan countries), the former Soviet Union,Cyprus and other markets which, at the discretion of the fund’s manager, areconsidered to be in the SEE area.

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Both of these funds arestructured as English limited partnerships.

***NBG Technology LP***

NBG Technology LP is an English limited partnership,established in 2001 and has capital commitments of €42million, half of which have been committed by the Bank. NBG Technology LP aimsto invest primarily in the equity or equity-related capital of unlisted SMEsoperating in the technology, media and telecommunications sectors throughoutEurope. NBGI Private Equity Limited is the manager of the fund and employsa specialist team of investment professionals to manage the Fund, under thebrand “NBGI Ventures”.

During 2006, NBG Technology LP completed its firstsuccessful exit, with the sale of part of its holding in an investeecompany realizing a gain sufficient to repay investors all of the fund’sinvestment cost in the deal and retain a potentially valuable stake in thecompany. The fund was also active in making three new investments in the year,bringing up the number of investments in the fund as a whole to eight. Theinvestment period of NBG Technology LP ended in October 2006, atwhich time it was decided to reduce the commitment of the fund’s limitedpartners pro-rata to €42 million.

NBG Technology LP ispresently in the process of raising its second fund designed to take advantageof the strong, good quality deal-flow which it has now established,particularly in its core specialist areas of medical devices, energy, telecomand media.

***NBG Greek Fund Limited***

NBG Greek Fund Limited, aCypriot company wholly owned by the Bank, was established in 1998 withcommitted capital of €44 million. The scope ofNBG Greek Fund Limited is to invest primarily in rapidly growing Greek companies.In 2004, NBG Greek Fund Limited reduced its committed capital down to €15million and is divesting its current holdings which, at the end of 2006, had anestimated market value of about €3.5 million.

***Interlease E.A.D.***

Interlease E.A.D. (“Interlease”),a wholly-owned subsidiary of the Group, operates in the Bulgarian leasingindustry. In 2002, Interlease established a subsidiary company, Interlease AutoE.A.D., specializing in the car leasing sector. A major leasing provider inBulgaria, Interlease achieved a market share of 35% and 26% in equipment andcar leases respectively in 2006. Interlease also achieved a 15% market share inthe real estate sector. Profits and total assets of the company have grownsteadily. As at December 31, 2006, Interlease’s profit before tax amountedto €5.9million and total assets to approximately €250 million. In line withits cross-selling strategy, Interlease offers its leasing services in Bulgariathrough the Group’s Bulgarian subsidiary, UBB. Interlease possesses a fullydiversified client portfolio, consisting of lessees from almost all sectors ofthe country’s economic activity, focusing on the transportation and industrialequipment industries.

***Eurial Leasing IFN S.A.***

Eurial Leasing IFN S.A. (“Eurial”),operates in the leasing industry of Romania. In 2005, we acquired a 70% stakein Eurial. Before the acquisition, Eurial operated primarily in the automobileleasing sector, being the major lessor of Peugeot automobiles in Romania.Following Interlease’s success in Bulgaria, Eurial has adopted a strategy ofsupporting its clientele via alternative financial services, together withcross-selling operations. The Group plans to enhance Eurial’s structure andexpand its activities to cover the full spectrum of leasing services, making itone of the leading leasing companies in Romania. In 2006, Eurial achievedprofits before tax and total assets of €3million and €104million respectively, with a market share of 3%.

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***ETEBA Romania***

ETEBA Romania, formerlyS.C. Top Invest S.A., is our investment banking subsidiary in Romania. ETEBARomania’s investment banking activities include buying and selling securitiesfor client accounts, placing the distribution of securities under primary orsecondary offerings, providing consultancy and brokerage services and managingthe individual portfolio accounts of clients. Its operations are centered inBucharest.

**Insurance**

We provide insurance services primarily through one ofour subsidiaries, the Ethniki Hellenic General Insurance Company S.A. (“EH”).As at December 31, 2006, the Group held 76.7% of EH. EH offers a fullrange of products such as life, accident and health insurance for individualsand groups, fire, calamity, credit, motor, marine hull and cargo insurance, andgeneral third party liability. Through the expertise of its personnel and thereorganization of its internal procedures, EH provides advanced insurancesolutions that can meet the demands of the increasingly competitive Greekinsurance market.

EH provides insurance products through 62 branchoffices, 150 sales agencies with 2,100 tied-agents and 1,641 independentinsurance brokers. In addition, insurance products are distributed to consumersthrough the Bank’s extensive branch network.

In 2006, EH further strengthened its leading positionin the Greek insurance market by increasing its market share to 15.8% comparedto 14.9% in 2005. Particularly, in regards to Non-Life insurance business,gross written premiums reached €380.6 million in 2006compared to €378.3million in 2005, ranking EH first in the Greek market with a market share of14.6%, well ahead of its closest competitor which had a market share of 5.7% in2005.

The increase in the Property business reached 14%, whichwas in line with the market. Although the Motor business decreased compared tothe previous year, the Company’s new commercial policy delivered remarkableresults in the last quarter of 2006, achieving an increase of 36% in newapplications for the year and a 16% reduction in the cancellations compared to2005.

In the Life business, gross written premiums reached €343,507thousand compared to €243,572 thousand in 2005, an increase of 41%.This achievement is attributed to the new Bancassurance products “PROSTHETO+”and “FRONTIZO”, with €102.6 million in premiums.

In addition, Individual Life new business increased by29%, compared to 2005, outperforming by far the market. Insurance penetrationin the Bank’s mortgages portfolio reached approximately 90% for fire and alliedperils and 62% for term life coverage.

EH’s agency sales network further improved its mortgageloan sales, and in 2007 Assurebanking will be offering additional financialproducts of the Group, such as consumer loans, credit cards and mutual funds.

Moreover, with a view towards expansion in SEE, EH isoperating two Cypriot subsidiaries in collaboration with NBG Cyprus which areactive in Life and Non-Life insurance business. EH also operates in Romania,where it holds a 93.27% share in Societate Comerciala de Asigurare ReasigurareEleno-Romana Garanta S.A. EH’s activities in the Romanian market increased in2006 with the acquisition of Alpha Insurance Company (renamed NBG Asigurari)for €2.7million. As part of the sale, Alpha Bank has agreed to a 5-year contractallowing distribution of our products through Alpha Bank’s local network.Additionally, EH plans to merge its subsidiaries, Garanta and NBG Asigurari,and to launch composite insurance products covering mortgage loans and life andpersonal accident insurance. Garanta offers consumer credit insurance andpersonal accident products through the network of four banks, namely BancaRomaneasca, Alpha Bank Romania, Pireaus Bank Romania and Romextera.

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On February 22, 2006, EH, in partnership with UBBand American International Group Inc. (A.I.G.) founded two insurance companiesin Bulgaria, one for Life and one for Non-life insurance. EH and UBB will eachhold a 30% share of each company’s share capital. With the Life InsuranceCompany, the remaining 40% stake and the management will be held by AmericanLife Insurance Company (“ALICO”), whereas in the case of the Non-life InsuranceCompany, the remaining 40% stake will be held by AIG Central Europe and CISInsurance Holdings Corporation. Both companies have been fully operationalsince October 2006.

National Mesitiki Asfaliseon, a Greek insurance brokeracquired in 2005 by EH, contributes to the further expansion of servicesprovided in the Maritime and Aviation insurance markets, as well as for risksregarding port-structuring projects.

In May 2007 Finansbank, applied to the GeneralDirectorate of Insurance and has received permission to establish FinansEmeklilik ve Hayat A.S. (“Finans Pension”). This new company will complete itsorganizational preparations and obtain a licence to conduct life, personalaccident and pension business, and is expected to commence operations shortly. FinansPension will be headed by highly experienced Management in the Turkishinsurance market, joined at the level of Board of Directors by members of theparent insurance company of the Group, who will assist with their know-how inthe rapid development of the new company.

The tables below show thetotal revenues and assets, respectively, of EH’s insurance operations as at andfor the years ended December 31, 2004, 2005 and 2006.

**TotalInsurance Operations Income**

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**TotalInsurance Assets**

***Bancassurance Products***

We also provide insurance services through another ofour subsidiaries, NBG Bancassurance SA. (“NBG Bancassurance”). NBGBancassurance acts as an agent providing intermediary services between ourcustomers and insurance underwriters, and assumes no insurance underwritingrisk itself. As at December 31, 2006, NBG Bancassurance had assets of €9.4million and revenues of €8.0 million.

NBG Bancassuranceprovides the following services:

·       Realestate insurance on properties for which a mortgage loan has been granted bythe Bank;

·       paymentprotection insurance for customers for which a consumer loan has been grantedby the Bank;

·       lifeand disability insurance for mortgage loan borrowers; and

·       newinvestment-insurance products, such as “Prostheto+” , “Frontizo” and “Triploun”..

In the beginning of 2006, the Bank presented its newpension program “Prostheto+”. It is targeted to individuals with availabledeposits in order to secure a guaranteed pension for life, which the customerbuys through a lump sum payment. The customer chooses the amount of theguaranteed pension as well as the age at which he wishes to receive suchpension. The customers have the flexibility to borrow part of the paymentthrough a loan with a very competitive interest. During the second half of2006, a new program “Frontizo” was presented by the Bank. Through this programcustomers secure a lump sum payment for their children when they reach aspecific age. The customer buys this through a lump sum payment. The bankcontinues to sell its “Triploun” program, an investment/insurance program whichhas a guaranteed return of 2% annually calculated on the amount formed upon itsexpiry, while the net highest return is remitted to the customer in addition tothe guaranteed return. In the beginning of 2007, the Bank presented its newpension program “Prostheto+ monthly”. It is targeted to individuals withoutavailable deposits in order to secure a guaranteed pension for life, which thecustomer buys through monthly payments. The customer chooses the amount of theguaranteed pension as well as the age at which he wishes to receive suchpension.

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Compared to EU 25, wherethe share of insurance premium to GDP is 9%, the Greek insurance premium to GDPshare is only 2.5%. Increasing competition in Greece and regulatory changeshave forced many smaller insurance companies out of business. Recently, thelicenses of two insurance companies in Greece were revoked. During 2006 twomultinational insurance companies, AXA and Groupama, entered the Greekinsurance market via buyouts, targeting the development of bancassuranceproducts. We believe that, in the future, the Greek insurance market will beserviced by a small number of large, adequately-capitalized and efficiently runinsurance providers, such as EH. We also anticipate that proposed changes tothe Greek pension system may, if adopted, provide new opportunities for theprivate insurance sector in Greece.

Recently, the Commissionof Supervision of Private Insurance has commenced extensive audits of allinsurance companies operating in Greece to ensure prudent reserving andadequate investments backing up liabilities. Unfair competition is thereforeexpected to be reduced in size and aggressiveness, allowing compliant companiessuch as EH to regain market share.

Theincreased competition in the Greek insurance market has resulted in lowerinsurance premiums and, consequently, lower operating margins. We areresponding to the pressures by:

·       fullycapturing the potential for bancassurance business, which is a rapidlyexpanding business;

·       improvingthe range and flexibility of our products and services;

·       introducingnew pension and health insurance products;

·       improvingour sales network;

·       selectivelydeveloping our presence in SEE, Eastern Europe and the SoutheasternMediterranean region; and

·       more effectively managinglosses in the automobile and health insurance sectors, reducing the loss ratio,adjusting our pricing policy and, more generally, reducing our operating costsby streamlining our activities, reducing head count and the cost of premises.

**Hotel Business**

We also have a strongpresence in the tourism sector, mainly through the Bank’s subsidiary, AstirPalace Vouliagmeni S.A., owner of the Astir Palace Hotel Complex (the “Complex”),which is currently under the management of Starwood Hotels & ResortsWorldwide Inc. (“Starwood”).

Starwood officiallyassumed the management of the Complex on July 1, 2006 for a term of 15years. Also in July 2006, the Arion Hotel and Bungalows were renamed theArion Resort & Spa, and the Nafsika Hotel was renamed The WestinAthens. Within the Arion Resort & Spa establishment, a world class spawas recently completed which is now operating as part of the Luxury Collectionbrand.

The 165-roomAfrodite Hotel is currently undergoing an extensive renovation that willeventually be rebranded as the “W Athens” hotel. Other forthcoming projectsinclude the full restoration of the 76 bungalows of the complex and theadditional upgrade of the adjacent Astir Beach.

**Significant Equity Method Participations**

Ourequity method investment portfolio includes participations in Greekcorporations that were acquired through various means, including:

·       directinvestment;

·       debt-for-equityswaps under old legislation (since repealed); and

·       foreclosureproceedings on unpaid loans.

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Thefollowing table sets out equity participations in which we hold an excess of20% but less than 50%, or in which, we do not have control on December 31,2006.

| ** ** | ** ** | ** **                                 | ** ** | **December 31, 2006** | ** **                               |
|------------|------------|--------------------------------------------|------------|---------------------------------|------------------------------------------|
| **Name**   | ** ** | ** **                                 | ** ** | ** **                      | **% Interest  held by  Group** | ** ** | **Reported book value**(1) | ** ** |
| ** ** | ** ** | ** **                                 | ** ** | ** **                      | ** **                               | **(EUR  in thousands)** | ** ** | **(US$ in  thousands)**(2) | ** ** |
| 1.         |       | AGET Heracles  Cement Co. S.A.             |       |                            | 26.00                                    | % |   |   | 178,451 |   |   |   | 238,380 |   |   |
| 2.         |       | Social Securities  Funds Management        |       |                            | 40.00                                    | % |   |   | 801 |   |   |   | 1,070 |   |   |
| 3.         |       | Phosphate  Fertilizers Industry S.A        |       |                            | 24.23                                    | % |   |   | ___ |   |   |   | ___ |   |   |
| 4.         |       | Larco S.A.                                 |       |                            | 36.43                                    | % |   |   | 15,538 |   |   |   | 20,756 |   |   |
| 5.         |       | Siemens  Industrial S.A                    |       |                            | 30.00                                    | % |   |   | 20,593 |   |   |   | 27,509 |   |   |
| 6.         |       | Eviop Tempo S.A.                           |       |                            | 21.21                                    | % |   |   | 2,691 |   |   |   | 3,595 |   |   |
| 7.         |       | Teiresias S.A                              |       |                            | 39.34                                    | % |   |   | 578 |   |   |   | 772 |   |   |
| 8.         |       | Hellenic  Countryside S.A.                 |       |                            | 20.23                                    | % |   |   | 356 |   |   |   | 476 |   |   |
| 9.         |       | Pella S.A                                  |       |                            | 20.89                                    | % |   |   | ___ |   |   |   | ___ |   |   |
| 10         |       | Planet S.A                                 |       |                            | 31.18                                    | % |   |   | 3,661 |   |   |   | 4,890 |   |   |
| 11.        |       | Kariera S.A.                               |       |                            | 35.00                                    | % |   |   | 330 |   |   |   | 441 |   |   |
| 12.        |       | Zymi S.A.                                  |       |                            | 32.00                                    | % |   |   | 500 |   |   |   | 668 |   |   |
| 13.        |       | Europa Insurance  Co SA                    |       |                            | 23.02                                    | % |   |   | 2,001 |   |   |   | 2,673 |   |   |
| 14.        |       | UBB AIG Insurance  and Reinsurance Company |       |                            | 52.99                                    | % |   |   | 1,798 |   |   |   | 2,402 |   |   |
| 15.        |       | UBB AIG Life Insurance  Company            |       |                            | 52.99                                    | % |   |   | 2,042 |   |   |   | 2,728 |   |   |
|            |            |                                            |            |                                 |                                          |  |  |  |  |  |  |  |  |  |  |  |

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(1)             Asreflected in the U.S. GAAP Financial Statements of the Group at December 31,2006 under the equity method of accounting.

(2)             Solelyfor the convenience of the reader, the translation of euro into U.S. dollarshas been made at the Noon Buying Rate of US$1.00 = €0.7486as at June 11, 2007.

The market value of our holdings in AGET Heracles, theonly company listed above with shares traded on the ATHEX, was €330.1million in 2006, compared to €184.8 million in 2005. Theaggregate value of our investment portfolio at the end of 2006 was €234.6million. On April 19, 2007 the Bank signed an agreement for the sale ofits minority shareholding in AGET Heracles to majority shareholders LafargeGroup. Pursuant to this agreement, the Bank sold 18,480,899 shares, representing26% of the share capital of AGET Heracles. This sale is consistent with thestated strategy of the Bank to focus on its core banking activities and exitfrom its non-financial participations. The sale price has been agreed at €17.40per share, or €321.6million in total and was in line with the average closing price of the last 30trading days preceding the transaction.

Equity participations in which the percent ofownership interest held by the Group is less than 20% are accounted asportfolio investments in accordance with SFAS 115 “Accounting for certaininvestments in debt and equity securities”, as the Group does not have theability to influence the operations of the investees. Equity participations inwhich the percent of ownership interest held by the Group is greater than 20%but less than 50%, or which are jointly controlled by the Group and otherentities, are accounted for using the equity method because the Group caninfluence the operations of the investees.

UBB AIG Insurance andReinsurance Company and UBB AIG Life Insurance Company are jointly controlledby Group companies UBB and EH Insurance and companies of AIG.

**Intellectualproperty, contracts and manufacturing processes**

Our business andprofitability are not materially dependent on patents or licenses, industrial,commercial or financial contracts or new manufacturing processes.

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**Competition**

We compete with other banks, financial services firmsand a wide range of insurance companies in providing mutual fund services,capital markets and advisory services and insurance. Internationally, wecompete with banking firms of varying sizes and geographic scope.

The Bank itself competes with national, regional andforeign banks throughout Greece and abroad. There were 45 universal banks (i.e.banks that provide all types of banking services, including retail, commercialand investment banking), both domestic and foreign, in Greece as at December 31,2006. The top six domestic universal banking groups in Greece accounted forapproximately 77% of the total assets attributable to domestic and foreignuniversal banks as at that date. The largest foreign bank operating in Greece,Citibank, had assets of €9,057 million, as at December 31,2006, which represented approximately 3% of total bank assets in Greece.Foreign banks held approximately 10.4% of total bank assets in Greece as at December 31,2006 (the last date for which such information is currently available,according to our analysis of published financial statements).

Thetable below shows the breakdown of assets, loans outstanding and deposits inthe universal banking sector for the Bank and our five main competitors inGreece as at December 31, 2006. These figures exclude one specializedcredit institution and have been compiled by the Bank based on publiclyavailable information. This table also excludes specific market shares offoreign banks, as no official information accounted for under local standards withrespect to the year ended December 31 2006, is available to date for suchbanks.

| ** **                   | ** ** | **As at and for the year ended December 31, 2006** | ** ** |
|------------------------------|------------|-------------------------------------------------------------------------------------------------|------------|
| **Banks**                    | ** ** | ** **                                                                                      | ** ** | **Assets** | ** ** | **% of total  market** | ** ** | **Loans** | ** ** | **% of total  market** | ** ** | **Deposits** | ** ** | **% of total  market** | ** ** |
| ** **                   | ** ** | **(**€ in millions, except percentages)                                | ** ** |
| 1. National Bank of Greece   |       | 61,306                                                                                          |       |   | 22.7 | % |   | 32,755 |   |   | 19.9 | % |   | 44,565 |   |   | 25.3 | % |   |
| 2. EFG Eurobank Ergasias     |       | 50,057                                                                                          |       |   | 18.6 | % |   | 30,183 |   |   | 18.3 | % |   | 30,363 |   |   | 17.2 | % |   |
| 3. Alpha Bank                |       | 46,769                                                                                          |       |   | 17.3 | % |   | 28,238 |   |   | 17.2 | % |   | 20,373 |   |   | 11.6 | % |   |
| 4. Piraeus Group             |       | 27,942                                                                                          |       |   | 10.4 | % |   | 18,729 |   |   | 11.4 | % |   | 14,606 |   |   | 8.3 | % |   |
| 5. Commercial Bank of Greece |       | 21,805                                                                                          |       |   | 8.1 | % |   | 16,158 |   |   | 9.8 | % |   | 16,375 |   |   | 9.3 | % |   |
| 6. ATE Bank                  |       | 20,588                                                                                          |       |   | 7.6 | % |   | 13,625 |   |   | 8.3 | % |   | 18,198 |   |   | 10.3 | % |   |
| **Total**                    |       | 228,467                                                                                         |       |   | 84.7 | % |   | 139,688 |   |   | 84.9 | % |   | 144,480 |   |   | 82.0 | % |   |
|                              |            |                                                                                                 |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

**Regulation andSupervision of Banks in Greece**

The Bank of Greece is the central bank in Greece. Itis responsible for the licensing and supervision of credit institutions inGreece, in accordance with Law 2076/1992 and Mandatory Law 1665/1951(Licensing, operations and supervision of credit institutions), Law2832/2000 (Deposit Guarantee Fund), Law 2331/1995 (Anti-money laundering) andother relevant laws of Greece, each as amended. It also has regulatory powersin connection with the operation and supervision of credit institutions inGreece, by virtue of Law 1266/1982 (as amended and supplemented).

The central bank grants a banking license only if therequirements of the EU Council’s Consolidation Directive (2000/12/EC), whichincorporates several of the Directives listed below, are met. Before these EUDirectives took effect banks in Greece were required to obtain priorauthorization for significant organizational and operational changes, such asestablishing subsidiaries, opening branches, expanding geographically andoperating in foreign currencies. In contrast, the current system permits banksto engage in such activities without the prior authorization of the centralbank, subject to the notification of the central bank in certain cases and tocompliance with minimum initial capital requirements.

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The EU Council’smain Directives on regulation of credit institutions have been adopted underGreek law, including:

(a)          the first (Directive1977/780/EEC) and the second (Directive 1989/646/EEC) Directives, and theirsuccessive amendments, on the coordination of laws, regulations andadministrative provisions relating to the taking up and pursuit of the businessof credit institutions, which were implemented by Greek Law 2076/1992;

(b)         the Own Funds Directive(Directive 1989/299/EEC), which defines a credit institution’s regulatorycapital and was adopted under Greek law pursuant to Act No. 2053/18.03.1992of the Governor of the Bank of Greece;

(c)          the Solvency Ratio Directive(Directive 1989/647/EEC) and its successive amendments, which were adoptedunder Greek law pursuant to Act No. 2054/18.03.1992, amended by Acts No. 2479/27.08.2001and No. 2512/30.12.2002 of the Governor of the Bank of Greece. All theabove Acts have been codified by Act No. 2524/23.07.2003 of the Governorof the Bank of Greece, as amended by Act No. 2564/11.10.2005;

(d)         the Large ExposuresDirective (Directive 1992/121/EEC) on the supervision and monitoring of largeexposures of credit institutions, which was adopted under Greek law pursuant toAct No. 2246/16.09.1993 of the Governor of the Bank of Greece;

(e)          the Second ConsolidatedSupervision Directive (Directive 1992/30/EEC) on the supervision of creditinstitutions on a consolidated basis (amending the First ConsolidatedSupervision Directive), which was implemented by Presidential Decree 267/1995;

(f)            the Capital AdequacyDirective (Directive 1993/6/EEC) and its amendment (Directive 1998/31/EEC),which were fully implemented by Greek Laws 2396/1996, 2937/2001 and Acts No. 2397/07.11.1996and No. 2494/27.05.2002 of the Governor of the Bank of Greece;

(g)          Directive 2001/24/EC onthe reorganization and winding up of credit institutions, which provides forthe recognition across the European Union of reorganization and winding upmeasures adopted by the home member states of insolvent credit institutions andwas transposed into Greek law by Law 3458/2006; and

(h)         Directive 2002/87/EC onthe supplementary supervision of credit institutions, insurance undertakingsand investment firms in a financial conglomerate, which was transposed intoGreek law by Law 3455/2006.

(i)            Directive 2006/48/ECon the taking up and pursuit of the business of credit institutions that willbe transposed into Greek law within 2007.

(j)             Directive 2006/49/ECon the capital adequacy of investment firms and credit institutions that willbe transposed into Greek law within 2007.

To prepare for Greece’s participation in the EuropeanMonetary Union, significant changes were made to the regulatory framework ofthe central bank. In particular, its by-laws were amended to reinforce thecentral bank’s independence from the State, to recognize the legal integrationof the Bank of Greece into the European System of Central Banks and to providefor new enforcement powers to enable better supervision of credit institutions.

Credit institutions operating in Greece are obliged toobserve the liquidity ratios prescribed by the Bank of Greece (Act No. 2560/1.4.2005of the Governor of the Bank of Greece), maintain efficient internal audit,compliance and risk management systems and procedures (Acts No. 2438/6.8.1998and No. 2577/9.3.2006 of the Governor of the Bank of Greece), submit tothe Bank of Greece periodic reports and statements and provide it with suchfurther information as it may require, and (in connection with 

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certain operations oractivities) make notifications to or request the prior approval (as the casemay be) of the Bank of Greece, in each case in accordance with the applicablelaws of Greece and the relevant Acts, Decisions and Circulars of the Bank ofGreece (each as in force from time to time).

Pursuant to Law 2076/1992, Mandatory Law 1665/1951 andother relevant laws of Greece, the Bank of Greece has the power to conductaudits and inspect the books and records of credit institutions. In case ofbreach, the Bank of Greece is empowered to require the relevant creditinstitution to take appropriate measures to remedy the breach, impose fines,appoint an administrator and finally (where the breach cannot be remedied or incase of insolvency) revoke the license of the credit institution and place itinto special liquidation under its supervision. In the case of insufficientliquidity of a credit institution, the Bank of Greece may order a mandatoryextension of its due and payable obligations for a period not exceeding twomonths (which can be extended for a further one-month period) and appoint anadministrator under its supervision.

In accordance with GreekLaw 2832/2000, in cases of breach of the regulatory framework, in addition toother powers to impose sanctions under specific laws, the Bank of Greece hasthe general power to impose sanctions against credit institutions. Thesesanctions may consist of a compulsory deposit, equal to 40% of the amount ofthe violation, in a non-interest bearing account of the central bank or, if theamount of such violation cannot be determined, a compulsory interest freedeposit of up to €8,804,109 in each case forup to one year and/or a fine payable in favor of the Greek Government to becalculated either as a percentage of 40% of the amount of the violation or as aone-off payment of up to €880,411 which may be increased up to €1,467,351in case of a repeat violation.

***History and Deregulation***

Historically, theGreek banking system was subject to strict regulatory requirements, includingrestrictions on:

·       freelydetermined interest rates;

·       thefinancing of various sectors of the economy (i.e., how, when and where publicentities, such as wholly-owned utility companies, could invest their assets);and

·       certainfinancial services activities in the foreign exchange market.

Since the late1980s, but predominantly in the early 1990s, a gradual relaxation of the strictregulatory environment in Greece took place due to:

·       increasinginterdependence of national economies;

·       increasinginternational pressure for the opening of markets; and

·       anticipationof EMU.

Liberalization of capital movements, throughimplementation of the relevant EU Directives and in particular the Second EUBanking Directive, also contributed substantially to deregulation.

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***Interest Rates***

Beginning in 1987,minimum interest rates gradually replaced interest rates previously imposed bythe central bank. Administratively determined interest rates were finallyabolished in 1992. The removal on March 8, 1992, of an established minimumrate for savings deposits was the first step towards full deregulation of bankinterest rates. Since then, Greek banks have been free to negotiate interestrates with customers based on market conditions. In addition, a number oflimitations on bank financing of certain economic activities were eliminated in1991. As a consequence, credit institutions were allowed to negotiate freelyand grant new types of loans without limitations on the rate of interestincluding loans for:

·       workingcapital;

·       thepurchase of fixed assets and equipment;

·       therepair and purchase of real estate in Greece and the construction of buildings;

·       thesale of durables on credit; and

·       consumercredit and personal loans.

Limitations apply to thecompounding of interest. In particular, the compounding of interest withrespect to bank loans and credits only applies if the relevant agreement soprovides and is subject to limitations that apply under article 30 of Law2789/2000 (as amended by article 42 of Law 2912/2001 and article 47 of Law2873/2000) and article 39 of Law 3259/2004.

***Foreign Exchange***

Deregulation of the Greek financial services sectorwas accelerated by adoption of Greek Presidential Decrees 96/1993 (andcorresponding Acts of the Governor of the Bank of Greece No. 2199 2200,2201/07.03.1993), 104/1994 (and corresponding Acts of the Governor of the Bankof Greece No. 2301, 2302, 2303/16.05.1994) and Greek Law 2076/1992(implementing the second EU Banking Directive). Greek Law 2076/1992decriminalized violations of foreign exchange regulations. Since 1991,borrowers have been permitted to borrow in foreign currencies for alllegitimate business purposes at interest rates and on terms freely negotiatedbetween the parties. Beginning in January 1992, banks licensed in Greeceto engage in foreign exchange transactions were permitted to enter into spot,forward, swap and similar transactions in the foreign exchange market, pursuantto Act 1986/1991 of the Governor of the Bank of Greece.

In 1994, individuals and legal entities in Greececould, pursuant to Act 2344/94 of the Governor of the Bank of Greece, for thefirst time engage freely in foreign currency transactions in foreign countriesby filing an application with any bank. Credit institutions in Greece were alsoauthorized to accept deposits made by natural persons and legal entities inforeign currency.

Starting in 1991, Greek foreign exchange restrictionswere gradually relaxed, and were totally eliminated concurrently with theadoption of the euro on January 1, 2001. A 2% requirement of re-depositand assignment, which currently applies to deposits in Euro, applies to foreigncurrency deposits as well.

Drachma banknotes and coins remained legal tender inGreece until February 28, 2002.

Under article 4 of Greek Law 2842/2000, effective January 1,2001, credit institutions operating in Greece and authorized to enter intoforeign currency transactions can freely enter into transactions of any type inforeign currencies and foreign notes, on their own account and at their ownrisk, in accordance with the provisions in force.

Furthermore, creditinstitutions operating in Greece publish daily rate bulletins of buy/sellexchange rates of foreign currencies and notes for the purposes of trading withthe public. The relevant bid/offer 

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spreadsare determined freely. The Bank of Greece publishes daily reference exchangerates of the euro against foreign currencies based on the corresponding foreignexchange rate bulletins of the European Central Bank. “Open-cry” negotiatedrates through the “fixing” mechanism of Greek drachma against foreigncurrencies have been abolished. As a result, any reference to those rates instatutory, administrative, regulatory and contractual provisions is replaced byreference rates published by the central bank of Greece, unless otherwiseprovided or agreed upon.

***Secured Lending***

Since 1992, Greek Law 2076/1992 has permitted mortgagebanks to grant to customers loans and credit that are secured by Greek real andpersonal property and certain types of personal security, such as cash.

Mortgage lending isextended mostly on the basis of pre-notation filings (“*prosimiosi*”),which are less expensive and easier to record than mortgages, and may beconverted into full mortgages upon receiving a judgment subject to appeal onlybefore the Supreme Court from the relevant Greek court in the event of default.

***Compulsory Deposits with the Central Bank***

The compulsoryreserve requirement framework of the Bank of Greece has been altered in linewith Eurosystem regulations. Effective July 10, 2000, reserve ratios aredetermined by category of liabilities and replace the single reserve ratio of12% previously in force for commercial banks. The reserve ratio is set at 2%for all categories of liabilities comprising the reserve base, with theexception of the following liabilities to which a zero ratio applies:

·       depositswith agreed maturity over two years;

·       depositsredeemable at notice over two years;

·       repos;and

·       debtsecurities with agreed maturity over two years.

This requirement appliesto all credit institutions, as well as to the Postal Savings Bank.

***Guidelines for Risk-based Capital Requirements***

Banking regulatory authorities of the majorindustrialized countries have worked together in recent years to developinternational capital adequacy guidelines based on the relationship between abank’s capital and its risks. In July 1988, the Basel Committee on BankingSupervision adopted risk-based capital guidelines, which are implemented bybanking regulations in the countries that endorse the Basel standards,including Greece. These guidelines are intended to reduce competitiveinequality among international banks by harmonizing the regulatory definitionof capital for the purpose of asset-risk evaluation and establishing a uniformtarget-capital adequacy ratio.

The harmonization of credit institution standards is akey part of the program to create an internal banking market in the EU. In1989, the EU Council of Ministers adopted a Directive on the administration ofthe “own funds” of credit institutions known as the “Own Funds Directive”, anda Directive on the solvency ratio for credit institutions, known as the “SolvencyRatio Directive”. Both Directives were codified by the Consolidation Directive(2000/12/EC).

The Own Funds Directive defines regulatory capital,for the purposes of computing a capital adequacy ratio, as the sum of certainitems constituting “Tier I capital” and other items constituting “supplementaryor Tier II capital”. The Directive closely traces the mechanics of the BaselCommittee guidelines.

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The substantive risk-based capital rules containedin the Solvency Ratio Directive generally adopt the Basel Committee guidelinesinto EU law. The Solvency Ratio Directive determines the credit risk of a bank’sassets by multiplying (1) the balance sheet value of each asset by (2) therelevant risk weighting, to produce a risk-adjusted value. For off-balancesheet items, a two-step risk-adjustment is applied, taking into account thenature of (1) the financial instrument concerned and (2) thecounterparty involved. For off-balance sheet items concerning interest ratesand foreign exchange rates (such as swaps, forwards and options), regulatoryauthorities prescribe measurement based on a mark to market approach, or eithercurrent or original exposure. As at January 1993, credit institutions inEU member countries must maintain capital adequacy of at least 8%.

Upon implementation of the Capital Adequacy Directive,the capital requirements for a credit institution in relation to itscountry-specific credit risks are calculated based on the credit institution’sinvestment portfolio, consisting of the assets and off-balance sheettransactions that are not included in its trading book. Prior to the implementationof the Capital Adequacy Directive in Greece, capital requirements werecalculated based on all asset items and off-balance sheet transactionsaccording to statutory provisions established by the central bank.

The level of a credit institution’s regulatory capitalrequired to provide a cushion against trading book exposures depends on themethodology used for measuring general and specific position risks related totraded debt and derivative instruments, equities and equity derivatives, aswell as counterparty risk of over-the-counter derivatives, repo and reverserepo, concentration and settlement risk of all the trading book items andforeign exchange risk of the total of on and off-balance sheet items.

Under the Basel standards, supervisory authorities ineach jurisdiction have some discretion in determining whether to includeparticular instruments as capital under the risk-based capital guidelines andwhether to assign different weights, within a prescribed range, to variouscategories of assets to reflect their relative security.

The Basel Committee’s risk-based guidelines require abank to have a minimum ratio of capital to assets and the off-balance sheetitems determined on a risk-weighted basis, of at least 8%. At least half of therequired capital must be “Tier I” capital and the rest “Tier II” capital.According to guidelines established by the Bank of Greece, regulatory capitalis calculated in accordance with the parameters set forth below.

Tier I capital,which includes:

·       ordinaryshareholder’s equity;

·       reservescreated by appropriations of retained earnings, share premia and othersurpluses;

·       retainedearnings;

·       innovativeTier I instruments such as perpetual non-cumulative preferred stock;

·       minorityinterests; and

·       negativeconsolidation differences.

However, thefollowing must be deducted from Tier I capital:

·       allholdings of own shares and Tier I paper;

·       pastand current year’s net losses;

·       goodwill;

·       interimunpublished net losses;

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·       50%of the cumulative deficit of Defined Benefit Plans for our employees;

·       negativevaluation differences (after tax) of the Available For Sale Equity Portfolio;and

·       positiveconsolidation differences.

Tier II, orsupplementary capital, mainly includes:

·       fixedassets revaluation reserves;

·       reservesagainst general banking risks;

·       cumulativedated preferred stock and dated subordinated debt with a minimum maturity offive years under certain conditions;

·       45%of the positive valuation differences (pre-tax) of the Available For SaleEquity Portfolio; and

·       otherundated quasi-equity capital instruments under conditions, such as cumulativepreferred stock and mandatorily convertible debt instruments.

The following mustalso be deducted from the sum of Tier I and Tier II capital:

·       investmentsin unconsolidated subsidiaries and other financial institutions amounting tomore than 10% of their capital;

·       50%of the cumulative deficit of Defined Benefit Plans for our employees; and

·       thesum of all holdings in other financial institutions’ capital in excess of theequivalent of 10% of the credit institution’s eligible Tier I and II capitalbase.

According to Resolution 178/7/19.07.2004 of the Bankof Greece’s Banking and Credit Affairs Committee and Circular No. 21/22.09.2004of the Governor of the Bank of Greece, as amended by the Bank of Greece’sBanking and Credit Affairs Committee Resolution 198/17.5.2005, certain hybridTier I instruments may be included, subject to stringent conditions, in Tier Icapital of credit institutions in Greece. Moreover, hybrid Tier I instruments(both innovative and non-innovative) may not exceed 25% of Tier I capital,while innovative hybrid Tier I instruments may not exceed 10% of Tier Icapital.

A bank’s Tier II capital may not exceed its Tier Icapital. There are also limitations on the maximum amount of certain Tier IIitems that may be counted towards a bank’s capital requirements. In particular,cumulative fixed term preferred stock and subordinated debt with a minimummaturity of five years may not exceed 50% of Tier I capital.

To assess the capital adequacy of banks under therisk-based capital guidelines, a bank’s capital is related to the aggregaterisk of its assets and off-balance sheet exposure, which are weighted accordingto four broad categories of risk (each reflecting the collective likelihood ofloss, non-performance or default)—0%, 20%, 50% and 100%. The risk-based capitalguidelines also set credit conversion formulas for measuring risk relating tooff-balance sheet items, including financial guarantees, letters of credit andforeign currency and interest rate contracts.

According to Act No. 2156/92(amended by Act No. 2560/05) of the Governor of the Bank of Greece, allcredit institutions operating in Greece are required to provide regulatoryauthorities with quarterly information on overall liquidity. This requirementbecame effective on May 31, 1993, and applies to:

·       domesticcredit institutions;

·       Greekbranches of EU banks; and

·       Greekbranches of non-EU banks.

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According to Act No. 2560/01.04.2005of the Governor of the Bank of Greece, each credit institution must submitcompleted liquidity tables on a quarterly basis. All assets and liability itemsare classified in time buckets, according to their relative remainingmaturities. Items without contractually fixed maturity dates must be classifiedin time buckets on the basis of the accounting principle of conservationism,i.e., assets in the over 1 year time bucket and liabilities in the overnightbucket. The “trading and available-for-sale securities” and “current andsavings accounts” are excluded and their classification in time buckets shallbe determined on the basis of behavioral analysis. For the purposes of theaudit, credit institutions are required to observe mandatory liquidity ratiosin the form of minimum limits:

·       Liquiddisposable funds ratio, which is determined as the ratio of “liquid disposablefunds” of the overnight time bucket up to 30 days to “borrowed funds”. Theminimum limit of this ratio is set at 20%.

·       Asset-Liabilitytenor variance ratio, which is determined as the ratio of “assets minusliabilities” of the overnight time bucket up to 30 days to “borrowed funds”.The minimum limit of this ratio (prefaced by a minus sign) is set at –20%.

Pursuant to Act No. 2442/29.01.1999 (as amendedby Act No. 2513/15.01.2003) and Act No. 2565/13.10.05 of the Governorof the Bank of Greece, credit institutions that have their registered office inGreece, as well as the branch offices in Greece of credit institutions whoseregistered seat is in a country outside the EU, must maintain loan lossprovisions to at least a minimum amount to be calculated with reference tofactors set forth under the Act. In certain circumstances credit institutionsmay use, as an alternative, the calculations that are included in the valuationreport issued by their Internal Audit and submitted to and approved by thecentral bank. Under the Act, credit institutions must file reports to the Bankof Greece regarding the adequacy of their loan loss provisions quarterly.

In an effort tocontrol excessive exposure to a single or related borrowers, the central bank,through Act No. 2246/93, also known as the “Large Exposures Act,” adoptedthe EU Council’s Large Exposures Directive. An exposure is considered a largeexposure if it exceeds 10% of the credit institution’s regulatory capital. ThisDirective, drawing on the European Commission’s 1986 recommendation, requiresthat credit institutions:

·       immediatelynotify the central bank of any excessive concentration of exposures; and

·       limitsuch concentrated exposures to a certain percentage of the credit institution’sregulatory capital.

The Large Exposures Act imposes two limits onexposures. First, the value of each large exposure in the banking book may notexceed 25% of a credit institution’s regulatory capital. Second, total largeexposures in the banking book for a given credit institution may not exceed800% of its regulatory capital. A credit institution is allowed to exceed itslarge exposure limits only in relation to items included in its tradingportfolio and is required to hold additional regulatory capital in suchcircumstances.

In November 2005, the Basel Committee on BankingSupervision published its final proposals on the new capital adequacystandards. The New Basel Capital Accord proposals currently include a diversityof methodologies for the calculation of capital requirements in respect ofcredit risk and operational risk (a newly-introduced term for the risk of lossresulting from inadequate or failed internal processes, people and systems, orfrom external events) and necessary revisions to the Amendment to Market Risks(1996). The Standardized (credit & operational risk) and FoundationInternal Ratings Based (credit risk) approaches are expected to becomeeffective in various countries within 2007, while the most Advanced (credit &operational risk) approaches are expected to become effective within 2008.Within the final version of the New Basel Capital Accord, additional guidanceon the application of trading activities and double default was published,demonstrating the capacity of the revised Framework to evolve with time andkeep pace with market developments and advances in risk management practices.

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The final Directives 2006/48/EC on the taking up andpursuit of the business of credit institutions and 2006/49/EC on the capitaladequacy of investment firms and credit institutions of the European Parliamentand of the Council were finalized and published in June 2006. Due to theintroduction of EU Directives 2006/48/EC and 2006/49/EC, the Bank may berequired by its regulators to maintain higher levels of capital, which coulddecrease our operational flexibility and may increase our financing costs.Consequently, we cannot assure you that the New Basel Capital Accord will nothave a material adverse effect on our financial condition or results ofoperations in the future.

The respective Greek Lawand Bank of Greece Governor’s Acts that will enforce the above mentioned EUDirectives are expected to be introduced within 2007.

***Additional Reporting Requirements***

All credit institutions inGreece are required to provide the Bank of Greece with: (1) a quarterlyreport on capital adequacy; (2) a quarterly report on profitability andexposure to banking risks (pursuant to Annexes 2 and 3 of Act No. 1313/88amended by Act No 2563/05); (3) monthly data relating to open currencypositions (pursuant to Act No. 2291/94, amended by resolution No176/18.6.04 of the Banking and Credit Affairs Committee); (4) a quarterlyreport on loan loss reserves pursuant to Act No. 2442/99 (amended byAct No. 2513/03 and 2565/05); (5) a quarterly report on liquiditypursuant to Act No. 2156/92 (amended by Act No. 2560/05); (6) aquarterly report on cross-border credit exposures pursuant to Act No. 2520/03;(7) a general annual internal audit report (pursuant to Act No. 2438/98);(8) a quarterly report on large exposures pursuant to Act No. 2246/93;(9) a semi-annual report on large debtors pursuant to Bank of Greece,Banking and Credit Affairs Committee resolutions 485/91, 540/94, 159/03 and915/03; (10) a semi-annual report on credit institution exposures pursuantto Act No. 2563/05; (11) a quarterly report on securitization pursuant toAct No. 2563/05; and (12) a semi-annual report on hedge funds pursuant toAct No. 2563/05

***Deposit Guarantee Fund***

In January 1993, the Greek Parliament adopted Law2114/1993 on the introduction of a deposit protection fund. This Law wasrepealed in July 1995 by the adoption of Greek Law 2324/1995, which took intoaccount EU Council Directive 1994/19/EC on deposit guarantee schemes, and wasfurther supplemented in June 2000 by the adoption of Greek Law 2832/2000.The Greek deposit guarantee fund took effect in September 1995. Currently,the fund, which is a private entity according to Greek Law 2832/2000, isadministered jointly by the Bank of Greece, the Hellenic Bank Association, theMinistry of Economy and Finance and the Association of Greek Cooperative Banks.

The Hellenic DepositGuarantee Fund is funded by annual contributions of participating creditinstitutions (and cooperative banks pursuant to Greek Law 2832/2000 andPresidential Decree 329/2000). The level of each participant’s annualcontribution is generally determined according to certain percentages appliedto the total amount of eligible deposits. If accumulated funds are notsufficient to cover the claimants whose deposits become unavailable,participants may be required to pay an additional contribution. However, thiscontribution may not exceed an amount equal to 300% of a bank’s last annualcontribution. This additional contribution is set off against the annualcontributions of following years. Greek law adopted the minimum level ofcoverage provided by the EU Directive, which amounts to €20,000per depositor per credit institution. Accordingly, credit institutions in EUmember states that belong to a system offering a higher level of coverage havea competitive advantage compared to Greek banks.

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***Prohibition of Money Laundering and Terrorist Financing***

Greece, as a member of the Financial Action Task Force(“FATF”) and as a member state of the EU, fully complies with FATFrecommendations and the relevant EU legal framework.

Specifically:

Articles 5 and 6 ofGreek Law 2145/1993 (now repealed) implemented some of the core provisions ofEU Council Directive 91/308 regarding money laundering. In August 1995,the Greek Parliament adopted Law 2331/1995 (amended by Laws 2479/1997 and2515/1997), which prohibits the use of the financial system to legitimizerevenues generated from illegal activities, and implements EU Council Directive 91/308.The main provisions of Greek legislation on money laundering are as follows:

·       moneylaundering is a criminal offence;

·       personssubject to the law include credit institutions, financial institutions, andcertain insurance undertakings;

·       creditinstitutions (and other persons) are required to identify customers, retaindocuments and notify authorities of suspicious transactions;

·       provisionsof private law and banking secrecy do not apply to money laundering activities;and

·       apublic authority was established pursuant to Law 2331/1995 and is responsiblefor examining reports filed by banks with respect to suspicious transactionsand for ensuring correct implementation of this Law. Among others, severalministries, the Central Bank, the Hellenic Capital Market Commission, taxauthorities, the police, and the Hellenic Bank Association participate in theadministration of the public authority.

In July 2002, the Greek Parliament adopted Law3034/2002, which implemented the International Convention for the Suppressionof the Financing of Terrorism, with which we are fully compliant. Additionally,we comply with the Uniting and Strengthening America by Providing Appropriate ToolsRequired to Intercept and Obstruct Terrorism Act of 2001 (known as the “USAPATRIOT Act of 2001”), which took effect in October 2001 and which hasimplemented a range of new anti-money laundering requirements on banks andother financial services institutions worldwide.

On December 13, 2005, Law 3424 was adopted by theGreek Parliament, which amended and supplemented the existing legislation onthe prevention of money laundering (Law 2331/95) and terrorist financing (Law3034/2002), and harmonized Greek legislation with Directive 2001/97/EC.

Furthermore, the Bank of Greece, our supervisory body,having taken into consideration the need for further specialization of the saidframework issued its Decision No 231/4/13.10.2006 with a view to preventing theuse of the financial system for the purpose of money laundering and terroristfinancing. This Decision came into force on November 3, 2006, andsupplements the Bank of Greece Governor’s Act No 2577 of March 9, 2006regarding the “Framework of operation principles and assessment criteria forthe organization and Internal Control Systems of financial institutions andtheir managing officers’ respective functions”.

Decision No 231/4/13.10.2006 is in line with the thirdAML/CFT Directive 2005/60EU according to which all EU member states shouldfully comply by December 15, 2007 and also implements FATF’s 9 SpecialRecommendations on Terrorist Financing.

Finally, Regulation (EC) No 1781/2006 of the EuropeanParliament and European Council of November 15, 2006 on information on thepayer accompanying transfer of funds is binding in its entirety and is directlyapplicable in Greece.

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***Equity Participation by Banks***

Banks must follow certain procedures regardingholdings in other companies:

*Central bank.*According to the Bank of Greece, Banking and Credit Affairs Committeeresolution 80/15/29.8.2000, as amended by resolution 150/9/9.5.2003, creditinstitutions must obtain central bank approval to acquire a holding in theshare capital of credit institutions, financial services companies, insurancecompanies, information technology and data processing companies, asset andliability management companies, venture capitals, real property managementcompanies, interbank management companies, stock and derivatives exchanges, theCentral Securities Depository and the Derivatives Clearing House. Priorapproval is required when:

·       acommercial or investment bank makes an initial investment in excess of €2.5million or, in the case of all other credit institutions, an initial investmentin excess of €0.5million (up from €1.5million and €0.3million respectively, prior to the May 2003 amendment); and

·       analready existing participation is increased by an amount exceeding the limitsset by the Bank of Greece, and which calculated cumulatively over a calendaryear, exceeds the lower of either of the two following thresholds:

·        2%of the credit institution’s own funds at the end of the previous six-month period;or

·        €8million (up from €6million prior to the May 2003 amendment).

These thresholds do not include shares acquiredthrough underwriting in the previous 12 months but include shares acquiredthrough subsidiaries in which the parent holds a stake of at least 20%.

No prior permissionis required for exceeding the limits set by the Bank of Greece if:

·       thecredit institution already owns (directly or indirectly) more than 50% of theshare capital or the voting rights, and its Capital Adequacy Ratio (solo andconsolidated) exceeds 11% and the additional investment does not influence thisratio by more than one percentage point; and

·       theadditional investment results from the distribution of bonus shares or therepurchase of shares sold on the ATHEX provided that in the case of the latter,the repurchase is effected in the three-day period following the originalsale, and the difference between the proceeds of the sale and the book value ofthe investment prior to the sale is debited to special non-distributable reservesor provisions.

In addition, no prior permission is required forinitial or additional investment via closed-end funds.

*CompetitionCommission.*Subject to EU regulations, new andsignificant holdings (concentrations) must be reported to the Greek CompetitionCommission according to Greek Law 703/1977, as in force.

The Hellenic CapitalMarket Commission and the ATHEX must be notified once certain ownershipthresholds are crossed with respect to listed companies.

**Strategy**

**Our key goals, as set out in ourBusiness Plan 2007-2009, are the following:**

·       tobe the leading and most reputable financial institution in SEE, offeringsuperior service to our customers;

·       tobecome the employer of choice to the benefit of our employees; and

·       todeliver superior returns to our shareholders, within an environment of modernand effective corporate governance and a carefully monitored risk managementframework.

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Toachieve these key goals, we have formulated our strategic choices and actionsfor the next three years (2007-2009), focusing on three key areas:

·       maintainingbrisk growth in revenues;

·       furtherstrengthening operational efficiency; and

·       successfully integratingrecent acquisitions and exploiting synergy potential.

***Revenue growth***

*Retail banking*

Although business hasexpanded substantially in recent years, the domestic banking market stilloffers attractive growth margins in the retail segment. At December 31,2006, the ratio of household funding-to-GDP stood at 45% compared with 54% forthe euro area as a whole. Furthermore, the robust growth of the Greek economyand the resulting increase in employment and per capita income have generatedthe conditions necessary for further expansion in lending to households.

We intend to furtherstrengthen our leading position in retail banking by exploiting our broaddeposit base—one of our key competitive advantages—which enables us also toincrease cross-selling potential at the Group level, in particular retailproducts and bancassurance.

One of our key competitiveadvantages is our leading position in mortgage lending, with a share ofapproximately one fourth of the market. Notably, in 2006, we lent over €3.5billion in new mortgages, as the total mortgage portfolio grew to €13.8billion. This was due to the extensive branch network, customer loyalty and theinnovative products that the Bank offers. We aim to maintain our market shareand exploit alternative delivery channels, particularly targeting constructioncompanies and estate agencies.

We attach particularimportance to SMEs. The strengthening of our mobile sales force in 2006, whichserves as an alternative sales network, proved to be particularly successful aslending to SMEs grew by 45% and the customer base grew by 4,500 new businesses.

As we upgrade our branchoperations, we have improved services to customers. Affluent individuals andSMEs are served by Customer Relationship Managers (“CRMs”) who undertake toattend to their overall banking needs. The CRMs have the know-how vis-à-vis thefull set of products of the Group and are qualified to identify and plan thefinancial needs of the customer. This new model has been implemented in almostthe entire NBG branch network, while in 2007 it will be extended to privateretail customers. Through this model, we have made significant improvements incustomer service, as we can now offer new value-added services. The benefitsfor the Group focus on growth in business with existing customers (i.e.increases in loan balances and cross-selling) as well as the attraction of newcustomers.

*Investment services—Insurance*

In the area of investmentservices, in early 2007, we completed our acquisition of P&K InvestmentServices (including its subsidiaries P&K Securities and P&K MFMC) witha view to creating the largest integrated securities firm in SEE. Operating inthe spheres of investment banking, asset management and brokerage, P&KInvestment Services has a wide customer base comprising companies, individualsand institutional investors in Greece and abroad, and is noted for the qualityof the services provided.

In asset management, efforts will be stepped up toenhance the mix of higher performing fund categories, while special emphasiswill be placed on exploiting our extensive branch network as a sales channel.With respect to insurance, besides the benefits that we will reap from thelong-term rationalization of domestic market penetration, we expect to achievesignificant synergies in the international markets. For instance, in Turkey,the plan is to launch an insurance company jointly with Finansbank; in Romaniawe will leverage the newly acquired Alpha Insurance; and in Bulgariacollaboration will proceed jointly with AIG.

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In bancassurance, weintend to exploit the synergies deriving from our broad customer base. The keytargets for the three-year period 2007-2009 are to enhance theperformance of our insurance business by better leveraging the sales network,launching new products, strengthening incentives across the sales network andrevising pricing policy.

We are currently in theprocess of upgrading the services we offer to our private banking customers. Tothis end, we are extending our network of investment centers, and marketingselect third-party open-architecture products via agreements with leadinginternational investment houses.

*Acquisitions in SEE*

In view of the fact thatbanking penetration levels in Greece in the medium term are maturing, and dueto the limited scale of the Greek market, we are looking to expand in marketsthat present lower credit penetration and bigger margins for growth. To thisend, we succeeded in substantially strengthening our presence in the widerregion of SEE in 2006. Foreseeing the rapid developments that are currentlytaking place in the international environment and the need to expand into newdynamic markets that offer growth at levels similar to those of other majorbanks operating on a European level, we made two important acquisitions in2006, in Turkey and Serbia.

The acquisition ofFinansbank signals the consolidation of our presence in SEE, giving us accessto a Turkish market of 70 million inhabitants, more than double the numberprior to the acquisition.

Finansbank is a dynamicprivate bank run on innovative methods for growing and supporting its business,led by a highly efficient management team, and enjoying a strong position inthe Turkish market. Finansbank further consolidated its strong position in2006, posting lending growth in retail and corporate banking of over 75% and50% respectively, outperforming the targets that had been set for the year. In2006, Finansbank opened 100 new branches in Turkey bringing the total to 309branches as at December 31, 2006. This vigorous network growth willcontinue over the course of the coming three years, the goal being to open afurther 240 new branches, bringing the total to 550 branches in 2009.

In December 2006, weacquired a 99% shareholding in Vojvodjanska. This was Serbia’s biggest sale todate of a state-controlled bank. Through the acquisition of Vojvodjanska, thesecond largest bank in Serbia in terms of branch network and sixth largest interms of assets, and with over 600,000 retail and 60,000 business customers, westrengthened our presence in the Serbian market, increasing the number ofSerbian branches to 203 and our market share in deposits to 8%, with around 10%in much sought-after deposits in local currency and 6% in lending, thus makingVojvodjanska one of the Serbia’s leading banks.

For 2009, our target isfor the Group’s SEE and Turkish businesses to generate approximately 45% oftotal Group profitability, while over 60% of our branches and employees will beoutside Greece. Note in particular that these targets will be achieved despitethe expected continuation of high growth in our business in the domestic Greekmarket.

***Enhancedoperational efficiency***

In 2006, the first phaseof internal reorganization at the Group was completed, through a range ofactions that aimed at actively monitoring and containing operating expenses.These actions have led to more efficient management of general expenses andstaff costs at the Bank, resulting in below-inflation increases. In SEE,operating expenses grew at a faster pace than in Greece due to the vigorousorganic expansion of the Group in the region.

As a result of ourendeavors to control costs while dynamically growing our revenues, ourefficiency—as expressed by the cost/income ratio—stood at 50.7% in 2006compared with 53.3% in 2005, while we were close to the 2007 target of 50% setby the Business Plan 2005-2007.

In the three-year period2007-2009, we will step up our efforts to contain administrative expensesby initiating the second round of internal reorganization. The key actions willfocus on centralization of 

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commissionsat the Group level, and on further rationalization of general expenses byintroducing best practices. As a result, in 2007-2009, domestic generaland administrative expenses are expected to increase at roughly the same paceas inflation, on average, each year, while in the wider SEE region, growth inthese expenses will be outstripped by the increase in revenues, therebyimproving significantly the ratio of general expenses to income.

As regards staffproductivity increases, the main actions planned for the coming three-yearperiod will aim at reducing those tasks carried out in the branches that arenot associated with sales, and the improved management of human resources.Special emphasis will be placed on training and professional development ofstaff, while the application of productivity bonuses and performance-relatedpay will be strengthened, thereby enhancing incentives and rewardingperformance.

The Group’s operationalefficiency is expected to improve significantly to levels below 44% in 2009,compared with 50.7%, in 2006, boosted mainly by improvements in the cost/incomeratio of Finansbank, which is forecasted to fall to below 41% in 2009, from its2006 level of 45% in 2006.

***Effective integrationof new acquisitions and the leverage of synergies***

The recent acquisitions—particularlyFinansbank—have created a new structure for the Group, with a wide diversity ofrevenue and profitability sources that derive in large part from operations outsideGreece. In 2006, more than half of the Group’s branches were located in SEE,while approximately one-fifth of income and a quarter of profits derived fromthe wider SEE region. According to the targets set out in the Business Plan 2007-2009,about 45% of our profitability in 2009 will be generated outside Greece. Theleverage of significant synergies arising from the new Group structure willcontribute to growth in this direction, as effective integration into the Groupof the recently acquired banks is expected to generate substantial benefits,with the total impact of these synergies on profits before tax anticipated tobe in the region of €150 million at the end of2009. To achieve effective integration of the new members into the Group, it isimperative that a single control and management system is effectivelyimplemented. To this end, substantial work has already been done by means ofspecial projects for the integration of financial reporting, performancemanagement, risk management, corporate governance and regulatory compliance.

***Effectivemanagement of regulatory capital***

Active management of ourregulatory capital is being strengthened alongside the changes in strategy andorientation, and the rapid growth in lending, particularly in SEE and Turkey.Accordingly, we sold off a number of our shareholdings in sectors andactivities that either did not yield satisfactory returns or were notcompatible with our strategy.

Following the sale of oursubsidiary Atlantic Bank of New York to New York Community Bank at the end of2005, we sold our Canadian subsidiary NBG Canada. The sale of these two banksis in line with our strategy to discontinue operations in mature markets wherethe prospects of further growth are limited and where, in any case, we haveonly a very small presence. We will continue to withdraw from non-strategicsectors and divest our portfolio of low-yielding assets so as to better utilizethe funds we invest, thereby generating benefits for our shareholders.

The creation and maintenance of an environment ofinternational best practice management is essential in order to ensure ourcompliance with the requirements of the Basel II framework of rules regardingcapital adequacy of banks. In the first stage of implementation of Basel II, wesaw our regulatory capital affected to only a very small degree. Following theincrease in share capital and the acquisitions discussed above (including 99%integration of Finansbank), the Group’s Upper Tier I capital adequacy ratiostood at 8%, 50 basis points above the minimum target of 7.5% set out in theBusiness Plan 2007-2009.

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Growth in operations willbe supported by strict and efficient management of the Group’s regulatorycapital throughout the three years ahead. Further expansion of the Group throughacquisitions will continue to be selective, ensuring desired returns on thecapital invested, but will be relatively small-scale in the coming two years.The transformation of the Group into a modern international organizationrequires further changes at a multitude of levels. The progress already made isparticularly important and has laid the foundations for a successful outcome tothe Business Plan 2007-2009.

**C.**   OrganizationalStructure

Historically, Greek law prohibited banks from engagingdirectly in financial service activities outside their traditional deposit andloan functions. A remnant of such rules is that Greek banks are prohibitedfrom providing leasing services directly, but may do so through dedicatedsubsidiaries. Therefore, specialized financial institutions were established inGreece, each for the provision of a particular type of financial service. AGreek bank that sought to provide multiple financial services to its customerswould establish several subsidiaries, each a specialized institution within thebank’s integrated group of diverse financial services companies. As aconsequence of this historical practice, the Greek financial services sectortoday is characterized by a group of specialized companies established around aprincipal bank. National Bank of Greece SA is such a principal bank, aroundwhich our consolidated subsidiaries are organized.

Set forth below is a chartindicating the individual companies within the Group.

| ** **                             | ** ** | ** ** | ** **   | **Bank’s Participation as at   December 31, 2006** | ** ** |
|----------------------------------------|------------|------------|--------------|----------------------------------------------------------------------------------|------------|
| **Primary Operating Area**   | ** ** | ** ** | ** **   | **Country of incorporation**                                           | ** ** | **Direct** | ** ** | **Indirect** | ** ** | **Total** | ** ** |
| International banking activities       |       |       |         |                                                                             |       |   |   |   |   |   |   |   |   |
| The South African  Bank of Athens Ltd. |       |       | South Africa |                                                                             |       | 91.44 | % |   | 8.06 | % |   | 99.50 | % |
| National Bank of  Greece Cyprus Ltd.   |       |       | Cyprus       |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| Stopanska Banka  A.D.                  |       |       | FYROM        |                                                                             |       | 71.20 | % |   | — |   |   | 71.20 | % |
| United Bulgarian  Bank AD              |       |       | Bulgaria     |                                                                             |       | 99.91 | % |   | — |   |   | 99.91 | % |
| Banca Romaneasca  SA                   |       |       | Romania      |                                                                             |       | 88.71 | % |   | — |   |   | 88.71 | % |
| Finansbank SA                          |       |       | Turkey       |                                                                             |       | 46.00 | % |   | — |   |   | 46.00 | % |
| Vojvodjanska Banka  a.d. Novi Sad      |       |       | Serbia       |                                                                             |       | 99.43 | % |   | — |   |   | 99.43 | % |
| Investment banking and venture capital |       |       |         |                                                                             |       |   |   |   |   |   |   |   |   |
| NBG Venture  Capital S.A.              |       |       | Greece       |                                                                             |       | — |   |   | 100.00 | % |   | 100.00 | % |
| NBG Greek Fund  Ltd.                   |       |       | Cyprus       |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| ETEBA Emerging  Markets Fund Ltd.      |       |       | Cyprus       |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| ETEBA Estate Fund  Ltd.                |       |       | Cyprus       |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| ETEBA Venture  Capital Management S.A. |       |       | Cyprus       |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| NBG International                      |       |       | UK           |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| ETEBA Bulgaria  A.D. Sofia             |       |       | Bulgaria     |                                                                             |       | 92.00 | % |   | 8.00 | % |   | 100.00 | % |
| ETEBA Romania  S.A.                    |       |       | Romania      |                                                                             |       | 100.00 | % |   | — |   |   | 100.00 | % |
| Innovative  Ventures S.A. (I-Ven)      |       |       | Greece       |                                                                             |       | — |   |   | 100.00 | % |   | 100.00 | % |
|                                        |            |            |              |                                                                                  |            |  |  |  |  |  |  |  |  |  |  |

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| Financial Services                              |   |   |       |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| National Securities SA.                         |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| Ethniki Kefalaiou S.A.                          |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| Diethniki SA                                    |   |   | Greece     |   |   | 81.00  | %      |   | 19.00  | %      |   | 100.00 | %      |
| National Management and Organization Company SA |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| Ethniki Leasing SA                              |   |   | Greece     |   |   | 93.33  | %      |   | 6.67   | %      |   | 100.00 | %      |
| Ethniki Mutual Fund Management SA               |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| National Securities Cyprus (Ethnosecurities)    |   |   | Cyprus     |   |   | — |   |   | 100.00 | %      |   | 100.00 | %      |
| NBGI Inc.                                       |   |   | USA        |   |   | — |   |   | 100.00 | %      |   | 100.00 | %      |
| NBGI Private Equity Limited                     |   |   | UK         |   |   | — |   |   | 100.00 | %      |   | 100.00 | %      |
| Interlease A.D. Sofia                           |   |   | Bulgaria   |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| EURIAL Leasing SA                               |   |   | Romania    |   |   | 70.00  | %      |   | — |   |   | 70.00  | %      |
| NBG Luxembourg                                  |   |   | Luxembourg |   |   | 94.67  | %      |   | 5.33   | %      |   | 100.00 | %      |
| NBG Luxfinance                                  |   |   | Luxembourg |   |   | 94.67  | %      |   | 5.33   | %      |   | 100.00 | %      |
| NBG International Holding BV                    |   |   | Holland    |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| NBGI Private Equity Funds                       |   |   | UK         |   |   | — |   |   | 100.00 | %      |   | 100.00 | %      |
| Insurance                                       |   |   |       |   |   |   |   |   |   |   |   |   |   |
| NBG Bancassurance S.A.                          |   |   | Greece     |   |   | 99.70  | %      |   | 0.30   | %      |   | 100.00 | %      |
| Ethniki Hellenic General Insurance              |   |   | Greece     |   |   | 76.74  | %      |   | — |   |   | 76.74  | %      |
| Business  consulting                            |   |   |       |   |   |   |   |   |   |   |   |   |   |
| Ethnodata                                       |   |   | Greece     |   |   | 98.41  | %      |   | 1.59   | %      |   | 100.00 | %      |
| NBG Training Center S.A.                        |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| Ethnoplan S.A                                   |   |   | Greece     |   |   | — |   |   | 100.00 | %      |   | 100.00 | %      |
| Selected  non-banking participations            |   |   |       |   |   |   |   |   |   |   |   |   |   |
| NBG Management Services                         |   |   | Cyprus     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| DIONISOS SA                                     |   |   | Greece     |   |   | 99.91  | %      |   | — |   |   | 99.91  | %      |
| KADMOS S.A.                                     |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| EKTENEPOL Construction Company                  |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| Mortgage, Tourist PROTYPOS S.A.                 |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| GRAND HOTEL SUMMER PALACE S.A.                  |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |
| Hellenic Tourist Constructions S.A.             |   |   | Greece     |   |   | 77.76  | %      |   | — |   |   | 77.76  | %      |
| ASTIR PALACE VOULIAGMENIS S.A.                  |   |   | Greece     |   |   | 78.06  | %      |   | — |   |   | 78.06  | %      |
| Ethniki  Ktimatikis Ekmetalefsis                |   |   | Greece     |   |   | 100.00 | %      |   | — |   |   | 100.00 | %      |

 

**D.   Property,Plants and Equipment**

We own approximately 1,800 properties, approximately1,300 of which are buildings. These properties are, for the most part, heldfree of encumbrances. Most of our properties are attributable to our branchesand offices through which we maintain our customer relationships and administerour operations. Most of our other properties have been acquired as a result offoreclosure on the collateral of defaulted loans. The Bank had disposals in2006, in connection with the sale of Atlantic Bank of New York and NBG Canada.There are no environmental issues of which we are aware of that may affect theBank’s utilization of our real estate assets.

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The Group’s real estateportfolio was recorded at a cost of €950.6 million as atDecember 31, 2006, which is recorded in our US GAAP financial statementsas “premises and equipment’’. Those of our properties that have been acquiredas a result of foreclosure on the collateral of defaulted loans had a bookvalue of €91.9million as at December 31, 2006, and are recorded as “other assets” in theGroup’s U.S. GAAP financial statements. Management believes that the currentmarket value of real estate assets exceeds their book value. We are not alwaysable to realize the full market value of real estate which we are required toor wish to sell because of variations in the property market and legalimpediments to the open market sale of such property. However, in order toexpedite the process of divesting these non-core assets, we have simplified theauction process and have established a subsidiary, Ethniki Kefalaiou, whichacquires from the Bank and our subsidiaries certain real estate assets with thesole purpose of realizing for the Group the value of such assets moreefficiently. For more information on the Group’s management of its propertiessee Item 4.B: *“Business Overview OtherFinancial and Related Services Real Estate Management”*.

Thetable below identifies the Group’s significant real property holdings, takinginto account the book value under IFRS which approximates market values, as at December 31,2006:

| **Address** | ** **                                                  | ** ** | ** **                                                      | **Type of Property** | ** **                                                              | **Use**    | ** **                                           | **Area**   | ** **                          | **As at  December 31,  2006  Book Value  per IFRS** | ** ** |
|-------------|-------------------------------------------------------------|------------|-----------------------------------------------------------------|--------------------------------|-------------------------------------------------------------------------|------------|------------------------------------------------------|------------|-------------------------------------|-------------------------------------------------------------------------|------------|
| ** **  | ** **                                                  | ** ** | ** **                                                      | ** **                     | ** **                                                              | ** ** | ** **                                           | ** ** | **(**€ in thousands) | ** **                                                              |
| 1.          | Mikro  Kavouri,  Vouliagmeni                                |       | Land  and  multistory hotels                                    |                           | Hotels                                                                  |       | 57,000 m2 on a site  of 192,622 m2    |       |                                | 161,035                                                                 |       |   |
| 2.          | Drapetsona                                                  |       | Land                                                            |                           | —                                                                  |       | 254,142 m2                                      |       |                                | 120,303                                                                 |       |   |
| 3.          | Magoula Attiki                                              |       | Land and  warehouses                                            |                           | Warehousing                                                             |       | 105,783 m2 on a site  of 1,063,000 m2 |       |                                | 110,435                                                                 |       |   |
| 4.          | Dionysos                                                    |       | Land                                                            |                           | —                                                                  |       | 410,956 m2                                      |       |                                | 90,000                                                                  |       |   |
| 5.          | 103-105 Syggrou  Ave                                        |       | Multi-story  building                                           |                           | Administrative  services                                                |       | 67,634 m2 on a site  of 9,057 m2      |       |                                | 87,761                                                                  |       |   |
| 6.          | 86 Eolou  &  6-8-10-12  Sophocleous Str.           |       | Block of multi-story  buildings, listed on  historical register |                           | Head office  Administrative  services  Leased to Athens  Stock Exchange |       | 33,887 m2 on a site  of 9,687 m2      |       |                                | 67,618                                                                  |       |   |
| 7.          | 4 Korai Str. and  32 Stadiou Str.,  Athens                  |       | Building                                                        |                           | Administrative  services                                                |       | 13,967 m2 on a site  of 2,155 m2      |       |                                | 60,953                                                                  |       |   |
| 8.          | Varibobi                                                    |       | Land                                                            |                           | —                                                                  |       | 1,600,000 m2                                    |       |                                | 25,412                                                                  |       |   |
| 9.          | Büyükdere Caddesi  No: 129 Esentepe-İstanbul |       | Building                                                        |                           | Head office                                                             |       | 16,997 m2                                            |       |                                | 23,617                                                                  |       |   |
| 10.         | 38 Stadiou Str.,  Athens                                    |       | Multi-story  building, listed on  historical register           |                           | Branch &  administrative  services                             |       | 8,820 m2 on a site  of 1,700 m2       |       |                                | 20,415                                                                  |       |   |
| 11.         | 8 Kar. Serbias,  Athens                                     |       | Multi-story  building                                           |                           | Administrative  services                                                |       | 6,045 m2 on a site  of 938 m2         |       |                                | 15,707                                                                  |       |   |
| 12.         | 6 Aristotelous  Square and  5 Ploutarchou,  Thessaloniki    |       | Multi-story  building                                           |                           | Administrative  services                                                |       | 5,759 m2 on a site  of 879 m2         |       |                                | 13,839                                                                  |       |   |
| 13.         | Akti Miaouli,  Rhodes                                       |       | Multi-story  building                                           |                           | Hotel                                                                   |       | 33,707 m2 on a site  of 20,040 m2     |       |                                | 11,328                                                                  |       |   |
|             |                                                             |            |                                                                 |                                |                                                                         |            |                                                      |            |                                     |                                                                         |            |  |  |  |

 

There are no environmentalissues of which we are aware that could affect our utilization of theseproperty holdings.

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**E.   SelectedStatistical Data**

Information included inthis section, except where otherwise stated, relates to the Bank and itssubsidiaries. The statistical data presented below may differ from dataincluded in the consolidated financial statements of the Group includedelsewhere in this Annual Report. In certain cases, the statistical data isderived from statutory reports and from statistical data reported in the formsprescribed by the central bank for regulatory purposes. Such data are compiledas a normal part of our financial reporting and management information systems.Unless otherwise noted, amounts presented below are based on U.S. GAAPfinancial information.

**Average Balancesand Interest Rates**

Thefollowing table sets forth the average balances of our assets and liabilitiesfor the years ended December 31, 2004 , 2005 and 2006, from our continuingoperations and, for interest-earning assets and interest-bearing liabilities,provides the amount of interest earned or paid and the average rate of suchinterest for such asset or liability, as applicable. The table below has beencalculated on the basis of average monthly balances.

| ** **                                                 | ** ** | **Year ended December 31,**                     | ** ** |
|------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                 | ** ** | **2004**                                                       | ** ** | **2005** | ** ** | **2006**(4) | ** ** |
| ** **                                                 | ** ** | **Average  Balance**                                           | ** ** | **Interest** | ** ** | **Average  Rate %** | ** ** | **Average  Balance** | ** ** | **Interest** | ** ** | **Average  Rate %** | ** ** | **Average  Balance** | ** ** | **Interest** | ** ** | **Average  Rate %** | ** ** |
| ** **                                                 | ** ** | **(EUR in thousands, except percentages)** | ** ** |
| **Assets:**                                                | ** ** | ** **                                                     | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| Cash and due from banks                                    |       | 578,658                                                        |       | — |   |   | — |   |   | 1,088,639 |   | — |   |   | — |   |   | 1,084,471 |   | — |   |   |   |   |   |
| Deposits with central bank                                 |       | 857,169                                                        |       | 19,769 |   |   | 2.31 | % |   | 1,105,306 |   | 18,385 |   |   | 1.66 | % |   | 1,974,494 |   | 37,648 |   |   | 1.91 | % |   |
| Securities purchased under agreements  to resell |       | 5,680,881                                                      |       | 116,153 |   |   | 2.04 | % |   | 5,306,778 |   | 108,673 |   |   | 2.05 | % |   | 4,109,676 |   | 111,378 |   |   | 2.71 | % |   |
| Interest bearing deposits with banks                       |       | 5,941,230                                                      |       | 117,452 |   |   | 1.98 | % |   | 6,168,075 |   | 181,222 |   |   | 2.94 | % |   | 6,495,183 |   | 285,920 |   |   | 4.40 | % |   |
| Money market investments                                   |       | 148,422                                                        |       | 5,504 |   |   | 3.71 | % |   | 169,609 |   | 8,322 |   |   | 4.91 | % |   | 326,808 |   | 13,558 |   |   | 4.15 | % |   |
| Trading assets:                                            |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Debt equity and derivative instruments                     |       | 12,646,364                                                     |       | 404,999 |   |   | 3.20 | % |   | 10,876,887 |   | 374,868 |   |   | 3.45 | % |   | 12,676,584 |   | 480,902 |   |   | 3.79 | % |   |
| Securities:                                                |       |                                                           |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Available-for-sale, at fair value                          |       | 1,895,086                                                      |       | 76,074 |   |   | 4.01 | % |   | 2,554,146 |   | 92,843 |   |   | 3.63 | % |   | 3,308,857 |   | 185,003 |   |   | 5.59 | % |   |
| Held to maturity                                           |       |                                                           |       |   |   |   |   |   |   | 34,180 |   | 1,953 |   |   | 5.71 | % |   | 1,021 |   | — |   |   | — |   |   |
| Loans                                                      |       | 24,159,015                                                     |       | 1,315,110 |   |   | 5.44 | % |   | 30,202,848 |   | 1,591,972 |   |   | 5.27 | % |   | 35,558,111 |   | 2,373,241 |   |   | 6.67 | % |   |
| Less: Allowance for loan losses                            |       | (1,052,778                                                     | )          | — |   |   | — |   |   | (1,108,195 | ) | — |   |   | — |   |   | (1,026,293 | ) | — |   |   | — |   |   |
| Net loans                                                  |       | 23,106,237                                                     |       | — |   |   | — |   |   | 29,094,653 |   | — |   |   | — |   |   | 34,531,818 |   | — |   |   | — |   |   |
| Intangible assets                                          |       | 205,434                                                        |       | — |   |   | — |   |   | 181,730 |   | — |   |   | — |   |   | 1,073,603 |   | — |   |   | — |   |   |
| Premises and equipments, net                               |       | 856,969                                                        |       | — |   |   | — |   |   | 785,258 |   | — |   |   | — |   |   | 729,184 |   | — |   |   | — |   |   |
| Customer’s liability on acceptances                   |       | 591                                                            |       | — |   |   | — |   |   | 108 |   | — |   |   | — |   |   | — |   | — |   |   | — |   |   |
| Accrued Interest receivable                                |       | 506,128                                                        |       | — |   |   | — |   |   | 601,233 |   | — |   |   | — |   |   | 492,963 |   | — |   |   | — |   |   |
| Other assets                                               |       | 3,450,078                                                      |       | 19,555 |   |   | 0.57 | % |   | 1,348,812 |   | 12,150 |   |   | 0.90 | % |   | 2,150,550 |   | 15,124 |   |   | 0.70 | % |   |
| **Total Assets**                                           | ** ** | **55,873,247**                                                 | ** ** | **2,074,616** | ** ** |   | **3.71** | **%** |   | **59,315,414** | ** ** | **2,390,388** | ** ** |   | **4.03** | **%** |   | **68,955,212** | ** ** | **3,502,774** | ** ** |   | **5.08** | **%** |   |
| **Liabilities:**                                           | ** ** | ** **                                                     | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   |
| Deposits                                                   |       | 41,186,301                                                     |       | 454,460 |   |   | 1.10 | % |   | 44,960,606 |   | 598,705 |   |   | 1.33 | % |   | 53,156,593 |   | 1,105,197 |   |   | 2.08 | % |   |
| Central bank borrowings                                    |       | 4,726                                                          |       | 677 |   |   | 14.33 | % |   | 332 |   | 40 |   |   | 12.05 | % |   | 304 |   | 42 |   |   | 13.80 | % |   |
| Securities sold under agreements to repurchase        |       | 7,768,604                                                      |       | 153,962 |   |   | 1.98 | % |   | 6,812,404 |   | 141,889 |   |   | 2.08 | % |   | 4,040,408 |   | 126,903 |   |   | 3.14 | % |   |
| Other borrowed funds                                       |       | 57,815                                                         |       | 3,349 |   |   | 5.79 | % |   | 129,073 |   | 4,595 |   |   | 3.56 | % |   | 942,778 |   | 18,992 |   |   | 2.01 | % |   |
| Acceptances outstanding                                    |       | 591                                                            |       | — |   |   | — |   |   | 108 |   | — |   |   | — |   |   | — |   | — |   |   | — |   |   |
| Accounts payable, accrued expenses and other  Liabilities  |       | 2,666,219                                                      |       | 4,753 |   |   | 0.18 | % |   | 2,627,216 |   | 4,652 |   |   | 0.18 | % |   | 1,855,238 |   | 6,840 |   |   | 0.37 | % |   |
| Long-term debt                                             |       | 1,257,273                                                      |       | 44,706 |   |   | 3.56 | % |   | 2,021,215 |   | 87,240 |   |   | 4.32 | % |   | 2,742,203 |   | 144,445 |   |   | 5.27 | % |   |
| **Total  Liabilities**                                     | ** ** | **52,941,529**                                                 | ** ** | **661,907** | ** ** |   | **1.25** | **%** |   | **56,550,954** | ** ** | **837,121** | ** ** |   | **1.48** | **%** |   | **62,737,524** | ** ** | **1,402,419** | ** ** |   | **2.25** | **%** |   |

----

(1)             Non-accruingloans which have not been written off are included in “Loans”, above.

75

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(2)             Loanorigination fees, net of certain direct origination costs, are deferred andrecognized as an adjustment to yield of the related loans.

(3)             Throughout2001, the Bank ceased to accrue interest on commercial loans, residential realestate loans and credit card loans when they are delinquent for 180 days,360 days and 100 days (i.e. 90 days plus a 10-day graceperiod), respectively. With effect from January 1, 2002, due to regulatorychanges in Greece, the Bank ceases to accrue interest on commercial loans andresidential real estate loans when they are delinquent for 180 days, andfor credit card loans when they are delinquent for 100 days (90 days’delinquency plus a 10-day grace period).

(4)             2006 average balanceswere affected by our acquisition of Finansbank SA in August  2006 andVojvodjanska Banka in December 2006.

**Analysis of Changesin Net Interest Income and Interest Expense—Volume and Rate Analysis**

Thefollowing tables analyze the change in our net interest income attributable tochanges in the average volume of interest-earning assets and interest-bearingliabilities and changes in their respective interest rates for the periodspresented from our continuing operations. Amounts due to changes in volume havebeen calculated by multiplying the change in volume during the year times theaverage rate for the preceding year. Amounts due to changes in rates have beencalculated by multiplying the change in the current year average rate times thevolume of the current year. The net change attributable to changes in bothvolume and rate has been allocated proportionately to the change due to averagevolume and the change due to average rate. The changes are calculated on thebasis of the monthly average balance sheets set forth in the preceding table.

| ** **                                                | ** ** | **2005 vs. 2006**      | ** ** |
|-----------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                | ** ** | **Total  interest**              | ** ** | **Due to  change in** | ** ** | **Due to  change in** | ** ** |
| ** **                                                | ** ** | **change**                       | ** ** | **volume** | ** ** | **interest rate** | ** ** |
| ** **                                                | ** ** | **(EUR in thousands)** | ** ** |
| **ASSETS**                                                | ** ** | ** **                       | ** ** |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Cash and due from  banks and deposits with central bank   |       | 19,263                           |       |   | 14,457 |   |   |   | 4,806 |   |   |
| Securities purchased under agreements to resell           |       | 2,705                            |       |   | (24,514 | ) |   |   | 27,219 |   |   |
| Interest bearing  deposits with banks                     |       | 104,698                          |       |   | 9,611 |   |   |   | 95,087 |   |   |
| Money market  investments                                 |       | 5,236                            |       |   | 7,713 |   |   |   | (2,477 | ) |   |
| Trading assets                                            |       | 106,034                          |       |   | 62,026 |   |   |   | 44,008 |   |   |
| Available-for-sale  securities, at fair value             |       | 92,160                           |       |   | 27,434 |   |   |   | 64,726 |   |   |
| Held to maturity                                          |       | (1,953                           | )          |   | (1,895 | ) |   |   | (58 | ) |   |
| Loans                                                     |       | 781,269                          |       |   | 282,272 |   |   |   | 498,997 |   |   |
| Other assets                                              |       | 2,974                            |       |   | 7,222 |   |   |   | (4,248 | ) |   |
| **Total  Assets**                                         | ** ** | **1,112,386**                    | ** ** |   | **384,326** | ** ** |   |   | **728,060** | ** ** |   |
| **LIABILITIES**                                           | ** ** | ** **                       | ** ** |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Deposits                                                  |       | 506,492                          |       |   | 109,139 |   |   |   | 397,353 |   |   |
| Central bank  borrowings                                  |       | 2                                |       |   | (3 | ) |   |   | 5 |   |   |
| Securities sold  under agreements to repurchase           |       | (14,986                          | )          |   | (57,735 | ) |   |   | 42,749 |   |   |
| Other borrowed  funds                                     |       | 14,397                           |       |   | 15,744 |   |   |   | (1,347 | ) |   |
| Accounts payable,  accrued expenses and other liabilities |       | 2,188                            |       |   | (1,367 | ) |   |   | 3,555 |   |   |
| Long-term debt                                            |       | 57,205                           |       |   | 31,119 |   |   |   | 26,086 |   |   |
| **Total Liabilities**                                     | ** ** | **565,298**                      | ** ** |   | **96,897** | ** ** |   |   | **468,401** | ** ** |   |

 

76

----

 

| ** **                                                              | ** ** | **2004 vs. 2005**      | ** ** |
|-------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                              | ** ** | **Total  interest**              | ** ** | **Due to  change in** | ** ** | **Due to  change in** | ** ** |
| ** **                                                              | ** ** | **change**                       | ** ** | **volume** | ** ** | **interest rate** | ** ** |
| ** **                                                              | ** ** | **(EUR in thousands)** | ** ** |
| **ASSETS**                                                              | ** ** | ** **                       | ** ** |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Cash and due from  banks and deposits with central bank                 |       | (1,384                           | )          |   | 10,438 |   |   |   | (11,822 | ) |   |
| Federal funds  sold and securities purchased under agreements to resell |       | (7,480                           | )          |   | (7,649 | ) |   |   | 169 |   |   |
| Interest bearing  deposits with banks                                   |       | 63,770                           |       |   | 4,484 |   |   |   | 59,286 |   |   |
| Money market  investments                                               |       | 2,818                            |       |   | 786 |   |   |   | 2,032 |   |   |
| Trading assets                                                          |       | (30,131                          | )          |   | (56,667 | ) |   |   | 26,536 |   |   |
| Available-for-sale  securities, at fair value                           |       | 16,769                           |       |   | 26,456 |   |   |   | (9,687 | ) |   |
| Held to maturity                                                        |       | 1,953                            |       |   | — |   |   |   | 1,953 |   |   |
| Loans                                                                   |       | 276,862                          |       |   | 329,000 |   |   |   | (52,138 | ) |   |
| Other assets                                                            |       | (7,405                           | )          |   | (11,910 | ) |   |   | 4,505 |   |   |
| **Total  Assets**                                                       | ** ** | **315,772**                      | ** ** |   | **294,938** | ** ** |   |   | **20,834** | ** ** |   |
| **LIABILITIES**                                                         | ** ** | ** **                       | ** ** |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Deposits                                                                |       | 144,245                          |       |   | 41,647 |   |   |   | 102,598 |   |   |
| Central bank  borrowings                                                |       | (637                             | )          |   | (629 | ) |   |   | (8 | ) |   |
| Securities sold  under agreements to repurchase                         |       | (12,073                          | )          |   | (18,950 | ) |   |   | 6,877 |   |   |
| Other borrowed  funds                                                   |       | 1,246                            |       |   | 4,128 |   |   |   | (2,882 | ) |   |
| Accounts payable,  accrued expenses and other liabilities               |       | (101                             | )          |   | (70 | ) |   |   | (31 | ) |   |
| Long-term debt                                                          |       | 42,534                           |       |   | 27,164 |   |   |   | 15,370 |   |   |
| **Total Liabilities**                                                   | ** ** | **175,214**                      | ** ** |   | **53,290** | ** ** |   |   | **121,924** | ** ** |   |

 

**Interest EarningAssets—Net Interest Margin**

Thefollowing table shows the levels of average interest earning assets andinterest income and net interest income of the Group and the net interest marginfor each of the periods indicated from continuing operations. These data arederived from the table of average balance and interest rates above and arebased upon information in the Group’s U.S. GAAP Financial Statements.

| ** **                                      | ** ** | **Year ended December 31,**                     | ** ** |
|-------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                      | ** ** | **2004**                                                       | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                      | ** ** | **(EUR in thousands, except percentages)** | ** ** |
| Average interest  earning assets                |       | 53,725,467                                                     |       | 56,658,446 |   | 65,573,970 |   |
| Interest income  from continuing operations     |       | 2,074,616                                                      |       | 2,390,388 |   | 3,502,774 |   |
| Average interest  bearing liabilities           |       | 50,274,719                                                     |       | 53,923,630 |   | 62,366,071 |   |
| Interest expense  from continuing operations    |       | 661,907                                                        |       | 837,121 |   | 1,402,419 |   |
| Net interest  income from continuing operations |       | 1,412,709                                                      |       | 1,553,267 |   | 2,100,355 |   |
| Net interest margin(1)                          |       | 2.63                                                           | %          | 2.74 | % | 3.20 | % |

----

(1)             Netinterest margin represents net interest income divided by average interestearning assets.

77

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**Return on Equityand Assets**

Thefollowing table presents certain selected financial information and ratios forthe Group for the periods indicated from continuing operations.

| ** **                                                            | ** ** | **Year ended December 31,**                     | ** ** |
|-----------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                            | ** ** | **2004**                                                       | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                            | ** ** | **(EUR in thousands, except percentages)** | ** ** |
| Net interest  income from continuing operations                       |       | 1,412,709                                                      |       | 1,553,267 |   | 2,100,355 |   |
| Net income                                                            |       | 178,788                                                        |       | 526,911 |   | 799,877 |   |
| Average total  assets                                                 |       | 55,873,247                                                     |       | 59,315,414 |   | 68,955,212 |   |
| Average  shareholders’ equity(1)                                 |       | 1,483,507                                                      |       | 1,975,003 |   | 4,006,003 |   |
| Net interest income from  continuing operations as a percent of: |       |                                                           |       |   |   |   |   |
| Average total assets                                                  |       | 2.53                                                           | %          | 2.62 | % | 3.05 | % |
| Average shareholders’ equity(1)                                  |       | 95.23                                                          | %          | 78.65 | % | 52.43 | % |
| Net income as a percent  of:                                          |       |                                                           |       |   |   |   |   |
| Average total assets                                                  |       | 0.32                                                           | %          | 0.89 | % | 1.16 | % |
| Average  shareholders’ equity(1)                                 |       | 12.05                                                          | %          | 26.68 | % | 19.97 | % |

----

(1)             Average shareholders’equity is calculated as the arithmetical average of shareholders’ equity at thebeginning of the year and the end of the year.

**Assets**

***Investment Portfolio***

At December 31, 2006, the Group’s investmentsecurities had a carrying value of € 16,837.2 million,representing 22.22% of the Group’s total assets. Greek Treasury bonds and otherGreek Government or Government-guaranteed securities accounted for €7,847.7million, or 46.6% of the Group’s investment securities. In preparing itsU.S. GAAP Financial Statements, the Group classified its securities as requiredby U.S. GAAP according to the following categories: trading securities,securities available-for-sale and securities held to maturity.

The Bank has the largest portfolio of Greek Governmentbonds among Greek banks, which is attributable to the Bank’s position as theleading primary dealer (in terms of volume and liquidity) of Greek risk,according to statistics published by the Bank of Greece.

The Group’s equity portfolio stems largely frominvestment activities on the ATHEX as well as equities taken in loanforeclosure and workout situations from the past. As part of our aim torestructure and reorganize our operations, the Group has been strategicallydivesting our holdings in non-core businesses. In 2002, we made no materialdisposals due to unfavorable market conditions. In 2003, we had revenues of €32.4million by disposing of equity securities (mainly from our equityparticipations in AGET and HELEX). In 2004, we had revenues of approximately €25million of which €12.5million represented the disposal of our equity investment in OTEnet,approximately €7million represented the disposal of our equity investment in the CentralSecurities Depository and disposals of approximately €5.5million were made in cement, leasing, security and salt works. The abovedisposals resulted in gains of approximately €16 million. In 2005, wehad revenues of €31.6million from ELTEX, Hellascom, Lykos Paperless Solutions SA and Eviop Tempo SA.In 2006 we had revenues of €369.8 million, of which US$388.4 millionrepresented the disposal of our investment in Atlantic Bank of New York, CAD 71.3million was derived from the disposal of our investment in NBG Canada, €6.5million from the disposal of our equity investment in ASTIR AlexandroupolisAXE, €2.5million from the disposal of AGRIS and €0.8 million from otherdisposals. For more information on the Group’s divestitures see ITEM 4A: *“History and Development on the Company”.*

78

----

Thefollowing table sets forth the cost and fair value of each type of the Group’sdebt and equity assets held for trading at December 31, 2004 , 2005 and2006:

| ** **                                                                     | ** ** | **Year ended December 31,** | ** ** |
|--------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                     | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                                     | ** ** | **Amortized  Cost**                        | ** ** | **Fair  Value** | ** ** | **Amortized  Cost** | ** ** | **Fair  Value** | ** ** | **Amortized  Cost** | ** ** | **Fair  Value** | ** ** |
| ** **                                                                     | ** ** | **(EUR in thousands)**           | ** ** |
| **Trading Account Securities**                                                 |       |                                       |       |   |   |   |   |   |   |   |   |   |   |
| Greek government  bonds                                                        |       | 9,144,317                                  |       | 9,151,169 |   | 7,492,983 |   | 7,515,278 |   | 6,732,569 |   | 6,661,754 |   |
| Certificates of  deposit, banker’s acceptances and commercial paper       |       | 234,037                                    |       | 235,948 |   | 63,576 |   | 63,409 |   | — |   | — |   |
| Debt securities  issued by other governments and public entities               |       | 197,126                                    |       | 197,941 |   | 459,850 |   | 458,908 |   | 111,073 |   | 110,724 |   |
| Debt securities  issued by foreign financial institutions                 |       | 142,167                                    |       | 146,039 |   | 122,097 |   | 122,809 |   | 38,280 |   | 38,264 |   |
| Debt securities  issued by Greek financial institutions incorporated in Greece |       | 127,797                                    |       | 128,660 |   | 120,040 |   | 120,862 |   | 104,873 |   | 104,056 |   |
| Equity securities  issued by companies incorporated in Greece                  |       | 229,232                                    |       | 170,881 |   | 184,273 |   | 215,002 |   | 61,512 |   | 74,546 |   |
| Equity securities  issued by foreign companies                                 |       | 12,261                                     |       | 12,609 |   | 15,321 |   | 18,519 |   | 16,740 |   | 17,364 |   |
| Other                                                                          |       | 499,145                                    |       | 512,288 |   | 44,452 |   | 43,875 |   | 368,618 |   | 367,499 |   |
| Total                                                                          |       | 10,586,082                                 |       | 10,555,535 |   | 8,502,592 |   | 8,558,662 |   | 7,433,665 |   | 7,374,207 |   |
| Financial  instruments marked to market through the profit and loss  |       | —                                     |       | — |   | 5,206,898 |   | 5,104,757 |   | 5,415,700 |   | 5,307,946 |   |

 

79

----

Thefollowing table sets forth the amortized cost and fair value as well as grossunrealized gains and losses of each type of the Group’s available-for-sale andheld-to-maturity securities at December 31, 2004 , 2005 and 2006:

| ** **                                                                      | ** ** | **Year ended December 31,** | ** ** |
|---------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                      | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                                      | ** ** | **Amortized  Cost**                        | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** | **Amortized  Cost** | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  Losses** | ** ** | **Fair  Value** | ** ** |
| ** **                                                                      | ** ** | **(EUR in thousands)**           | ** ** |
| **Available-for-sale securities**                                               |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Greek government  bonds                                                         |       | 1,024,161                                  |       |   | 67,970 |   |   |   | (571 | ) |   | 1,091,560 |   | 962,800 |   |   | 22,008 |   |   |   | (11,371 | ) |   | 973,437 |   | 1,225,985 |   |   | 535 |   |   |   | (40,613 | ) |   | 1,185,907 |   |
| Mortgage-backed securities                                                      |       | 22,005                                     |       |   | 366 |   |   |   | — |   |   | 22,371 |   | — |   |   | — |   |   |   | — |   |   | — |   | — |   |   | — |   |   |   | — |   |   | — |   |
| Collateralized mortgage obligations                                             |       | 724,587                                    |       |   | 457 |   |   |   | (8,751 | ) |   | 716,293 |   | — |   |   | — |   |   |   | — |   |   | — |   | — |   |   | — |   |   |   | — |   |   | — |   |
| Debt securities issued by other governments and  public entities           |       | 397,627                                    |       |   | 16,941 |   |   |   | (884 | ) |   | 413,684 |   | 482,246 |   |   | 22,227 |   |   |   | (14,138 | ) |   | 490,335 |   | 1,626,818 |   |   | 24,416 |   |   |   | (33,158 | ) |   | 1,618,076 |   |
| Corporate debt securities issued by companies  incorporated in  Greece     |       | 292,515                                    |       |   | 2,699 |   |   |   | (1,460 | ) |   | 293,754 |   | 245,875 |   |   | 5,166 |   |   |   | (556 | ) |   | 250,485 |   | 133,106 |   |   | 144 |   |   |   | (2,314 | ) |   | 130,936 |   |
| Corporate debt securities issued by companies  incorporated outside Greece |       | 476,647                                    |       |   | 4,989 |   |   |   | (3,420 | ) |   | 478,216 |   | 350,941 |   |   | 5,404 |   |   |   | (13,207 | ) |   | 343,138 |   | 411,038 |   |   | 4,704 |   |   |   | (13,316 | ) |   | 402,426 |   |
| Equity securities issued by companies  incorporated in  Greece             |       | 153,401                                    |       |   | 12,959 |   |   |   | (564 | ) |   | 165,796 |   | 119,433 |   |   | 36,476 |   |   |   | (1,842 | ) |   | 154,067 |   | 213,953 |   |   | 44,941 |   |   |   | (4,404 | ) |   | 254,490 |   |
| Equity securities issued  by companies incorporated outside Greece              |       | 18,897                                     |       |   | 280 |   |   |   | (78 | ) |   | 19,099 |   | 7,591 |   |   | 2,020 |   |   |   | (2 | ) |   | 9,609 |   | 33,926 |   |   | 36,280 |   |   |   | (381 | ) |   | 69,825 |   |
| Mutual fund units                                                               |       | 338,062                                    |       |   | 10,140 |   |   |   | (594 | ) |   | 347,608 |   | 374,159 |   |   | 12,087 |   |   |   | (308 | ) |   | 385,938 |   | 470,387 |   |   | 23,991 |   |   |   | (972 | ) |   | 493,406 |   |
| **Total available-for-sale securities**                                         | ** ** | **3,447,902**                              | ** ** | ** ** | **116,801** |   | ** ** | ** ** | **(16,322** | **)** | ** ** | **3,548,381** | ** ** | **2,543,045** | ** ** | ** ** | **105,388** |   | ** ** | ** ** | **(41,424** | **)** | ** ** | **2,607,009** | ** ** | **4,115,213** | ** ** | ** ** | **135,011** |   | ** ** | ** ** | **(95,158** | **)** | ** ** | **4,155,066** | ** ** |
| **Held to  maturity securities**                                                | ** ** | **—**                                 | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** | ** ** | ** ** | **—** | ** ** | **20,867** | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** | ** ** | ** ** | **20,867** | ** ** | **—** | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** | ** ** | ** ** | **—** | ** ** |

 

80

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The following table setsforth the book value of the Group’s securities by maturity at December 31,2006:

| ** **                                                                 | ** ** | **Year ended December 31, 2006**           | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------------------------------------|------------|
| ** **                                                                 | ** ** | **Within one year or less**                | ** ** | **After one year through  five years** | ** ** | **After five years through  ten years** | ** ** | **After ten years** | ** ** |
| ** **                                                                 | ** ** | **Amor-  tized  Cost**                                         | ** ** | **Weigh-  ted  average  yield** | ** ** | **Fair  Value** | ** ** | **Amor-  tized  Cost** | ** ** | **Weigh-  ted  average  yield** | ** ** | **Fair  Value** | ** ** | **Amor-  tized  Cost** | ** ** | **Weigh-  ted  average  yield** | ** ** | **Fair  Value** | ** ** | **Amor-  tized  Cost** | ** ** | **Weigh-  ted  average  yield** | ** ** | **Fair  Value** | ** ** |
| ** **                                                                 | ** ** | **(EUR in thousands, except percentages)** | ** ** |
| **Trading  account securities:**                                           | ** ** | ** **                                                     | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Greek government and  agencies                                             |       | 216.276                                                        |       |   | 3.73 | % |   | 215,370 |   | 2,953,969 |   |   | 3.92 | % |   | 2,902,380 |   | 1,518,986 |   |   | 3.98 | % |   | 1,506,000 |   | 2,043,338 |   |   | 3.55 | % |   | 2,038,004 |   |
| Debt securities issued by  other governments and public entities           |       | 29.276                                                         |       |   | 2.81 | % |   | 29,320 |   | 24,634 |   |   | 6.01 | % |   | 24,241 |   | 42,118 |   |   | 5.19 | % |   | 41,713 |   | 15,045 |   |   | 6.39 | % |   | 15,450 |   |
| Debt securities issued by  Greek financial institutions                    |       | 3.071                                                          |       |   | 3.50 | % |   | 3,071 |   | 37,168 |   |   | 3.86 | % |   | 37,148 |   | 64,067 |   |   | 4.62 | % |   | 63,305 |   | 567 |   |   | 7.62 | % |   | 532 |   |
| Debt securities issued by  foreign financial institutions                  | ** ** | **—**                                                     | ** ** |   | **—** | ** ** |   | **—** |   | 13,515 |   |   | 5.54 | % |   | 13,458 |   | 14,477 |   |   | 3.88 | % |   | 14,477 |   | 10,288 |   |   |          3.78 | % |   | 10,329 |   |
| Corporate debt securities  issued by Greek companies                       |       | 54.509                                                         |       |   | 3.18 | % |   | 54,517 |   | 50,388 |   |   | 3.82 | % |   | 50,534 |   | 135,235 |   |   | 4.56 | % |   | 134,705 | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** |
| Corporate debt securities  issued by foreign companies                     | ** ** | **—**                                                     | ** ** |   | **—** | ** ** |   | **—** |   | 94,577 |   |   | 2.66 | % |   | 93,243 |   | 12,798 | ** ** |   | **—** |   |   | 12,990 | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** |
| Financial instruments  marked to market through Profit and Loss            | ** ** | **—**                                                     | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** |   | 5,415,700 | ** ** |   | 3.97 | % |   | 5,307,946 |   |
| **Total  trading account securities**                                      | ** ** | **303.132**                                                    | ** ** |   | **3.54** | **%** |   | **302,278** | ** ** | **3,174,251** | ** ** |   | **3.90** | **%** |   | **3,121,004** | ** ** | **1,787,681** | ** ** |   | **4.05** | **%** |   | **1,773,190** | ** ** | **7,484,938** | ** ** |   | **3,86** | **%** |   | **7,372,261** | ** ** |
| **Available-for-sale  securities:**                                        | ** ** | ** **                                                     | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Greek government and  agencies                                             |       | 43,201                                                         |       |   | 5.38 | % |   | 43,188 |   | 482,152 |   |   | 4.01 | % |   | 474,527 |   | 408,218 |   |   | 3.95 | % |   | 392,130 |   | 292,414 |   |   | 3.57 | % |   | 276,062 |   |
| Debt securities issued by  other governments and public entities           |       | 85,846                                                         |       |   | 12.94 | % |   | 83,850 |   | 1,086,085 |   |   | 16.85 | % |   | 1,080,736 |   | 391,362 |   |   | 4.51 | % |   | 374,958 |   | 63,523 |   |   | 4.24 | % |   | 78,532 |   |
| Corporate debt securities  issued by companies incorporated in  Greece     |       | 13,931                                                         |       |   | 5.69 | % |   | 13,974 |   | 116,175 |   |   | 4.41 | % |   | 113,962 |   | 3,000 |   |   | 5.00 | % |   | 3,000 | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** |
| Corporate debt securities  issued by companies incorporated outside Greece |       | 128,676                                                        |       |   | 4.81 | % |   | 129,172 |   | 92,518 |   |   | 4.86 | % |   | 93,036 |   | 86,320 |   |   | 3.55 | % |   | 89,196 |   | 103,524 |   |   | 6.62 | % |   | 91,022 |   |
| Other                                                                      | ** ** | **—**                                                     | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** |
| **Total  available-for-sale securities**                                   | ** ** | **271,654**                                                    | ** ** |   | **7.51** | **%** |   | **270,184** | ** ** | **1,776,930** | ** ** |   | **11.93** | **%** |   | **1,762,261** | ** ** | **888,900** | ** ** |   | **4.16** | **%** |   | **859,284** | ** ** | **459,461** | ** ** |   | **4.35** | **%** |   | **445,616** | ** ** |
| **Held to maturity securities**                                            | ** ** | **—**                                                     | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** | **—** | ** ** |   | **—** | ** ** |   | **—** | ** ** |

 

The Group holds asignificant amount of Government securities. This investment in Governmentsecurities (mostly government bonds and treasury bills) slightly exceeds theGroup’s shareholders’ equity. The market value of Government securities held bythe Group (which includes securities held in our trading and available-for-saleportfolios) at December 31, 2006 was €7,847.6million.

***Loan Portfolio***

The Group’s loan portfoliohas grown steadily in recent years in line with increased demand for creditgenerally in Greece and the other markets in which the Group operates. At December 31,2006, the amount of the Group’s total outstanding loans and advances tocustomers net of allowances for loan losses equaled €42,532.1million. The Group’s loan portfolio consists of approximately 50% retail and 50%commercial loans. See Note 15 to the U.S. GAAP Financial Statements.Approximately 74% of the Group’s loan portfolio was to Greek residents as at December 31,2006. Most of the Group’s loans are in the form of credit lines with shortmaturities.

*Loansby Type of Customer.**  *TheGroup offers a wide range of credit instruments to domestic and foreignbusinesses and State-related entities and individuals, including lettersof credit and long-term and short-term loans.

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Thefollowing table provides details of loans to customers made by the Group,classified by type of loan, the borrower’s principal economic activity, as wellas the breakdown of domestic and foreign loans at December 31, 2002, 2003,2004, 2005 and 2006. Amounts below are presented based on U.S. GAAP financialdata.

| ** **                    | ** **   | **Year ended December 31,** | ** **   |
|-------------------------------|--------------|--------------------------------------------|--------------|
| ** **                    | ** **   | **2002**                                   | ** **   | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                    | ** **   | **(EUR in thousands)**           | ** **   |
| **Greek residents:**          | ** **   | ** **                                 | ** **   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ***Consumer:***               | *** *** | *** ***                               | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |
| Residential mortgages         |         | 5,559,819                                  |         | 6,793,804 |   | 8,600,893 |   | 11,114,211 |   | 13,318,430 |   |
| Credit card                   |         | 1,030,071                                  |         | 1,220,799 |   | 1,416,847 |   | 1,468,940 |   | 1,505,203 |   |
| Auto financings               |         | 283,344                                    |         | 306,195 |   | 354,170 |   | 323,918 |   | 250,747 |   |
| Other consumers               |         | 957,020                                    |         | 1,306,133 |   | 1,841,913 |   | 2,253,248 |   | 2,957,806 |   |
| Total                         |         | 7,830,254                                  |         | 9,626,931 |   | 12,213,823 |   | 15,160,317 |   | 18,032,186 |   |
| ***Commercial:***             | *** *** | *** ***                               | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |
| Industry and mining           |         | 1,992,235                                  |         | 2,098,065 |   | 2,876,421 |   | 2,488,629 |   | 2,640,360 |   |
| Small-scale industry          |         | 685,704                                    |         | 715,106 |   | 809,999 |   | 854,807 |   | 1,027,183 |   |
| Trade                         |         | 2,322,891                                  |         | 2,468,250 |   | 2,922,831 |   | 3,184,510 |   | 4,079,807 |   |
| Construction                  |         | 228,986                                    |         | 364,903 |   | 440,347 |   | 421,072 |   | 556,814 |   |
| Tourism                       |         | 291,207                                    |         | 306,722 |   | 266,041 |   | 265,026 |   | 261,679 |   |
| Shipping and transportation   |         | 856,660                                    |         | 806,961 |   | 863,455 |   | 914,747 |   | 1,047,846 |   |
| Commercial mortgages          |         | 100,636                                    |         | 133,596 |   | 282,219 |   | 388,377 |   | 530,229 |   |
| Public sector                 |         | 2,186,293                                  |         | 1,478,400 |   | 1,069,869 |   | 1,460,697 |   | 1,465,205 |   |
| Other                         |         | 704,155                                    |         | 1,048,274 |   | 1,231,666 |   | 1,695,737 |   | 2,507,644 |   |
| Total                         |         | 9,368,767                                  |         | 9,420,277 |   | 10,762,848 |   | 11,673,602 |   | 14,116,767 |   |
| Total Greek  residents loans  |         | 17,199,021                                 |         | 19,047,208 |   | 22,976,671 |   | 26,833,919 |   | 32,148,953 |   |
| Unearned income               |         | —                                     |         | — |   | — |   | 7,130 |   | 25,097 |   |
| Loans net of unearned  income |         | 17,199,021                                 |         | 19,047,208 |   | 22,976,671 |   | 26,841,049 |   | 32,174,050 |   |

 

82

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| ** **                             | ** **   | **Year ended December 31,** | ** **   |
|----------------------------------------|--------------|--------------------------------------------|--------------|
| ** **                             | ** **   | **2002**                                   | ** **   | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                             | ** **   | **(EUR in thousands)**           | ** **   |
| **Foreign:**                           | ** **   | ** **                                 | ** **   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ***Consumer:***                        | *** *** | *** ***                               | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |
| Residential mortgages                  |         | 258,603                                    |         | 263,964 |   | 361,601 |   | 358,129 |   | 1,559,995 |   |
| Credit card                            |         | 16,669                                     |         | 20,546 |   | 39,285 |   | 67,048 |   | 991,816 |   |
| Auto financings                        |         | 10,930                                     |         | 16,735 |   | 17,543 |   | 36,149 |   | 263,342 |   |
| Other consumers                        |         | 244,196                                    |         | 267,159 |   | 402,290 |   | 618,955 |   | 1,202,391 |   |
| Total                                  |         | 530,398                                    |         | 568,404 |   | 820,719 |   | 1,080,281 |   | 4,017,544 |   |
| ***Commercial:***                      | *** *** | *** ***                               | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** | *** *** |
| Industry and mining                    |         | 869,188                                    |         | 890,675 |   | 1,350,708 |   | 430,807 |   | 842,849 |   |
| Small-scale industry                   |         | 41,488                                     |         | 88,118 |   | 151,313 |   | 195,662 |   | 867,621 |   |
| Trade                                  |         | 468,406                                    |         | 618,837 |   | 734,183 |   | 668,427 |   | 989,898 |   |
| Construction                           |         | 189,243                                    |         | 267,510 |   | 355,785 |   | 405,887 |   | 878,824 |   |
| Tourism                                |         | 71,598                                     |         | 101,591 |   | 118,033 |   | 126,485 |   | 327,866 |   |
| Shipping and transportation            |         | 204,234                                    |         | 226,543 |   | 328,713 |   | 379,265 |   | 638,039 |   |
| Commercial mortgages                   |         | 647,306                                    |         | 631,668 |   | 136,732 |   | 42,852 |   | 113,982 |   |
| Public sector                          |         | 32,198                                     |         | 45,694 |   | 15,572 |   | 12,309 |   | 4,695 |   |
| Other                                  |         | 385,048                                    |         | 452,381 |   | 201,260 |   | 503,782 |   | 3,023,958 |   |
| Total                                  |         | 2,908,709                                  |         | 3,323,017 |   | 3,392,299 |   | 2,765,476 |   | 7,687,732 |   |
| Total foreign loans                    |         | 3,439,107                                  |         | 3,891,421 |   | 4,213,018 |   | 3,845,757 |   | 11,705,276 |   |
| Unearned income                        |         | (6,803                                     | )            | (5,589 | ) | (14,284 | ) | (12,633 | ) | (122,483 | ) |
| Loans net of unearned income           |         | 3,432,304                                  |         | 3,885,832 |   | 4,198,734 |   | 3,833,124 |   | 11,582,793 |   |
| **Total loans net of unearned income** | ** **   | **20,631,325**                             | ** **   | **22,933,040** | ** ** | **27,175,405** | ** ** | **30,674,173** | ** ** | **43,756,843** | ** ** |
| Less: Allowance for loan losses        |         | (1,011,145                                 | )            | (1,047,493 | ) | (1,115,212 | ) | (1,092,545 | ) | (1,224,757 | ) |
| **Total  net loans**                   | ** **   | **19,620,180**                             | ** **   | **21,885,547** | ** ** | **26,060,193** | ** ** | **29,581,628** | ** ** | **42,532,086** | ** ** |

 

A brief description of the type of loanclassifications included in the above analysis is as follows.

Residential mortgages consist primarily of fixed andfloating rate loans first collateralized by interests in owner-occupieddwellings including single family homes and condominiums. These loans arenearly all secured by pre-notation (“*prosimiosi*”) which is less expensive and easierto record than mortgages. See, below in this Item 4.E, “*—Credit Quality—Risk Management—Loan Approval Process*”*.*

The Group is also able to offer certain Government-subsidizedmortgage loans in Greece to borrowers who meet certain criteria. See Item 4.B, “*—Banking Activities in Greece—Retail banking—MortgageLending*”*.*

Credit card lendings are unsecured revolving creditlines.

Auto financing loans are extended for personalvehicles and are mostly secured.

Other consumer loans are made to individuals on aninstallment plan to finance the purchase of consumer goods and to pay forservices. The Bank extends revolving credit facilities for retail customersunder which approved customers can withdraw funds up to the limit of theirindividual credit facility as needed for personal purposes. These loans areunsecured.

The majority of the Group’s commercial loans are inthe form of short-term (i.e., less than one year) credit facilities. Generally,if the borrowers meet interest payments in a timely manner, these facilitiesare rolled over, subject to the wishes of the borrower and the Bank’s credit reviewpolicies.

83

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Industry and mining loans include credit extensionsprimarily made to corporations involved in the textile, food and beverage,chemical, and metals mining ventures. Such loans are generally collateralizedby interests in the customers’ real property and operating assets.

Small scale industry loans are those made tocommercial ventures that generally employ fewer than 50 persons, and suchloans are collateralized by assets of the company or assets of the companies’shareholders.

Trade loans are those made to ventures which do notmanufacture goods but import, export, distribute and sell goods. Such loans aretypically collateralized by inventory or assets of the company’s shareholders.

Construction loans are made for larger scaleinfrastructure or commercial projects undertaken by private entities on theirown behalf or on behalf of government public works offices.

Tourism loans are made primarily to developers andoperators of hotel and resort properties and such loans are secured byinterests in those properties.

Shipping and transportation loans are advancedprimarily for shipbuilding, and to a lesser extent, shipyard construction andvessel acquisitions and are collateralized by interests in the vessels or otherproperty and the future revenues generated by the vessels. Other transportationloans relate to ground and air transport.

Commercial mortgages are loans for and collateralizedby real property used in commercial ventures. These loans are nearly allsecured by pre-notation (“*prosimiosi*”) which are less expensive andeasier to record than mortgages.

Public sector loans are those advanced to the GreekGovernment, public utilities and entities governed by the public law of Greece,including IKA, the largest social security institution in Greece, and ashareholder of the Bank.

The rollover policy of the Group stipulates fullrepayment of loan obligations upon maturity/expiry of a loan facility before anew loan is extended.

84

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Thefollowing table provides details of loans to customers made by the Group bymaturity, classified by type of loan, the borrower’s principal economicactivity, as well as the breakdown of domestic and foreign loans as at December 31,2006. Amounts below are presented based on U.S. GAAP financial data.

| ** **                       | ** **   | **Year ended December 31, 2006** | ** **   |
|----------------------------------|--------------|------------------------------------------------------|--------------|
| ** **                       | ** **   | **Within one  year or less**          | ** **   | **After one year  through  five years** | ** ** | **After five  years** | ** ** | **Total** | ** ** |
| ** **                       | ** **   | **(EUR in thousands)**                     | ** **   |
| **Greek Residents**              | ** **   | ** **                                           | ** **   |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| ***Consumer:***                  | *** *** | *** ***                                         | *** *** | * * | *** *** | *** *** | * * | *** *** | *** *** | *** *** | *** *** |
| Residential mortgages            |         | 1,036,555                                            |         |   | 2,796,150 |   |   | 9,485,725 |   | 13,318,430 |   |
| Credit card                      |         | 1,505,203                                            |         |   | — |   |   | — |   | 1,505,203 |   |
| Auto financing                   |         | 25,183                                               |         |   | 190,569 |   |   | 34,995 |   | 250,747 |   |
| Other consumers                  |         | 1,209,594                                            |         |   | 1,587,266 |   |   | 160,946 |   | 2,957,806 |   |
| Total                            |         | 3,776,535                                            |         |   | 4,573,985 |   |   | 9,681,666 |   | 18,032,186 |   |
| ***Commercial:***                | *** *** | *** ***                                         | *** *** | * * | *** *** | *** *** | * * | *** *** | *** *** | *** *** | *** *** |
| Industry and mining              |         | 1,274,551                                            |         |   | 1,078,224 |   |   | 287,585 |   | 2,640,360 |   |
| Small-scale industry             |         | 699,323                                              |         |   | 203,002 |   |   | 124,858 |   | 1,027,183 |   |
| Trade                            |         | 2,437,790                                            |         |   | 1,248,584 |   |   | 393,433 |   | 4,079,807 |   |
| Construction                     |         | 302,586                                              |         |   | 136,171 |   |   | 118,057 |   | 556,814 |   |
| Tourism                          |         | 156,450                                              |         |   | (326 | ) |   | 105,555 |   | 261,679 |   |
| Shipping and transportation      |         | 165,796                                              |         |   | 484,836 |   |   | 397,214 |   | 1,047,846 |   |
| Commercial mortgages             |         | 2,918                                                |         |   | 18,807 |   |   | 508,504 |   | 530,229 |   |
| Public sector                    |         | 343,273                                              |         |   | 716,550 |   |   | 405,382 |   | 1,465,205 |   |
| Other                            |         | 1,884,878                                            |         |   | 538,554 |   |   | 84,212 |   | 2,507,644 |   |
| Total                            |         | 7,267,565                                            |         |   | 4,424,402 |   |   | 2,424,800 |   | 14,116,767 |   |
| Total Greek  residents loans     |         | 11,044,100                                           |         |   | 8,998,387 |   |   | 12,106,466 |   | 32,148,953 |   |
| **Foreign:**                     | ** **   | ** **                                           | ** **   |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| ***Consumer:***                  | *** *** | *** ***                                         | *** *** | * * | *** *** | *** *** | * * | *** *** | *** *** | *** *** | *** *** |
| Residential mortgages            |         | 237,048                                              |         |   | 646,459 | ** ** |   | 676,488 |   | 1,559,995 |   |
| Credit card                      |         | 953,117                                              |         |   | 1,255 | ** ** |   | 37,444 |   | 991,816 |   |
| Auto financing                   |         | 129,184                                              |         |   | 118,455 | ** ** |   | 15,703 |   | 263,342 |   |
| Other consumers                  |         | 421,958                                              |         |   | 496,643 | ** ** |   | 283,790 |   | 1,202,391 |   |
| Total                            |         | 1,741,307                                            |         |   | 1,262,812 | ** ** |   | 1,013,425 |   | 4,017,544 |   |
| ***Commercial:***                | *** *** | *** ***                                         | *** *** | * * | *** *** | *** *** | * * | *** *** | *** *** | *** *** | *** *** |
| Industry and mining              |         | 412,288                                              |         |   | 307,067 | ** ** |   | 123,494 |   | 842,849 |   |
| Small-scale industry             |         | 597,914                                              |         |   | 210,036 | ** ** |   | 59,671 |   | 867,621 |   |
| Trade                            |         | 617,153                                              |         |   | 244,136 | ** ** |   | 128,609 |   | 989,898 |   |
| Construction                     |         | 429,244                                              |         |   | 210,895 | ** ** |   | 238,685 |   | 878,824 |   |
| Tourism                          |         | 170,558                                              |         |   | 89,313 | ** ** |   | 67,995 |   | 327,866 |   |
| Shipping and transportation      |         | 344,310                                              |         |   | 251,815 |   |   | 41,914 |   | 638,039 |   |
| Commercial mortgages             |         | 5,398                                                |         |   | 84,786 |   |   | 23,798 |   | 113,982 |   |
| Public sector                    |         | 950                                                  |         |   | 2,273 |   |   | 1,472 |   | 4,695 |   |
| Other                            |         | 1,689,553                                            |         |   | 845,457 |   |   | 488,948 |   | 3,023,958 |   |
| Total                            |         | 4,267,368                                            |         |   | 2,245,778 |   |   | 1,174,586 |   | 7,687,732 |   |
| Total foreign  loans             |         | 6,008,675                                            |         |   | 3,508,590 |   |   | 2,188,011 |   | 11,705,276 |   |
| Unearned income                  |         | (58,845                                              | )            |   | (39,836 | ) |   | 1,295 |   | (97,386 | ) |
| Loans, net of  unearned income   |         | 16,993,930                                           |         |   | 12,467,141 |   |   | 14,295,772 |   | 43,756,843 |   |
| Less: Allowance  for loan losses |         | (927,479                                             | )            |   | (17,548 | ) |   | (279,730 | ) | (1,224,757 | ) |
| Total net loans                  |         | 16,066,451                                           |         |   | 12,449,593 |   |   | 14,016,042 |   | 42,532,086 |   |

 

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Of the Group’s loansoutstanding at December 31, 2006 that are due after one year, €8,678million had fixed interest rates while €18,004 million hadfloating interest rates.

**Foreign CountryOutstanding Loans**

The Group’s foreign country outstanding loans, representingspecific country risk, are extended primarily by the Group’s foreign branchesand banking subsidiaries. The Bank’s Greek and London operations also provideloans customarily made in US dollars to the shipping industry, as well as loansdenominated in other currencies as requested by customers. The Group’s mostsignificant exposure to foreign countries for the year ended December 31,2004 were to the United States, the United Kingdom, France, Cyprus andBulgaria; for the year ended December 31, 2005 to United States, theUnited Kingdom, Cyprus, FYROM, Romania and Bulgaria; and for the year endedDecember 31, 2006 to Turkey, Cyprus, Bulgaria and Romania. These foreigncountry outstanding loans represent additional economic and political risks.For additional information on the macroeconomic and political risks fromoperating in Turkey, as well as for the risks of conducting significantinternational activities and expanding in emerging markets, see Item 3.D *“Risk Factors”*.

Thetables below show the amount of foreign country outstandings at December 31,2004, 2005 and 2006 in each foreign country where such outstandings exceed 1%of the Group’s total assets.

| ** **                             | ** ** | **At December 31, 2004** | ** ** |
|----------------------------------------|------------|-----------------------------------------|------------|
| ** **                             | ** ** | **Country**                             | ** ** |
| ** **                             | ** ** | **United States**                  | ** ** | **United Kingdom** | ** ** | **Germany** | ** ** | **Cyprus** | ** ** | **France** | ** ** | **Bulgaria** | ** ** |
| ** **                             | ** ** | **(EUR in thousands)**        | ** ** |
| Loans                                  |       |                                    | 983,507    |   |   |   | 197,167 |   |   | 136,901 |   | 861,205 |   | 12,851 |   | 862,102 |   |
| Interest bearing  deposits with  banks |       |                                    | 103,517    |   |   |   | 548,410 |   |   | 85,727 |   | 542 |   | 149,487 |   | 31,764 |   |
| Other interest  bearing investments    |       |                                    | 1,193,714  |   |   |   | 1,702,157 |   |   | 457,882 |   | 49,869 |   | 952,978 |   | 10,209 |   |
| Other monetary  assets                 |       |                                    | 313,986    |   |   |   | 197,447 |   |   | 57,548 |   | 170,110 |   | 41,030 |   | 450,881 |   |
| Total                                  |       |                                    | 2,594,724  |   |   |   | 2,645,181 |   |   | 738,058 |   | 1,081,726 |   | 1,156,346 |   | 1,354,956 |   |

 

| ** **                                 | ** ** | **At December 31, 2005** | ** ** |
|--------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                 | ** ** | **Country**                             | ** ** |
| ** **                                 | ** ** | **United States**                  | ** ** | **Cyprus** | ** ** | **Bulgaria** | ** ** | **Romania** | ** ** |
| ** **                                 | ** ** | **(EUR in thousands)**        | ** ** |
| Loans                                      |       |                                    | 1,078,911  |   |   | 886,620 |   | 1,192,982 |   | 441,630 |   |
| Interest bearing  deposits with banks |       |                                    | 19,625     |   |   | 83,695 |   | 82,900 |   | 17,881 |   |
| Other interest  hearing investments        |       |                                    | 1,069,147  |   |   | 65,279 |   | 88,508 |   | 24,848 |   |
| Other monetary  assets                     |       |                                    | 107,633    |   |   | 56,268 |   | 257,758 |   | 169,589 |   |
| Total                                      |       |                                    | 2,275,316  |   |   | 1,091,862 |   | 1,622,148 |   | 653,948 |   |

 

| ** **                            | ** ** | **At December 31, 2006** | ** ** |
|---------------------------------------|------------|-----------------------------------------|------------|
| ** **                            | ** ** | **Country**                             | ** ** |
| ** **                            | ** ** | **United Kingdom**                 | ** ** | **Serbia** | ** ** | **Turkey** | ** ** | **Bulgaria** | ** ** | **Romania** | ** ** | **Cyprus** | ** ** |
| ** **                            | ** ** | **(EUR in thousands)**        | ** ** |
| Loans                                 |       |                                    | 207,409    |   |   | 373,065 |   | 6,876,897 |   | 1,740,493 |   | 776,350 |   | 768,824 |   |
| Interest bearing  deposits with banks |       |                                    | 343,145    |   |   | 95,067 |   | 224,746 |   | 46,452 |   | 62,432 |   | 107,342 |   |
| Other interest  bearing investments   |       |                                    | 300,399    |   |   | 112,262 |   | 1,307,310 |   | 104,330 |   | 21,980 |   | 78,377 |   |
| Other monetary  assets                |       |                                    | 23,446     |   |   | 239,948 |   | 858,055 |   | 388,455 |   | 290,756 |   | 69,839 |   |
| Total                                 |       |                                    | 874,399    |   |   | 820,342 |   | 9,267,008 |   | 2,279,730 |   | 1,151.518 |   | 1,024,382 |   |

 

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The table below shows theamount of foreign outstandings (in EUR thousands) by type of borrower forcountries where the Group’s exposure exceeded 1% of total assets at December 31,2004, 2005 and 2006.

| ** **                   | ** ** | **Year ended December 31, 2004** | ** ** |
|------------------------------|------------|------------------------------------------------------|------------|
| ** **                   | ** ** | **Country**                                          | ** ** |
| ** **                   | ** ** | **United States**                               | ** ** | **Cyprus** | ** ** | **Bulgaria** | ** ** | **United Kingdom** | ** ** | **Germany** | ** ** | **France** | ** ** |
| ** **                   | ** ** | **(EUR in thousands)**                     | ** ** |
| **Consumer:**                |       |                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential  mortgages       |       |                                                 | 40,659     |   |   | 38,815 |   | 100,316 |   |   | 157 |   |   | — |   | — |   |
| Credit card                  |       |                                                 | 113        |   |   | 5,593 |   | 17,546 |   |   | — |   |   | — |   | — |   |
| Auto financing               |       |                                                 | —     |   |   | 11,428 |   | 4,367 |   |   | — |   |   | — |   | — |   |
| Other consumers              |       |                                                 | 2,694      |   |   | 77,157 |   | 181,553 |   |   | 927 |   |   | 7,309 |   | 192 |   |
| Total                        |       |                                                 | 43,466     |   |   | 132,993 |   | 303,782 |   |   | 1,084 |   |   | 7,309 |   | 192 |   |
| **Commercial:**              |       |                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Industry and  mining         |       |                                                 | 918,789    |   |   | 105,528 |   | 58,357 |   |   | 32,115 |   |   | 48,965 |   | — |   |
| Small-scale  industry        |       |                                                 | —     |   |   | — |   | 115,614 |   |   | — |   |   | 17 |   | 7,349 |   |
| Trade                        |       |                                                 | —     |   |   | 296,684 |   | 239,540 |   |   | 1,027 |   |   | 25,706 |   | 196 |   |
| Construction                 |       |                                                 | 16,407     |   |   | 128,840 |   | 29,625 |   |   | 59,656 |   |   | 47,808 |   | 5,024 |   |
| Tourism                      |       |                                                 | —     |   |   | 75,569 |   | 34,810 |   |   | — |   |   | 2,149 |   | — |   |
| Shipping and  transportation |       |                                                 | —     |   |   | 118,957 |   | 28,846 |   |   | 32,452 |   |   | 386 |   | 90 |   |
| Mortgages                    |       |                                                 | —     |   |   | — |   | — |   |   | — |   |   | — |   | — |   |
| Public sector                |       |                                                 | —     |   |   | 164 |   | 1,268 |   |   | — |   |   | — |   | — |   |
| Other                        |       |                                                 | 4,845      |   |   | 2,470 |   | 50,260 |   |   | 70,833 |   |   | 4,561 |   | — |   |
| Total                        |       |                                                 | 940,041    |   |   | 728,212 |   | 558,320 |   |   | 196,083 |   |   | 129,592 |   | 12,659 |   |
| Total loans                  |       |                                                 | 983,507    |   |   | 861,205 |   | 862,102 |   |   | 197,167 |   |   | 136,901 |   | 12,851 |   |

 

| ** **                   | ** ** | **Year ended December 31, 2005** | ** ** |
|------------------------------|------------|------------------------------------------------------|------------|
| ** **                   | ** ** | **Country**                                          | ** ** |
| ** **                   | ** ** | **United States**                               | ** ** | **Cyprus** | ** ** | **Bulgaria** | ** ** | **Romania** | ** ** |
| ** **                   | ** ** | **(EUR in thousands)**                     | ** ** |
| **Consumer:**                |       |                                                 |       |   |   |   |   |   |   |   |   |
| Residential  mortgages       |       |                                                 | 42,997     |   |   | 50,809 |   | 188,341 |   | 30,548 |   |
| Credit card                  |       |                                                 | 134        |   |   | 5,670 |   | 41,966 |   | 4,812 |   |
| Auto financing               |       |                                                 | —     |   |   | 8,677 |   | 5,714 |   | 15,459 |   |
| Other consumers              |       |                                                 | 2,672      |   |   | 67,436 |   | 234,000 |   | 137,809 |   |
| Total                        |       |                                                 | 45,803     |   |   | 132,592 |   | 470,021 |   | 188,628 |   |
| **Commercial:**              |       |                                                 |       |   |   |   |   |   |   |   |   |
| Industry and  mining         |       |                                                 | 357,983    |   |   | 97,670 |   | 87,225 |   | 67,629 |   |
| Small-scale  industry        |       |                                                 | —     |   |   | — |   | 189,548 |   | 3,574 |   |
| Trade                        |       |                                                 | —     |   |   | 285,059 |   | 188,142 |   | 68,845 |   |
| Construction                 |       |                                                 | 46,979     |   |   | 105,249 |   | 106,308 |   | 29,504 |   |
| Tourism                      |       |                                                 | —     |   |   | 64,431 |   | 56,447 |   | 1,561 |   |
| Shipping and  transportation |       |                                                 | —     |   |   | 157,344 |   | 37,064 |   | 7,517 |   |
| Mortgages                    |       |                                                 | 619,632    |   |   | — |   | — |   | 20,067 |   |
| Public sector                |       |                                                 | —     |   |   | 2,692 |   | 1,212 |   | — |   |
| Other                        |       |                                                 | 8,514      |   |   | 41,583 |   | 57,015 |   | 54,305 |   |
| Total                        |       |                                                 | 1,033,108  |   |   | 754,028 |   | 722,961 |   | 253,002 |   |
| Total loans                  |       |                                                 | 1,078,911  |   |   | 886,620 |   | 1,192,982 |   | 441,630 |   |

 

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| ** **                   | ** ** | **Year ended December 31, 2006** | ** ** |
|------------------------------|------------|------------------------------------------------------|------------|
| ** **                   | ** ** | **Country**                                          | ** ** |
| ** **                   | ** ** | **Turkey**                                           | ** ** | **Bulgaria** | ** ** | **Romania** | ** ** | **Cyprus** | ** ** | **Serbia** | ** ** | **United  Kingdom** | ** ** |
| ** **                   | ** ** | **(EUR in thousands)**                     | ** ** |
| **Consumer:**                |       |                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Residential  mortgages       |       | 1,005,901                                            |       | 296,295 |   | 65,476 |   | 69,547 |   | 19,052 |   |   | 191 |   |   |
| Credit card                  |       | 888,262                                              |       | 60,128 |   | 8,165 |   | 5,651 |   | 11,424 |   |   | 5 |   |   |
| Auto financing               |       | 217,357                                              |       | 4,975 |   | 13,014 |   | 7,458 |   | 10,087 |   |   | 11 |   |   |
| Other consumers              |       | 263,174                                              |       | 350,093 |   | 257,342 |   | 48,481 |   | 148,566 |   |   | 481 |   |   |
| Total                        |       | 2,374,694                                            |       | 711,491 |   | 343,997 |   | 131,137 |   | 189,129 |   |   | 688 |   |   |
| **Commercial:**              |       |                                                 |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Industry and  mining         |       | 273,538                                              |       | 135,829 |   | 103,958 |   | 91,635 |   | 47,855 |   |   | 14,983 |   |   |
| Small-scale  industry        |       | 605,063                                              |       | 217,769 |   | 7,346 |   | — |   | 31,353 |   |   | — |   |   |
| Trade                        |       | 203,091                                              |       | 265,403 |   | 113,392 |   | 265,112 |   | 44,762 |   |   | 8,939 |   |   |
| Construction                 |       | 378,892                                              |       | 177,934 |   | 52,007 |   | 105,351 |   | 8,806 |   |   | 109,212 |   |   |
| Tourism                      |       | 217,458                                              |       | 52,772 |   | 4,348 |   | 47,544 |   | 1,694 |   |   | — |   |   |
| Shipping and  transportation |       | 339,159                                              |       | 52,670 |   | 10,453 |   | 125,823 |   | 9,380 |   |   | 37,686 |   |   |
| Mortgages                    |       | 9                                                    |       | 29,977 |   | 21,339 |   | — |   | — |   |   | 20,561 |   |   |
| Public sector                |       | —                                               |       | 807 |   | — |   | 1,207 |   | — |   |   | — |   |   |
| Other                        |       | 2,484,993                                            |       | 95,841 |   | 119,510 |   | 1,015 |   | 40,086 |   |   | 15,340 |   |   |
| Total                        |       | 4,502,203                                            |       | 1,029,002 |   | 432,353 |   | 637,687 |   | 183,936 |   |   | 206,721 |   |   |
| Total loans                  |       | 6,876,897                                            |       | 1,740,493 |   | 776,350 |   | 768,824 |   | 373,065 |   |   | 207,409 |   |   |

 

**Credit Quality**

***Risk Management—Loan Approval Process***

*Thediscussion below relates to the Bank and our banking subsidiaries, Finansbank,Vojvodjanska, the South African Bank of Athens, UBB, Stopanska Banka, NBGCyprus and Banca Romaneasca.*

*TheBank.*   The Bank has established a centralizedcredit approval process, which is governed by the Credit Policy for theCorporate Banking Portfolio (the “Credit Policy”). The Corporate BankingPortfolio includes all corporate customers with an annual turnover exceeding €2.5million. Credit Policy addresses core credit policies and procedures foridentifying, measuring, approving and reporting credit risk. To this end, itincludes a set of rules related to the extensions of credit and thegranting of approval authority.

Credit extensions are based on Credit Proposals, whichare prepared by the Corporate Banking Business Divisions and submitted forapproval as appropriate. The approval level primarily depends on the totalamount of proposed facilities, tenor, the classification of the obligor and thesector. All credit extensions are subject to the approval of authorized CreditDivision members or the Group Chief Risk Officer.

There are eleven levels of credit approval authorityas follows:

Levels 11-5: For credit facilities up to €12million, the approval authority is granted to a combination of CorporateBanking Business Divisions and Credit Division officers.

Level 4: For credit facilities over €12million and up to €20million, the approval authority is granted to the Assistant General Manager ofCorporate and Investment Banking and the Credit Division Manager.

Level 3: For credit facilities over €20million and up to €80million, the approval authority is granted to the Bank’s Credit Committee—“LevelA”. Members of this Committee are the Assistant General Manager of Corporateand Investment Banking, the Corporate Banking Business Division Managers andthe Credit Division Manager.

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Level 2: For credit facilities over €80million and up to €200million, approval authority is granted to the Bank’s Credit Committee—“Level B”.The members of this Committee are the General Manager of Corporate andInvestment Banking, the Group Chief Risk Officer, and the members of the CreditCommittee—”Level A”.

Level 1: For creditfacilities over €200 million, approvalauthority is granted to the Bank’s Executive Committee, the members of whichare appointed by the Board of Directors.

*Mortgage Loans*

The underwriting process is centralized under theMortgage Credit Division. All mortgage applications are rated using a bespokeapplication scorecard. Centralized underwriting ensures segregation of dutiesand uniform enforcement of underwriting standards. Loan security is typicallyin the form of a Mortgage Pre-notation on a property for 120% of the loanamount. Pre-notation is easily converted into a full mortgage following anon-appeal able court order or decision, which may be obtained at the requestof the Bank in the event of default.

Maximum loan amount usually does not exceed 75% of theasset’s market value, but this may infrequently evolve up to 100% according tovarious factors and specific circumstances, which deal with the applicant’scredit profile, type of ownership, location of the asset, type of the financedproperty etc.

Mortgage applications of up to €200,000have to be approved by a Section Supervisor. Applications of up to €300,000have to be approved by a Head of Department. Applications of up to €500,000have to be approved by a Deputy Division Manager, and applications between €500,001and €1,000,000must be approved by the Division Manager. Mortgage loan applications between €1,000,001and €2,000,000are submitted for joint approval by the General Manager for Retail Banking andthe Retail Credit Manager. Loans in excess of €2,000,000 have to be approvedby the Deputy CEO and the CRO. Moreover, the Section Supervisor can exceed75% of the Loan to Value ratio (“LTV”) only for loans up to €150,000and the Head of Department for loans up to €250,000.

The Bank may, at our discretion, permit the transferof a mortgage on condition that the transferee agrees to assume all obligationsarising from the original mortgage contract, and provided that the transferee’sincome and credit profile have been screened and approved by the MortgageCredit Division.

Loan approval criteria include the applicants’ income,the sources of such income, employment history, and the applicant’spayment-to-income ratio (PTI). PTI does not normally exceed the threshold of40%, in compliance with the Bank of Greece’s recommendation. Moreover, loanapproval takes into account the applicant’s former relation with the Bank (e.g.deposits, private banking), as well as the value of collateral. Further, alarge proportion of our mortgage portfolio, approximately 38%, is eitherguaranteed or subsidized by the Greek Government, further improving the overallrisk profile of the Bank.

Qualified appraisers, bothin-house and outsourced, are completely independent from the underwritingprocess and carry out collateral valuation. In doing so, they have to take intoaccount the “objective value system”, specifying the value of each individualproperty for tax purposes and covering most of the country. The “objectivevalue” of the property is normally lower than its market value and as such is auseful benchmark for the appraiser, serving as an indication of the minimumasking price for the asset.

*Consumer Loans*

For personal loans and credit cards, the creditapproval process is centralized and is carried out through the use of bespokecredit scorecards, developed on the basis of historical data. These are usedfor the review of applications to ensure effective and accurate decision-making.Sophisticated statistical methods are subsequently implemented to determinepricing and risk/return ratios.

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The Group Risk ManagementDivision (“GRMD”) produces, among other reports, vintage analyses by period ofdisbursement, issuing channel, and product type for various delinquencydefinitions, thus continuously ensuring strict monitoring of the scorecards’efficiency and separation power. Exposures are pooled by application score anddelinquency bucket to produce estimates of default probabilities. Consumerloans are generally not collateralized, with the exception of car loans.

*Lending to SMEs*

The SME division hascreated small business credit centers in Athens, Thessaloniki and Patras inorder to standardize lending criteria. These credit centers are staffed bylending teams under the supervision of a team leader. Credit underwriters use adecision support model to assist in their credit decisions when reviewing andmaking credit decisions on applications forwarded by branches. An internalrating model has recently been developed for the credit evaluation of loanrequests. This model is expected to further improve the quality and reduce thetime required for the credit granting process. The Athens, Thessaloniki andPatras credit centers handle all of the Bank’s credit applications, whethercoming from entrepreneurs or SMEs.

The credit policies arecommunicated throughout the Bank by way of credit manuals and circulars,supplemented by bulletins and local directives on particular issues. The Bankhas developed and implemented a credit manual for each of the above retailportfolios, following best banking practices. The credit manual is periodicallyrevised.

Thecredit-granting processes and procedures are centralized. The rationale behindthis organizational structure is three-fold:

·       Toensure the correct application of credit policy;

·       effectivelychannel the applications through the business pipeline, thus speeding up thedecision-making process, while ensuring accuracy and consistency; and

·       effectivelymonitor the client information input process.

Finally, through the development of portfolio models,our Risk Management Division is able to calculate, evaluate and monitorexpected and unexpected losses for all portfolio asset classes and segments.

*Finansbank.  *Thecredit approval system is managed by the Credits Department.  

Finansbank’sCredits Department consists of the following groups and unit: 

·       Corporateand Commercial Loan Approval Group

·       SMELoan Approval Group

·       FinancialAnalysis and Inquiry Group

·       CreditFollow-up and Scoring Group

·       Non-PerformingLoans Group

·       ExpertiseUnit

The Credits Department approves loans in compliancewith the applicable regulations within the framework of its own policy andprinciples.  The department conductsnecessary intelligence and financial analysis procedures to verify whether thecustomer is creditworthy. It makes every effort to ensure safe return of theloan through receipt of a proper security compliant with the terms andconditions set forth in the written internal procedures about credits andcollaterals.

*Finansbank’s*Board of Directors has the right to grant loans within the limits set byTurkish Banking Law. *Finansbank’s*Board of Directors can assign its credit granting authority to the CreditCommitte and 

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Head Office up to 10% and1% of capital respectively. The Head Office can use this credit grantingauthority through its units, regional offices and branches. 

Head Office is empowered to approve exposures up toTRY 20 million.

All loans betweenTRY 20 to 200 million are approved by the Credit Committee, whose members arethe following: 

·       IoannisPehlivanidis, Member of the Board of Directors

*·**      **Dr. *Omer*A. Aras, Vice Chairman ofthe Board of Directors*

*·**      **Sinan*Sahinbas*, General Manager*

Extensions of credit exceeding TRY 200 million areapproved by the Board of Directors.

*Vojvodjanska.**  **Vojvodjanska**has implemented afour-tiered credit approval system which is based on various criteria. The Bank’sbodies which are responsible to reach the decisions on facilities are theBranch Credit Committees, the Head Office Credit Committee, the ExecutiveBoard, and the Board of Directors.*

*TheBranch Credit Committees**approve short-term loansto clients classified in “A” and “B” categories and according to defined branchlimits. The Branch Credit Committees also can grant loans under individualclient’s request up to maximum amount up to the competence of the Head OfficeCredit Committee, regardless of the maturity, classification and quantitativerisk evaluation which are collateralized with cash deposits or pledge on bondsdenominated in foreign currency issued by the Republic of Serbia.*

*The HeadOffice Credit Committee has approval authority to the amount of RSD 30 million(**€**0.36*million*) per client, anddecisions on total exposure per client and his related parties up to RSD 60million (**€**0.73*million*). Pursuant toVojvodjanska’s credit risk methodology, the Branch Credit Committees and HeadOffice Credit Committee cannot approve loans to clients with a credit riskevaluation of 8 or above.*

*Vojvodjanska’sExecutive Board approves loan up to the amount of RSD50 million (**€**610 thousand) per client,and decisions on total exposure per client and its related parties up to RSD100million (**€**1.22 million). The abovementioned Bank’s competent bodies have the right to reach decisions on loansgranted under conditions which are in line with conditions defined in theenactments of the Bank’s business policy.*

*Vojvodjanska’sBoard of Directors approves all other loans to corporate clients andentrepreneurs.*

*TheSouth African Bank of Athens.*   The loan approvalprocess at SABA is centralized and takes place in the Credit Risk Departmentlocated at SABA’s head office. However, branch managers have authority to grantasset-based finance loans, at a rate not below prime, for motor vehicles, up totwo years old, of up to R250,000 and cash-backed loans of up to R1 millionwhich require either pledged cash investments or pledged investment policies ascollateral. In 2004, SABA started a major project which entails the automatingof the loan approval process as well as the entire credit process. The firstthree modules, covering the application process, of the project wereimplemented in January 2005. Due to the core banking system enhancementsthat took place during 2006, no further development has occurred on thisproject.

*UnitedBulgarian Bank.*   UBB has implemented athree-tiered credit approval system, which is based on the size of theaggregate exposure of the borrower. The first tier is composed of corporatecredit centers that have discretion to approve exposures not exceeding BGN 0.5million for SMEs, as well as for large companies. Exposures that exceed theabove thresholds, and are up to a maximum of U.S. $1 million (for loans in $), €1million (for loans in €), or BGN 2 million (for loans in BGN) mustbe approved by the Intermediate Credit Committee. UBB’s Credit Committeeapproves exposures that exceed the competences of lower levels and are up to amaximum of U.S. $6 million (for loans in $), €6 million (for 

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loans in €),or BGN12 million (for loans in BGN). The Credit Committee consists of the threeExecutive Directors of UBB, the Head of Corporate Banking and the Head of RiskManagement. All loans exceeding $6 million, €6 million or BGN12million, as applicable, after approval by the Credit Committee, must beapproved by UBB’s Board of Directors.

Since April 2007, UBB has established an ExtendedCredit Committee, consisting of its three Executive Directors, the Head ofCorporate Banking and the Head of Risk Management, as well as a senior managerof NBG, whose vote is required for the approval of any proposed facility. TheExtended Credit Committee approves loan facilities exceeding $6 million, €6million or BGN 12 million, and up to $20 million, €20 million or BGN 40million, respectively, provided that these facilities do not exceed 10% of UBB’sown funds. Loan facilities exceeding the above limits are submitted to UBB’sBoard of Directors for approval.

*Stopanska Banka.*   StopanskaBanka has adopted a five-tiered credit approval system for lending, dependingon the size of the loan. The micro credit Committee (established in 2003)approves loans for which the cumulative exposure of Stopanska Banka to a singleclient is up to €50,000.The Credit Committee approves loans for which the cumulative exposure ofStopanska Banka to a single client is between €50,001 and €1.5million. The Senior Credit Committee approves loans for which the cumulativeexposure to a single client exceeds €1.5 million up to anamount equal to 10% of the guarantee capital of Stopanska Banka. The RiskManagement Committee approves credit exposure towards a single borrowerexceeding 10% of the guarantee capital of Stopanska Banka and up to €8million with the prior consent of the Senior Credit Committee. The Board ofDirectors approves credit exposure towards a single borrower above €8million with the prior consent of the Risk Management Committee.

*NBG Cyprus*

Commercial and Corporateloans applications are approved as follows:

·       Amountsup to CYP 150,000 by a Team Leader of the Corporate Credit Section (in thecase of SMEs only CYP 50,000 by a Team Leader of the SME Credit Section).

·       Amountsbetween CYP 150,001 and CYP 500,000 by the Corporate CreditSection Committee, chaired by the Head of the Corporate CreditSection (in the case of SMEs only CYP 200,000 by the SMEs CreditSection Committee, chaired by the Head of the SME Credit Section).

·       Amountsbetween CYP 500,001 and CYP 1.5 million are approved by the Credit DepartmentCommittee, chaired by the Manager of Credit Department.

·       Amountsover CYP 1.5 million and up to CYP 2.5 million are approved by the CreditDivision Committee, chaired by the General Manager.

·       Amountsover CYP 2.5 million and up to CYP 4.0 million are approved by the ExecutiveOperations Council, chaired by the Managing Director.

·       Amountsin excess of CYP 4.0 million are approved by the Executive Credit Committee andratified by the Board of Directors.

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*Banca Romaneasca*   BancaRomaneasca has adopted a multi-tiered credit approval system for lending,depending on the total aggregate exposure on a single debtor (considered as asingle client or group of clients). The Branch Credit Committee is entitled toapprove only corporate loans up to the amount of €100,000 or €60,000depending on the level of exposure limit set by internal decisions for eachbranch. In Head Office—Retail Division there is an approval procedure forretail loans totaling up to €50,000. For corporateexposures SME Credit Center has the approval competence on a single debtor ofmaximum €300,000as follows: Level I—up to €150,000—the approval is given by SME CreditCenter Supervisor and SME Credit Center Manager, Level II—between €150,001up to €300,000—theapproval is given by SME Credit Center Manager and Manager of Credit RiskDepartment. The Head Office Credit Committee approves any corporate creditexposure on a single debtor between €300,001 up to €1,500,000and any retail exposure on a single debtor which exceeds €50,000up to €200,000.The Head Office Managing Committee approves corporate loans for which the totalaggregate exposure on a single debtor with respect to credit lines, guaranteesand other loan operations is between €1,500,001 up to €7,000,000and retail exposures to a single debtor between €200,001 and up to 10% ofBanca Romaneasca’s own funds. The Board of Directors approves loans of anykind, letters of credit, and other loan operations, exceeding €7million for corporate exposures, up to the legal lending limit per one singledebtor and retail exposures which exceed 10% of Banca Romaneasca’s own fundsand related parties.

***Risk Management—Credit Review Policies***

The Bank and each of itssubsidiaries conduct the credit risk process separately. The Group hasimplemented systematic controls and monitoring of credit risk. The Group RiskManagement Division coordinates each of the credit risk procedures establishedby its subsidiaries. For more information on the Group Risk Management Divisionsee Item 5.B, *“Liquidity and CapitalResources—Asset/Liability and Risk Management”*.

*The Bank.*

Credit Proposal Standards

Credit Policy determinesthe contents of Credit Proposals (“CP”), which are conducted at least annuallydepending on the classification of the obligor. Each CP includes, among othercriteria, the purpose and amounts of the facilities proposed, the main termsand conditions, key risks and mitigants, the obligor risk rating andclassification status of the obligors and relationship, business, financial andindustry reviews and analyses.

Obligor riskratings and limits

According to the Rating Policy, which is an integralpart of the Credit Policy, all obligors of the Corporate Portfolio are rated ona 20-grade scale using calibrated and validated rating systems with eachgrade corresponding to a Probability of Default.

The Bank uses a number of obligor rating systems,assigning a borrower rating to each Corporate Banking Portfolio customer. Thisrating is based primarily upon quantitative criteria as well as qualitativefactors. In addition, each of the Bank’s and its subsidiaries’ rating systemsconsider the borrower’s industry risk and its relative position within its peergroup. As the Bank prepares for compliance with Basel II IRB methods, corporateborrower ratings are mapped to probabilities of default in order to estimatespecific expected loss per obligor.

The Bank manages itscorporate credit granting function, controls credit exposures and ensuresregulatory compliance with a set of obligor, industry and large exposure limits.The assignment of obligor limits is directly related to the obligor riskrating.

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Remedial Management

The Bank has establishedand is implementing an obligor classification system in order to facilitaterecognition of problems in various credit relationships at early stages and toproactively take remedial action. The classification process is theresponsibility of the Credit Division. There are five classificationcategories, Current, Watch List, Sub-standard, Doubtful and Loss. The obligorclassification determines the frequency of the credit reviews and the level ofcredit approval authority.

Credit Review, Management and Control

The Retail Banking Collection Division holds theresponsibility of monitoring and collecting past due amounts for the entireretail portfolio. The Division’s objectives are mainly focused on reducing loanportfolio delinquency rates, facilitating early awareness of defaulted loans,ensuring proactive remedial management of defaulted loans and reducing costs,minimizing losses and increasing the retail business portfolio overallprofitability.

In 2006, the planning ofnew credit risk management and rating systems for retail banking exposures wascompleted by developing new statistical models in line with acceptedinternational standards, that also take Greek market behavior intoconsideration. Specifically, Expected Loss was estimated for both the consumercredit and SME portfolios on the basis of key credit risk measurementvariables, i.e. probability of default, loss given default and exposure atdefault. The corresponding estimation for the mortgage credit portfolio wasalso for the most part completed.

*Finansbank.  **Responsibility of loantracking lies primarily with the branches and secondarily with the Units ofDistrict Offices, the Directorate General Loans Department and Loans TrackingUnit.*

*The loan tracking process consists of ensuringadherence to loan covenants, timely identification of existing and potential problematicloans, determination of the remedial measures of existing and potentialnon-performing loans, implementation of such measures and reporting tomanagement on the quality and structure of the loan portfolio.*

*Credit risk is monitored by Risk Management and theCredits Department. The comprehensive and well documented credit system is thebackbone of credit risk management. The Credit Policy Manual covers creditauthorization activities, concentration limits, credit monitoring activities,credit risk classification systems (rating, scoring), credit risk strategiesand guidelines. In order to evaluate the Bank’s retail and non-retail loanportfolios, two risk committees were established. The Retail Risk Comittee andthe Corporate Risk Committee meet monthly and determine principles and policiesregarding their respective portfolios.*

*Rating systems and scorecards are in place toassist with risk management for the credit portfolio. These models are reviewedand validated by an independent unit within risk management.*

*Total loan portfolio is monitored by the creditrisk management unit and concentration limits are applied to the loan portfolioto maintain credit quality at the pre-agreed level. Limit categories aredefined as single borrower limits, group of connected borrowers’ limit,industry limit, internal rating limits, top 50 customers and top 20 groups’exposure limit. Risk management reports present a full review of the creditportfolio from various aspects and enable monitoring of the limits, and aresubmitted to the Board of Directors on monthly basis.*

*The capital charge for credit risk is considered asan indicator of the level of risk of loan portfolios and is currently reportedbased on the “Standardized Approach” defined by the Bank of InternationalSettlements (“BIS”), which weighs credit risk according to the type of thefacility and the collateral.*

*Finansbank has outlined its Basel II roadmap whichincludes all the necessary steps to comply with the Internal Rights Based(“IRB”) approaches” within the timeline agreed by regulators. The Basel II*

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*roadmap consolidates model development projects forProbability of Default, Loss Given Default and Exposure at Default (“PD, LGDand EAD”) for retail and non-retail portfolios as well as subsidiaries;IT Projects for data collection and model implementation; validation ofmodels in use; detailed bottom-up calculations of economic capital (“ECAP”) andrisk adjusted return on capital (“RAROC”). After the development of a capitalportfolio model and calculation of ECAP, the Risk Adjusted Performance (“RAPM”)systems will be developed as well.*

*Vojvodjanska.  **Loans, other placements,guarantees and other off balance sheet exposures are classified into categoriesA,B,V,G and D following the requirements of the relevant NBS Regulation. Loansare classified in accordance with the evaluation of their collectability,number of days the payments are in arrears, and the financial standing of thecounterparty. Special provisions against potential losses are calculated byapplying the percentages 1%, 5%, 25%, 50% and 100% on the amounts of theparticular exposures classified into categories A,B,V,G and D respectively.*

*The South African Bank ofAthens.*   SABA focuses on working capitalfacilities and asset-based finance for SMEs and all facilities are reviewed onan annual basis in light of the most recent financial statements for suchcorporate clients. During this review period, SABA analyzes the client’s entirebusiness and looks for opportunities to add value by either providing businessadvice or restructuring/increasing facilities.

*United Bulgarian Bank.*   Outstandingbusiness loans to large corporations are reviewed monthly by the responsiblecredit officers and by UBB’s Credit Portfolio Review Committee, which isresponsible for reviewing general categories of risk and implementing riskguidelines. Loans to SMEs are reviewed on a quarterly basis. All loans arereclassified quarterly according to a risk assessment based on a four-pointrisk-rating system. In addition, UBB’s auditors carry out a separate review ofloans representing approximately 70% of the loan portfolio on an annual basis.The review is focused on the largest and most recently granted loans and arandom sample of other loans. Interim reviews are undertaken during semi-annualaudit reviews. Reports related to the status of loans are submitted regularlyto the Credit Committee by UBB’s Credit Portfolio Review Committee. At leastonce a year, UBB’s executive management presents a full report on the qualityof UBB’s loan portfolio to its board of directors.

*Stopanska Banka*   StopanskaBanka applies a six-point risk rating system for classifying loans. Loans arerated in categories A0, A1, B, C, D, and E, with E being the highest riskcategory of non-performing claims. Loans are classified depending mainly on thelength of time they have been in arrears. Additionally, collateral coverageratios, as well as quality and marketability of collateral are considered inrisk classification. Loans in category A have been in arrears for less than 15days, while those in category E have been in arrears for over 365 days.Allowances for loan losses are based on specified allowance coefficients whichvary in proportion to the risk attributable to each one of the six loancategories.

*NBG Cyprus.*   NBGCyprus has adopted the Bank’s risk rating system. A special Credit ProvisionsCommittee presents a report annually to NBG Cyprus’ Executive Credit Committeeon the quality of the bank’s credit portfolio.

*Banca Romaneasca.*   BancaRomaneasca applies a five-point risk rating system. The risk rating assigned toa loan is determined by three factors: initiation of legal proceedings,financial performance and debt service. The initiation of legal proceedingsagainst a debtor results in the highest risk rating. A debtor’s financialperformance is measured by a combination of quantitative and qualitativecriteria, such as the debtor’s quantitative financial performance as well ashis general background. Banca Romaneasca evaluates these factors and, afterreceiving a client’s annual and semi-annual financial statements, determinesthe risk rating on a semi-annual basis (in April and August). Based onfinancial performance and taking into account any delinquencies lasting over 15days, each branch calculates the appropriate provision for each debtor’saccount at the end of each month.

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***Allowance for LoanLosses—Methodology***

We maintain an allowancefor loan losses sufficient to absorb losses inherent in the loan portfolio. Thebalance of the allowance for loan losses is based on ongoing assessments of theprobable estimated losses inherent in the loan portfolio that are performed bythose members of the Group’s management who are responsible for the respectiveloan types, subject to the approval of the Group’s senior management.Guidelines have been established for the assessment process and arecontinuously monitored and improved.

Ingeneral, the allowance incorporates the measurement methods, income recognitionand disclosures as provided for in the following accounting pronouncements:

·       Statementof Financial Accounting Standards No. 5”, Accounting for Contingencies”;

·       SFASNo. 114”, Accounting by Creditors for Impairment of a Loan”; and

·       SFASNo. 118”, Accounting by Creditors for Impairment of a Loan—Income Recognitionand Disclosure”.

Specifically, ourmethodology has five primary components described below:

·       *Specific allowances.*   Specificallowances are recorded for certain impaired loans identified among largenon-homogeneous loans that we have extended to our commercial customers thatare rated in our four highest risk categories. These allowances are recordedafter an analysis of the particular customer is performed which takes intoconsideration the loan balance, payment history, cash flow analysis, collateralvalue and other factors. Individually impaired loans are measured based on thepresent value of payments expected to be received, or, for loans that aresolely dependent on the collateral for repayment, the estimated fair value ofthe collateral.

·       *Coefficient analysis.*   A coefficientanalysis is performed on commercial loans in which the individual loans aregrouped into eight risk categories based on common characteristics such asindustry, payment history (including delinquency), collateral values and otherfactors. Allowance percentages, or coefficients, based on historic loss ratesamong these groupings are then applied to determine the allowance for loanlosses to be recorded related to these loans, with the exception of impairedloans to which specific allowances are applied, as described above.

·       *Homogeneous analysis.*   Our consumerloan portfolio is pooled by portfolio segment (residential mortgages,installment loans, credit cards, etc.) and the losses inherent in eachportfolio segment are estimated and recorded as loan loss allowances basedprimarily on historical loss rates applied to current loan balances.

·       *Foreign loans.*   Allowances for lossesinherent in loans made through our branches and subsidiaries outside of Greeceare estimated by the branch or subsidiary which originated the loan.Methodologies applied are similar to those employed by the Group for loans inGreece.

·       *Unallocated allowance.*   As theestimative process for portfolio losses is based on historical data, theamounts it indicates must acknowledge the inherent flaws in the process. Theseamounts further incorporate conditions existing at the balance sheet date whichare difficult to measure and contain higher levels of uncertainty as to theireffect on our loss rates. Such conditions include, among other things:

·       generaland specific economic and business conditions affecting our key lendingsegments and geographical areas;

·       geographicaland industry segment concentrations;

·       creditquality trends, including trends in non-performing loans expected to resultfrom existing conditions;

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·       averageloan balances and volumes;

·       collateralvalues;

·       seasoningof the loan portfolio;

·       recentloss experience in particular segments of the portfolio;

·       durationof the current business cycle within an industry;

·       banklegislative regulatory developments; and

·       findingsof our internal audit department.

The allowance for credit losses is based uponestimates of probable losses inherent in the loan portfolio. The amountactually observed for these losses can vary significantly from the estimatedamounts, but we expect that the consistent application of our methodologydescribed above will reduce such variances. To ensure this is the case, weevaluate our loans and the methodologies applied thereto, including lossestimation percentages, on a regular basis based on management’s judgment ofthe changing dynamics within the portfolio. For instance, our coefficientanalysis incorporates loss and delinquency data for the most recent three-yearperiod, and our analysis of homogeneous loans incorporates loss and delinquencydata for the most recent two-year period. See “—*Risk Management—Credit Review Policies”* in this Item 4.E.

Thefollowing table sets forth the loan loss allowances for U.S. GAAP purposes bymethodology for the last five years to which the methodology was applied torespective loan balances.

| ** **                                                 | ** ** | **At December 31,**    | ** ** |
|------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                 | ** ** | **2002**                         | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                 | ** ** | **(EUR in thousands)** | ** ** |
| Specific  allowances                                       |       | 341,226                          |       | 308,063 |   | 438,439 |   | 476,127 |   | 443,673 |   |
| Coefficient  analysis                                      |       | 101,070                          |       | 89,535 |   | 112,182 |   | 50,808 |   | 67,938 |   |
| Homogeneous  analysis                                      |       | 281,640                          |       | 363,867 |   | 300,900 |   | 280,800 |   | 356,603 |   |
| Foreign loans                                              |       | 210,068                          |       | 192,851 |   | 186,958 |   | 231,210 |   | 318,439 |   |
| Unallocated                                                |       | 47,424                           |       | 73,080 |   | 61,079 |   | 53,600 |   | 38,104 |   |
| Total loan loss  allowance from continuing operations |       | 981,428                          |       | 1,027,396 |   | 1,099,558 |   | 1,092,545 |   | 1,224,757 |   |
| Total loan loss  allowance from discontinued operations    |       | 29,717                           |       | 20,097 |   | 15,654 |   | 13,148 |   | — |   |
| Total loan loss  allowance                                 |       | 1,011,145                        |       | 1,047,493 |   | 1,115,212 |   | 1,105,693 |   | 1,224,757 |   |

 

The decrease in specific allowances reflects theincreased write-offs of corporate loans in 2006. Homogenous allowancesincreased due to higher allowances taken in relation to mortgage loans due tochange in the probable losses of our mortgage portfolio resulting from theageing of non-performing loans, minimal collections and the addition of newpast due loans.

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Thefollowing table illustrates the activity in the loan loss allowance balanceover the previous five years:

| ** **                                                                            | ** ** | **Year ended December 31,** | ** ** |
|---------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                            | ** ** | **2002**                                   | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                                            | ** ** | **(EUR in thousands)**           | ** ** |
| Balance at beginning of  year                                                         |       | 1,014,927                                  |       | 1,011,145 |   | 1,047,493 |   | 1,115,212 |   | 1,092,545 |   |
| Less: Amounts  attributable to discontinued operations                                |       | —                                     |       | — |   | — |   | (15,654 | ) | — |   |
| Add: Allowance (upon  acquisition) attributable to companies acquired during the year |       | 2,474                                      |       | 3,766 |   | — |   | — |   | 133,227 |   |
| Add: Provisions for  probable loan losses from continuing operations             |       | 133,924                                    |       | 139,061 |   | 201,234 |   | 225,013 |   | 261,603 |   |
| Add: Provisions for  probable loan losses from discontinued operations           |       | 9,467                                      |       | 1,482 |   | (1,393 | ) | — |   | — |   |
| Write-offs                                                                            |       | (111,884                                   | )          | (101,670 | ) | (130,431 | ) | (245,881 | ) | (277,338 | ) |
| Recoveries(1)                                                                         |       | 2,480                                      |       | 9,011 |   | 1,929 |   | 7,058 |   | 20,064 |   |
| Less: Net write-offs                                                                  |       | (109,404                                   | )          | (92,659 | ) | (128,502 | ) | (238,823 | ) | (257,274 | ) |
| Exchange differences and  other variations                                            |       | (40,243                                    | )          | (15,302 | ) | (3,620 | ) | 6,797 |   | (5,344 | ) |
| Balance at end of year                                                                |       | 1,011,145                                  |       | 1,047,493 |   | 1,115,212 |   | 1,092,545 |   | 1,224,757 |   |

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(1)             Recoveries afterwrite-offs of non-performing loans are minimal since, under Greek regulationsnon-performing loans cannot be written-off until all legal remedies forrecovery have been exhausted.

Keyratios related to the activity in our loan loss allowance for the previous fiveyears to which our loan loss methodology was applied are as follows:

| ** **                                                                | ** ** | **At December 31,** | ** ** |
|---------------------------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                                                | ** ** | **2002**                      | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                                | ** ** | **(%)**                       | ** ** | **(%)** | ** ** | **(%)** | ** ** | **(%)** | ** ** | **(%)** | ** ** |
| Allowance for  loan losses as a percent of total loans                    |       | 4.9                           |       | 4.6 |   | 4.1 |   | 3.6 |   | 2.8 |   |
| Provision for  probable loan losses as a percent of net loans written-off |       | 131.1                         |       | 151.7 |   | 155.5 |   | 94.2 |   | 101.6 |   |
| Recoveries of  loans to loans written-off in the previous year            |       | 1.9                           |       | 8.1 |   | 1.9 |   | 5.4 |   | 8.1 |   |
| Net loans written-off  to average loans outstanding                       |       | 0.6                           |       | 0.4 |   | 0.5 |   | 0.8 |   | 0.7 |   |
| Allowance for loan  losses as a percent of non-accruing loans             |       | 74.6                          |       | 76.7 |   | 79.6 |   | 75.5 |   | 81.8 |   |

 

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***Non-Performing Loans, Loan Loss Provisions and LoanLoss Experience***

*Non-Performing, Delinquentand Restructured Loans.**  *The table below shows (1) all loans that arenon-performing, which are accounted for on a nonaccrual basis, (2) allaccruing loans which are contractually past due 90 days or more as toprincipal or interest payments and (3) loans which are not included in (1) or(2) which are troubled debt restructurings for each of the five yearsended December 31, 2002, 2003, 2004, 2005 and 2006.

| ** **                                            | ** ** | **At December 31,**    | ** ** |
|-------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                            | ** ** | **2002**                         | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                            | ** ** | **(EUR in thousands)** | ** ** |
| **Domestic loans:**                                   |       |                             |       |   |   |   |   |   |   |   |   |
| Non-performing  past due and restructured loans: |       |                             |       |   |   |   |   |   |   |   |   |
| Accruing loans:                                       |       |                             |       |   |   |   |   |   |   |   |   |
| Past due 90 days - 180 days                           |       | 19,743                           |       | 22,093 |   | 66,270 |   | 152,488 |   | 235,697 |   |
| Past due 180 days - 365 days                          |       | 68,995                           |       | 51,599 |   | 231,211 |   | 165,392 |   | 165,178 |   |
| Total accruing  loans                                 |       | 88,738                           |       | 73,692 |   | 297,481 |   | 317,880 |   | 400,875 |   |
| Non-accruing  loans:                                  |       |                             |       |   |   |   |   |   |   |   |   |
| Past due 90 days - 180 days                           |       | 3,077                            |       | 1,313 |   | 8,516 |   | 35,772 |   | 29,885 |   |
| Past due 180 days - 365 days                          |       | 47,734                           |       | 28,983 |   | 18,786 |   | 273,571 |   | 244,865 |   |
| Past due 365 days or more                             |       | 1,062,354                        |       | 1,043,336 |   | 1,055,352 |   | 781,687 |   | 821,034 |   |
| Total non-accruing  loans                             |       | 1,113,165                        |       | 1,073,632 |   | 1,082,654 |   | 1,091,030 |   | 1,095,784 |   |
| Troubled debt  restructuring                          |       | 158,551                          |       | 113,663 |   | 80,470 |   | 101,050 |   | 154,882 |   |
| Total domestic  loans                                 |       | 1,360,454                        |       | 1,260,987 |   | 1,460,605 |   | 1,509,960 |   | 1,651,541 |   |
| **Foreign loans:**                                    |       |                             |       |   |   |   |   |   |   |   |   |
| Non-performing  past due and restructured loans: |       |                             |       |   |   |   |   |   |   |   |   |
| Accruing loans:                                       |       |                             |       |   |   |   |   |   |   |   |   |
| Past due 90 days - 180 days                           |       | —                           |       | — |   | — |   | — |   | 2,986 |   |
| Past due 180 days - 365 days                          |       | —                           |       | — |   | — |   | — |   | 6,316 |   |
| Total accruing  loans                                 |       | —                           |       | — |   | — |   | — |   | 9,302 |   |
| Non-accruing  loans:                                  |       |                             |       |   |   |   |   |   |   |   |   |
| Past due 90 days - 180 days                           |       | 44,761                           |       | 37,749 |   | 163,535 |   | 189,949 |   | 59,323 |   |
| Past due 180 days - 365 days                          |       | 37,244                           |       | 96,253 |   | 23,727 |   | 50,854 |   | 75,466 |   |
| Past due 365 days or more                             |       | 160,700                          |       | 157,611 |   | 130,890 |   | 115,524 |   | 266,484 |   |
| Total non-accruing  loans                             |       | 242,705                          |       | 291,613 |   | 318,152 |   | 356,327 |   | 401,273 |   |
| Troubled debt  restructuring                          |       | 62,131                           |       | 57,129 |   | 4,935 |   | 13,367 |   | 4,098 |   |
| Total foreign  loans                                  |       | 304,836                          |       | 348,742 |   | 323,087 |   | 369,694 |   | 414,673 |   |
| Total domestic and  foreign loans                     |       | 1,665,290                        |       | 1,609,729 |   | 1,783,692 |   | 1,879,654 |   | 2,066,214 |   |

 

Increase in domestic accruing loans past due 90-180is primarily attributable to mortgage loans.

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Thefollowing table sets forth the amount of loans of the Group which werenon-performing, as determined by the banks in the Group, as at December 31,2002, 2003, 2004 ,2005 and 2006.

| ** **                           | ** ** | **At December 31,**    | ** ** |
|--------------------------------------|------------|----------------------------------|------------|
| ** **                           | ** ** | **2002**                         | ** ** | **2003** | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                           | ** ** | **(EUR in thousands)** | ** ** |
| Group customer  loans (gross amount) |       | 20,631,325                       |       | 22,933,040 |   | 27,175,405 |   | 30,674,173 |   | 43,756,843 |   |
| **Domestic loans:**                  | ** ** |                             |       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Non-performing loans                 |       | 1,113,165                        |       | 1,073,632 |   | 1,082,654 |   | 1,091,030 |   | 1,095,784 |   |
| **Foreign loans:**                   | ** ** |                             |       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Non-performing loans                 |       | 242,705                          |       | 291,613 |   | 318,152 |   | 356,327 |   | 401,273 |   |
| Total non-performing  loans          |       | 1,355,870                        |       | 1,365,245 |   | 1,400,806 |   | 1,447,357 |   | 1,497,057 |   |

 

*The Group’sTreatment of Non-Performing Loans*

The accounting processes applied by the Group forproblem loans are based on Greek and applicable local regulations in othercountries where the Group operates. Greek regulations with respect to problemloans differ in certain respects from those followed by banks in othercountries, including the United States.

Under current Greek law, a non-performing loan is onewhere interest and/or principal has not been paid for six months (regardless ofthe existence or value of collateral). Prior to 2002, this period was12 months. However, under long-standing Bank policies, commercial loansare treated as non-performing after 180 days and consumer loans aretreated as non-performing after 100 days (i.e. 90 days plus a 10-daygrace period). The Bank ceases to accrue interest when a loan is determinedto be non-performing.

The total value of non-performing loans (i.e.,non-accruing loans) for the Group was €1,497 million at December 31,2006. This corresponds to 3.3% of the Group’s loans outstanding at the samedate. Of the Group’s non-performing loans, €1,148.6 million were heldby the Bank. This amount represented 3.6% of the Bank’s portfolio.

For the year ended December 31, 2006, the Grouprecorded for certain non-performing loans gross interest that was paid in cashin the amount of €9 million instead of €32.7 millionwhich would have been recorded had these loans been current.

The Group’s level of non-performing loans(approximately 3.3% of the total loan portfolio at December 31, 2006) issignificantly higher than most other banks in the EU. The high level ofnon-performing loans in the Group’s portfolio has resulted from severalfactors. Key factors that have contributed to the level of non-performing loanswere the recession in the Greek economy, which affected many borrowers in the1990s, and past Government influence over lending policies, includingGovernment regulations requiring lending to specific sectors of the economy andGovernment policies that required the Bank to extend loans to troubledcompanies considered to be important to the Greek national interest. Othercontributing factors were that the methods for approving loans and monitoringtroubled loans in the past, in general, depended heavily on collateral and didnot focus on the cash flow of the borrower, leading to relatively high levelsof payment defaults. In addition, there were inadequate procedures formonitoring troubled loans.

Furthermore, non-performing loans have tended toremain on the Group’s balance sheets significantly longer than would be thecase with banks in other Western European countries and the United States dueto Greek regulations limiting the ability of Greek banks to make provisions forand to write off non-performing loans. See *“—Provisionsfor Probable Loan Losses and Write-offs of Non-Performing Loans”*

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below in this Item 4.E,for a discussion of the Group’s reserve and write-off policies and relevantregulations.

The Bank generally initiates action to recover orsettle outstanding amounts as soon as a loan is determined to benon-performing. The Bank has special branches responsible for the collection ofnon-performing loans in coordination with the central non-performing loandivisions (corporate & retail).

In addition, the Bank is proceeding with therestructuring of certain non-performing loans. The terms on whichnon-performing loans are restructured vary depending upon several factorsincluding how long the loan has been classified as non-performing and the valueof the collateral underlying the loan. Restructuring terms generally involve adiscount to the total amount of unpaid interest owed to the Bank under the loanand a revised interest rate and repayment schedule. Non-performing loans thathave been restructured remain classified as non-performing loans until they arerepaid in full and interest does not accrue with respect to such loans. If theborrower performs under the restructuring arrangements, however, the Bankceases to pursue legal action against the borrower under the original loan. Thenumber of borrowers opting to restructure their loans with the Bank has beenrelatively low during the past two years while the implementation of Greek law2912/2001, which caps the balance of certain non-performing loans, waspending and foreclosure procedures were prohibited. This law was finalized andimplemented in 2004 through law 3259/2004 article 39 called theCompounding law. Since its implementation, the number of borrowers opting torestructure their loans with the Bank has started to increase.

Finansbank’s Treatment of Non-Performing Loans

Accordingto Turkish regulations, loans are classified in five categories depending ontheir current status and how many days they are past due:

| **Category** | ** ** | **Description** | ** **                    | **Minimum Provision  under Central  Bank of Turkey Rules** | ** ** |
|--------------|------------|-----------------|-------------------------------|-------------------------------------------------------------------------------------|------------|
| I            |       |            | Standard Loans                |                                                                                |       | — |   |   |
| II           |       |            | Watch Loans                   |                                                                                |       | — |   |   |
| III          |       |            | Loans past due  over 90 days  |                                                                                |       | 20 | % |   |
| IV           |       |            | Loans past due  over 180 days |                                                                                |       | 50 | % |   |
| V            |       |            | Loans past due over 360  days |                                                                                |       | 100 | % |   |

 

According to local regulations, all receivables whichhave been classified in the Third, Fourth and Fifth Groups and the collectionof whose principal and interest has been delayed for more than 90 days from thedue date are deemed non-performing receivables.

Finansbank’s policy is to classify loans according tothe above-mentioned categories.

Finansbank analyzes its loan book on a portfolio basisfor loans smaller than $ 1 million by taking into account historical defaultand recovery rates. For loans greater than $ 1 million a specific impairmenttest is performed by calculating present value of estimated future cash flows.Any additional impairment raised in both cases is treated as portfolioimpairment.

Vojvodjanska’s Treatment of Non-Performing loans

Vojvodjanska considers loans to be non-performing wheninterest has not been paid for 90 days, in accordance with internal regulationsof the bank. Vojvodjanska stops accruing interest only after court procedureshave been initiated. Its system continues to calculate the interest in asuspended account. Interest accrued but not collected is provisioned 100%.Vojvodjanska begins legal action against borrowers on a case-by-case basis. Forborrowers that are legal entities, it generally freezes the company’s currentaccounts first, and after 90 days commences foreclosure proceedings. Formortgage loans to individuals, legal action commences when the loan isapproximately 120 days past due. The bank has its own 

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Non-Performing LoanDivision in charge of collecting non-performing loans. Vojvodjanska will beginoutsourcing the collection of consumer loans to local companies.

In some cases, when Vojvodjanska assesses that thecompany in default has only temporary financial problems but has potential forsuccessful operations in the near future, the bank reschedules or restructuresits non-performing loans. The restructuring depends on the Vojvodjanska’sassessment of the ability of the client to regularly repay the loan in thefuture and the quality of the existing or the additional collateral the clientis ready to offer. In some cases when the client is categorized as “C”, “D” or “E”it is possible for the restructuring to include some partial write-off. Inaccordance with internal regulations, rescheduled loans remain classified asnon-performing until full repayment. New loans that can be possibly granted tothese companies under rescheduling should have the additional approval of theNon-Performing Loan Division until full repayment of the initial loan.

SABA Treatment of Non-Performing Loans

SABA reclassifies the status of its loan accounts onthe following basis:

i)                  60 days inarrears—the account is reclassified from “1” to “2” (loan classifications areexplained in the table below) and additional provision is made pursuant toSouth African Reserve Bank requirements.

ii)              90 days inarrears—the account is reclassified to “3” and again additional provision ismade pursuant to South African Reserve Bank requirements. During this time ofre-classification, the bank also endeavors to communicate with the client inorder to either obtain repayment of the arrears or to restructure the debtagainst, if necessary, additional security.

iii)          120 days in arrears—thebank will determine whether legal action should be initiated for recovery. Theaccount will be reclassified to “4” and transferred to the Recoveries Division.Accounts thus classified do accrue interest.

The Recoveries Division will endeavor to communicatewith the borrower in order to obtain repayment. If arrangements are concludedwith the debtor at this point, such arrangements are generally governed by adeed of settlement where the debtor consents to judgment in the event of afurther default under the revised arrangements. The revised arrangements mayinclude, *inter alias*, a reduction in the interestrate applicable to the loan and/or a discount in respect of interest, which remainsunpaid.

Once a facility hasbeen restructured pursuant to a Deed of Settlement, the account will remain inthe books of the Recoveries Division with interest only transferred to theincome statement once the principal has been reduced to an amount that isadequately supported by the value of tangible collateral held or, in caseswhere no tangible collateral is held, once the principal has been repaid.

iv)            In the event of therebeing no response to the initial demand for payment by the Recoveries Division,the matter is referred to attorneys for legal action, the account isreclassified as “5” and does not accrue interest.

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TheSouth African Reserve Bank has issued guidelines on how loans should becategorized and what minimum provision should be raised, a summary of which isset forth below.

| · |   | 1 Current         |   | 1% general provision                       |   |
|--------|--------|-------------------|--------|--------------------------------------------|--------|
| · |   | 2 Special Mention |   | 2% specific  provision                     |   |
| · |   | 3 Sub-standard    |   | 20% specific  provision net of collateral  |   |
| · |   | 4 Doubtful        |   | 50% specific  provision net of collateral  |   |
| · |   | 5 Bad Debt        |   | 100% specific provision  net of collateral |   |

 

SABA strictly adheres to these guidelines.

SABA analyzes its loan portfolio by taking intoaccount historical default and recovery rates product by product. Anyadditional impairment raised is treated as portfolio impairment and is aboveand beyond the provision already raised in terms of South African Reserve Bankguidelines.

UBB Treatment of Non-Performing Loans

UBB classifies loans as non-performing if they are inarrears for more than 90 days. Interest payments that are overdue for more than90 days are accrued as an off-balance sheet item and are not capitalized. UBBcharges penalties on overdue balance sheet interest in accordance with theterms of the relevant loan agreement. These penalties are accrued as anoff-balance sheet item. When overdue amounts are fully repaid, UBB renews itsbalance sheet accruals. Following its adoption of IFRS as of January 1,2003, UBB suspends accrual of interest income when loans become doubtful ofcollection (non-performing). Such income is excluded from interest income untilreceived. When overdue amounts are fully repaid, UBB renews its balance sheetaccruals.

Stopanska Banka Treatment of Non-Performing Loans

Stopanska Banka considers loans to be non-performingand stops accruing interest on such loans when interest has not been paid for90 days, in accordance with legal regulations of the central bank of thecountry. Interest accrued but not collected is provisioned 100%. StopanskaBanka begins legal action against borrowers on a case-by-case basis. Forborrowers that are legal entities, the bank applies a 45-day policy forenforced collection for delayed repayment, where generally the company currentaccounts are first frozen, followed by activation of other instruments ofcollateral if necessary, and after 90 days the bank commences foreclosureproceedings. For mortgage loans to individuals, legal action commences when theloan is approximately 90 days past due. The bank has its own Non-PerformingLoan Division in charge of collecting non-performing loans. In 2004, StopanskaBanka began outsourcing the collection of consumer loans to local companies.

In some cases, when the bank assesses that the companyhas only temporary financial problems but has potential for successfuloperations in the near future, Stopanska Banka reschedules or restructures itsnon-performing loans. The restructuring depends on the bank’s assessment of thepotential of the client for regular payment of loans in the future and theexisting or additional collateral that the client is ready to offer. In somecases when the client is categorized as “D” or “E” it is possible for therestructuring to include some partial write-offs of interest or defaultinterest. In accordance with current central bank regulations, rescheduledloans remain classified as non-performing for at least six months afterrescheduling. After that period they can be gradually upgraded to a highercategory only if the client regularly meets its obligations to the bank.

NBG Cyprus Treatment of Non-Performing Loans

Since January 2004, NBG Cyprus considered loansto be non-performing and such loans ceased accruing interest when more than sixmonthly installments fall in arrears. Effective April 1, 2005, NBG 

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Cyprus considers loans tobe non-performing and stops accruing interest on such loans when more thanthree monthly installments fall in arrears. All interest accrued but notcollected is reversed.

NBG Cyprus considers overdrafts to be non-performingwhen they have exceeded their limits by 5%, on a continuous basis, for morethan three months. The bank stops accruing that portion of the interest on suchfacilities that is not covered by the total of the credit turnover during theprevious three months. In cases where interest stops accruing but there isadequate security for the credit facilities, including interest, with tangiblesecurities, interest can continue to accrue with respect to such facilities.

NBG Cyprus determines whether to commence legal actionwith respect to non-performing loans and overdraft accounts on a case-by-casebasis. The bank has its own recoveries sector.

NBG Cyprus will occasionally restructure creditfacilities that are adversely classified and/or categorized as non-performing.The terms on which non-performing credit facilities are restructured varydepending upon several factors including how long they have been classified asnon-performing and the value of the underlying collateral. Restructuring termsgenerally involve a revised interest rate and repayment schedule and obtainingadditional security and guarantees.

Banca Romaneasca Treatment of Non-Performing Loans

Banca Romaneascaclassifies loans as non-performing when any amount of principal and/or interestis past due for more than 90 days. All non-performing loans are impaired inaccordance to the internal loans impairment procedure drafted in compliancewith the IFRS 39 provisions. The bank employs remedial management proceduresapplying to any loan falling under the non-performing loan category. Under theremedial procedures, the usual action performed by the bank in order to recoverthe amounts due is to enforce or execute the collaterals through court orders.

*Provisions forProbable Loan Losses and Write-offs of Non-Performing Loans*

Approximately 76.7% of the Group’s non-performingloans as at December 31, 2006, were held by the Bank. The Bank’snon-performing and potential problem loans are monitored internally by thecredit staff at the Bank’s headquarters, certain regional branches and specializedbranches which handle only non-performing loans. The prospects of recovery andthe estimated losses are reviewed. The Bank establishes provisions, reservelevels and write-offs for these loans. In addition, the Bank’s internal auditdepartment examines loan portfolios at branches to determine how loans are tobe classified.

Banks in Greece are allowed for tax purposes to takegeneral provisions for loan losses up to 1% of the average annual balance oftheir loan portfolio, except for loans extended to state-owned organizations orloans guaranteed by the Hellenic Republic. Specific provisions for other loanlosses are also permitted under relevant Greek tax laws. However, substantialtax penalties apply where loans written off against specific provision aresubsequently recovered, even in minimal amounts. Under Greek bankingregulations, non-performing loans can only be written off after all legalremedies for recovery, including the realization of collateral, have beenexhausted. This process can take up to ten years. As a result, specificprovisions for non-performing loans are generally made only if generalprovisions are deemed insufficient to cover non-performing loans. As part ofthe NBG Group’s strategy to improve the quality of its loan portfolio, the NBGGroup has improved its methods of providing for losses inherent in its loanportfolio.

Management, in accordance with Greek regulations,historically determined provisioning based on the amount of non-performing ortroubled loans and the quality of the collateral, as well as recommendationsfrom the Bank’s internal auditors. Provisioning levels are determined based onrequirements imposed by the Bank of Greece, which require banks to makeprovisions against all loans, with the amount to be provided depending on thetype and quality of the loan, as well as the institution’s experience with suchloans.

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During2005 and 2006, the Group wrote off €245.9 million and €277.3million, respectively, in non-performing loans from its continuing operations andmade new provisions net of recoveries of €225.0 million and €261.6 million,respectively, with regards to the loan portfolio. The table below showsallowances for loan losses for the Group by loan category for each of the yearsended December 31, 2002, 2003, 2004, 2005 and 2006.

| ** **                       | ** ** | **2002**                     | ** ** | **2003**   | ** ** | **2004**                     | ** ** | **2005**   | ** ** | **2006**                     | ** ** |
|----------------------------------|------------|------------------------------|------------|------------|------------|------------------------------|------------|------------|------------|------------------------------|------------|
| ** **                       | ** ** | **Amount**                   | ** ** | **%**(1)   | ** ** | **Amount**                   | ** ** | **%**(1)   | ** ** | **Amount**                   | ** ** | **%**(1) | ** ** | **Amount** | ** ** | **%**(1) | ** ** | **Amount** | ** ** | **%**(1) | ** ** |
| ** **                       | ** ** | **(EUR in  thousands)** | ** ** | ** ** | ** ** | **(EUR in  thousands)** | ** ** | ** ** | ** ** | **(EUR in  thousands)** | ** ** | ** ** | ** ** | **(EUR in  thousands)** | ** ** | ** ** | ** ** | **(EUR in  thousands)** | ** ** | ** ** | ** ** |
| **Greek residents**              | ** ** |                         | ** ** | ** ** |       | ** **                   | ** ** |       | ** ** | ** **                   |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| **Consumer**                     | ** ** |                         | ** ** | ** ** |       | ** **                   | ** ** |       | ** ** | ** **                   |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Residential mortgages            |       |                         | 178,000    | ** ** |       | 26.9                         |       |       | 190,000    | ** **                   |       | 29.6 |   |   | 123,300 | ** ** |   | 31.6 |   |   | 82,200 | ** ** |   | 36.2 |   |   | 171,071 | ** ** |   | 30.4 |   |
| Credit card                      |       |                         | 64,000     | ** ** |       | 5.0                          |       |       | 118,271    | ** **                   |       | 5.3 |   |   | 113,500 | ** ** |   | 5.2 |   |   | 111,100 | ** ** |   | 4.8 |   |   | 77,044 | ** ** |   | 3.4 |   |
| Auto financing                   |       |                         | —     | ** ** |       | 1.4                          |       |       | —     | ** **                   |       | 1.4 |   |   | — | ** ** |   | 1.3 |   |   | — | ** ** |   | 1.1 |   |   | — | ** ** |   | 0.6 |   |
| Other consumers                  |       |                         | 40,605     | ** ** |       | 4.6                          |       |       | 56,109     | ** **                   |       | 5.7 |   |   | 64,100 | ** ** |   | 6.8 |   |   | 87,500 | ** ** |   | 7.3 |   |   | 108,489 | ** ** |   | 6.7 |   |
| Total                            |       |                         | 282,605    | ** ** |       | 37.9                         |       |       | 364,380    | ** **                   |       | 42.0 |   |   | 300,900 | ** ** |   | 44.9 |   |   | 280,800 | ** ** |   | 49.4 |   |   | 356,604 | ** ** |   | 41.1 |   |
| **Commercial**                   | ** ** |                         | ** ** | ** ** |       | ** **                   | ** ** |       | ** ** | ** **                   |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Industry and mining              |       |                         | 111,039    | ** ** |       | 9.7                          |       |       | 102,929    | ** **                   |       | 9.1 |   |   | 174,223 | ** ** |   | 10.6 |   |   | 186,622 | ** ** |   | 8.1 |   |   | 171,303 | ** ** |   | 6.0 |   |
| Small-scale industry             |       |                         | 59,442     | ** ** |       | 3.3                          |       |       | 49,802     | ** **                   |       | 3.1 |   |   | 53,618 | ** ** |   | 3.0 |   |   | 57,414 | ** ** |   | 2.8 |   |   | 57,237 | ** ** |   | 2.4 |   |
| Trade                            |       |                         | 98,057     | ** ** |       | 11.3                         |       |       | 77,825     | ** **                   |       | 10.8 |   |   | 144,150 | ** ** |   | 10.8 |   |   | 137,984 | ** ** |   | 10.4 |   |   | 142,016 | ** ** |   | 9.3 |   |
| Construction                     |       |                         | 26,047     | ** ** |       | 1.1                          |       |       | 10,724     | ** **                   |       | 1.6 |   |   | 35,073 | ** ** |   | 1.6 |   |   | 34,472 | ** ** |   | 1.4 |   |   | 36,033 | ** ** |   | 1.3 |   |
| Tourism                          |       |                         | 78,422     | ** ** |       | 1.4                          |       |       | 93,165     | ** **                   |       | 1.3 |   |   | 55,678 | ** ** |   | 1.0 |   |   | 24,944 | ** ** |   | 0.9 |   |   | 22,212 | ** ** |   | 0.6 |   |
| Shipping and transportation      |       |                         | 34,809     | ** ** |       | 4.2                          |       |       | 25,394     | ** **                   |       | 3.5 |   |   | 29,658 | ** ** |   | 3.2 |   |   | 25,683 | ** ** |   | 3.0 |   |   | 25,122 | ** ** |   | 2.4 |   |
| Commercial mortgages             |       |                         | —     | ** ** |       | 0.5                          |       |       | —     | ** **                   |       | 0.6 |   |   | — | ** ** |   | 1.0 |   |   | — | ** ** |   | 1.3 |   |   | — | ** ** |   | 1.2 |   |
| Public sector                    |       |                         | 24         | ** ** |       | 10.6                         |       |       | 6          | ** **                   |       | 6.4 |   |   | — | ** ** |   | 3.9 |   |   | — | ** ** |   | 4.8 |   |   | — | ** ** |   | 3.3 |   |
| Other                            |       |                         | 50,198     | ** ** |       | 3.3                          |       |       | 44,122     | ** **                   |       | 4.6 |   |   | 58,221 | ** ** |   | 4.5 |   |   | 59,816 | ** ** |   | 5.4 |   |   | 57,687 | ** ** |   | 5.7 |   |
| Total                            |       |                         | 458,038    | ** ** |       | 45.4                         |       |       | 403,967    | ** **                   |       | 41.0 |   |   | 550,621 | ** ** |   | 39.6 |   |   | 526,935 | ** ** |   | 38.1 |   |   | 511,610 | ** ** |   | 32.2 |   |
| Total Greek residents loans      |       |                         | 740,643    | ** ** |       | 83.3                         |       |       | 768,347    | ** **                   |       | 83.0 |   |   | 851,521 | ** ** |   | 84.5 |   |   | 807,735 | ** ** |   | 87.5 |   |   | 868,214 | ** ** |   | 73.3 |   |
| **Foreign**                      | ** ** |                         | ** ** | ** ** |       | ** **                   | ** ** |       | ** ** | ** **                   |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| **Consumer**                     | ** ** |                         | ** ** | ** ** |       | ** **                   | ** ** |       | ** ** | ** **                   |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Residential mortgages            |       |                         | 389        | ** ** |       | 1.2                          |       |       | 854        | ** **                   |       | 1.1 |   |   | 1,581 | ** ** |   | 1.3 |   |   | 3,488 | ** ** |   | 1.2 |   |   | 3,457 | ** ** |   | 3.6 |   |
| Credit card                      |       |                         | 5,341      | ** ** |       | 0.1                          |       |       | 2,675      | ** **                   |       | 0.1 |   |   | 2,656 | ** ** |   | 0.1 |   |   | 4,926 | ** ** |   | 0.2 |   |   | 43,360 | ** ** |   | 2.3 |   |
| Auto financing                   |       |                         | 65         | ** ** |       | 0.1                          |       |       | 6          | ** **                   |       | 0.1 |   |   | 2,545 | ** ** |   | 0.1 |   |   | 2,925 | ** ** |   | 0.1 |   |   | 6,731 | ** ** |   | 0.6 |   |
| Other consumers                  |       |                         | 17,115     | ** ** |       | 1.2                          |       |       | 16,583     | ** **                   |       | 1.2 |   |   | 34,350 | ** ** |   | 1.5 |   |   | 44,845 | ** ** |   | 2.0 |   |   | 47,909 | ** ** |   | 2.7 |   |
| Total                            |       |                         | 22,910     | ** ** |       | 2.6                          |       |       | 20,118     | ** **                   |       | 2.5 |   |   | 41,132 | ** ** |   | 3.0 |   |   | 56,184 | ** ** |   | 3.5 |   |   | 101,457 | ** ** |   | 9.2 |   |
| **Commercial**                   | ** ** |                         | ** ** | ** ** |       | ** **                   | ** ** |       | ** ** | ** **                   |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Industry and mining              |       |                         | 88,538     | ** ** |       | 4.2                          |       |       | 86,797     | ** **                   |       | 3.9 |   |   | 52,838 | ** ** |   | 5.0 |   |   | 53,942 | ** ** |   | 1.4 |   |   | 42,531 | ** ** |   | 1.9 |   |
| Small-scale industry             |       |                         | 2,436      | ** ** |       | 0.2                          |       |       | 2,872      | ** **                   |       | 0.4 |   |   | 4,238 | ** ** |   | 0.6 |   |   | 1,609 | ** ** |   | 0.6 |   |   | 5,083 | ** ** |   | 2.0 |   |
| Trade                            |       |                         | 36,257     | ** ** |       | 2.3                          |       |       | 39,562     | ** **                   |       | 2.7 |   |   | 55,312 | ** ** |   | 2.7 |   |   | 68,366 | ** ** |   | 2.2 |   |   | 79,160 | ** ** |   | 2.2 |   |
| Construction                     |       |                         | 9,036      | ** ** |       | 0.9                          |       |       | 3,181      | ** **                   |       | 1.2 |   |   | 7,147 | ** ** |   | 1.3 |   |   | 10,416 | ** ** |   | 1.3 |   |   | 13,231 | ** ** |   | 2.0 |   |
| Tourism                          |       |                         | 2,475      | ** ** |       | 0.3                          |       |       | 2,356      | ** **                   |       | 0.4 |   |   | 3,263 | ** ** |   | 0.4 |   |   | 3,425 | ** ** |   | 0.4 |   |   | 5,679 | ** ** |   | 0.7 |   |
| Shipping and transportation      |       |                         | 51,329     | ** ** |       | 1.0                          |       |       | 36,297     | ** **                   |       | 1.0 |   |   | 33,011 | ** ** |   | 1.2 |   |   | 30,348 | ** ** |   | 1.3 |   |   | 11,757 | ** ** |   | 1.5 |   |
| Commercial mortgages             |       |                         | 3,753      | ** ** |       | 3.1                          |       |       | 2,429      | ** **                   |       | 2.7 |   |   | 331 | ** ** |   | 0.6 |   |   | 374 | ** ** |   | 0.2 |   |   | 324 | ** ** |   | 0.3 |   |
| Public sector                    |       |                         | 56         | ** ** |       | 0.2                          |       |       | 128        | ** **                   |       | 0.2 |   |   | 33 | ** ** |   | 0.1 |   |   | 34 | ** ** |   | — |   |   | 33 | ** ** |   | — |   |
| Other                            |       |                         | 6,288      | ** ** |       | 1.9                          |       |       | 12,326     | ** **                   |       | 2.0 |   |   | 5,307 | ** ** |   | 0.6 |   |   | 6,512 | ** ** |   | 1.6 |   |   | 59,184 | ** ** |   | 6.9 |   |
| Total                            |       |                         | 200,168    | ** ** |       | 14.1                         |       |       | 185,948    | ** **                   |       | 14.5 |   |   | 161,480 | ** ** |   | 12.5 |   |   | 175,026 | ** ** |   | 9.0 |   |   | 216,982 | ** ** |   | 17.5 |   |
| Total foreign loans              |       |                         | 223,078    | ** ** |       | 16.7                         |       |       | 206,066    | ** **                   |       | 17.0 |   |   | 202,612 | ** ** |   | 15.5 |   |   | 231,210 | ** ** |   | 12.5 |   |   | 318,439 | ** ** |   | 26.7 |   |
| Unallocated                      |       |                         | 47,424     | ** ** |       | —                       |       |       | 73,080     | ** **                   |       | — |   |   | 61,079 | ** ** |   | — |   |   | 53,600 | ** ** |   | — |   |   | 38,104 | ** ** |   | — |   |
| Total Allowance  For Loan Losses |       |                         | 1,011,145  | ** ** |       | 100.0                        |       |       | 1,047,493  | ** **                   |       | 100.0 |   |   | 1,115,212 | ** ** |   | 100.0 |   |   | 1,092,545 | ** ** |   | 100.0 |   |   | 1,224,757 | ** ** |   | 100.00 |   |

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(1)             Percentagesrepresent the balance of loans in the respective category as a percent of thetotal loan balance.

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Totalallowances for loan losses attributable to foreign residents increased by 37.7%,from €231.2million in 2005 to €318.4million in 2006. The increase is mainly due to the acquisition of Finansbankand Vojvodjanska, which contributed significantly to the balance of foreignloans. An analysis of the Group’s write-offs and recoveries for non-performingloans for December 31, 2002, 2003, 2004 , 2005 and 2006 is presented inthe following table

| ** **                                          | ** ** | **Year ended December 31,**                    | ** ** |
|-----------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                          | ** ** | **2002**                                                      | ** ** | **% of  total  loans** | ** ** | **2003** | ** ** | **% of  total  loans** | ** ** | **2004** | ** ** | **% of  total  loans** | ** ** | **2005** | ** ** | **% of  total  loans** | ** ** | **2006** | ** ** | **% of  total  loans** | ** ** |
| ** **                                          | ** ** | **(EUR in thousands except percentages)** | ** ** |
| **Write-offs**                                      |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Greek Residents:**                                |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                           |       | 62,744                                                        |       |   | 0.30 |   |   | 55,931 |   |   | 0.24 |   |   | 39,241 |   |   | 0.14 |   |   | 91,615 |   |   | 0.30 |   |   | 73,324 |   |   | 0.17 |   |   |
| Real estate—construction                       |       | 2,994                                                         |       |   | 0.01 |   |   | 1,900 |   |   | 0.01 |   |   | 681 |   |   | 0.01 |   |   | 3,480 |   |   | 0.01 |   |   | 4,029 |   |   | 0.01 |   |   |
| Real estate—mortgage                           |       | 29,265                                                        |       |   | 0.14 |   |   | 24,599 |   |   | 0.11 |   |   | 6,553 |   |   | 0.03 |   |   | 48,284 |   |   | 0.16 |   |   | 5,896 |   |   | 0.01 |   |   |
| Installment loans to individuals                    |       | 1,954                                                         |       |   | 0.01 |   |   | 97 |   |   | — |   |   | 14,684 |   |   | 0.05 |   |   | 91,439 |   |   | 0.30 |   |   | 111,834 |   |   | 0.26 |   |   |
| Total write-offs for loans to Greek  residents |       | 96,957                                                        |       |   | 0.46 |   |   | 82,527 |   |   | 0.36 |   |   | 61,159 |   |   | 0.23 |   |   | 234,818 |   |   | 0.77 |   |   | 195,083 |   |   | 0.45 |   |   |
| **Foreign:**                                        |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                           |       | 14,199                                                        |       |   | 0.07 |   |   | 18,820 |   |   | 0.08 |   |   | 62,571 |   |   | 0.23 |   |   | 1,858 |   |   | 0.01 |   |   | 45,432 |   |   | 0.11 |   |   |
| Real estate—construction                       |       |                                                          |       |   |   |   |   |   |   |   |   |   |   | 404 |   |   | — |   |   | 3 |   |   | — |   |   | 476 |   |   | — |   |   |
| Real estate—mortgage                           |       | 332                                                           |       |   | — |   |   | 30 |   |   | — |   |   | 32 |   |   | — |   |   | 233 |   |   | — |   |   | 187 |   |   | — |   |   |
| Installment loans to individuals                    |       | 396                                                           |       |   | — |   |   | 293 |   |   | — |   |   | 6,265 |   |   | 0.01 |   |   | 8,969 |   |   | 0.03 |   |   | 36,160 |   |   | 0.09 |   |   |
| Total write-offs for foreign loans             |       | 14,927                                                        |       |   | 0.07 |   |   | 19,143 |   |   | 0.08 |   |   | 69,272 |   |   | 0.24 |   |   | 11,063 |   |   | 0.04 |   |   | 82,255 |   |   | 0.20 |   |   |
| Total write-offs                                    |       | 111,884                                                       |       |   | 0.53 |   |   | 101,670 |   |   | 0.44 |   |   | 130,431 |   |   | 0.47 |   |   | 245,881 |   |   | 0.81 |   |   | 277,338 |   |   | 0.65 |   |   |
| **Recoveries**                                      |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Greek Residents:**                                |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                           |       | (486                                                          | )          |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (3,551 | ) |   | 0.01 |   |   | (2,000 | ) |   | — |   |   |
| Real estate—construction                       |       | —                                                        |       |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   |   |   |   |   |   |   | — |   |   | — |   |   |
| Real estate—mortgage                           |       | —                                                        |       |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (3,507 | ) |   | 0.01 |   |   | — |   |   | — |   |   |
| Governments and official institutions               |       | —                                                        |       |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   |   |   |   |   |   |   | (2,787 | ) |   | 0.01 |   |   |
| Total recovery on loans to Greek residents          |       | (486                                                          | )          |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (7,058 | ) |   | 0.02 |   |   | (4,787 | ) |   | 0.01 |   |   |
| **Foreign:**                                        |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial and industrial                           |       | (1,811                                                        | )          |   | 0.01 |   |   | (7,146 | ) |   | 0.03 |   |   | (1,843 | ) |   | 0.01 |   |   | — |   |   | 0.01 |   |   | (5,738 | ) |   | 0.01 |   |   |
| Real estate—construction                       |       |                                                          |       |   |   |   |   |   |   |   |   |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (186 | ) |   | — |   |   |
| Real estate—mortgage                           |       | (37                                                           | )          |   | — |   |   | (76 | ) |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (14 | ) |   | — |   |   |
| Installment loans to individuals                    |       | (146                                                          | )          |   | — |   |   | (1,789 | ) |   | 0.01 |   |   | (86 | ) |   | — |   |   | — |   |   | — |   |   | (9,339 | ) |   | 0.02 |   |   |
| Total recovery on foreign loans                     |       | (1,994                                                        | )          |   | 0.01 |   |   | (9,011 | ) |   | 0.04 |   |   | (1,929 | ) |   | 0.01 |   |   | — |   |   | 0.01 |   |   | (15,277 | ) |   | 0.03 |   |   |
| Total recoveries                                    |       | (2,480                                                        | )          |   | 0.01 |   |   | (9,011 | ) |   | 0.04 |   |   | (1,929 | ) |   | 0.01 |   |   | (7,058 | ) |   | 0.03 |   |   | (20,064 | ) |   | 0.05 |   |   |

 

**Off-Balance SheetItems**

See Item 5.E, “*Operating and FinancialReview and Prospects—Off-Balance Sheet Arrangements*”.

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**Liabilities**

***Deposits***

Thefollowing table shows details of the Group’s average deposits and averageinterest rates thereon, for the Group’s continuing domestic and foreignoperations, for each of the three years ended December 31, 2004 ,2005 and2006:

| ** **                                | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                | ** ** | **Average  Balance**                       | ** ** | **Average  rate (%)** | ** ** | **Average  balance** | ** ** | **Average  rate (%)** | ** ** | **Average  balance** | ** ** | **Average  rate (%)** | ** ** |
| ** **                                | ** ** | **(EUR in thousands except percentages)**  | ** ** |
| **Domestic Operations:**                  | ** ** | ** **                                 | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| Deposits by Greek residents:              |       |                                       |       |   |   | ** ** |   |   |   |   |   | ** ** |   |   |   |   |   | ** ** |   |
| Interest bearing demand deposits          |       | 3,801,763                                  |       |   | 0.43 | ** ** |   | 4,056,711 |   |   | 0.47 | ** ** |   | 4,916,597 |   |   | 0.58 | ** ** |   |
| Savings(1)                                |       | 23,373,691                                 |       |   | 0.71 | ** ** |   | 24,846,996 |   |   | 0.69 | ** ** |   | 24,901,609 |   |   | 0.81 | ** ** |   |
| Time deposits                             |       | 6,417,250                                  |       |   | 1.63 | ** ** |   | 6,649,596 |   |   | 2.79 | ** ** |   | 9,606,192 |   |   | 3.59 | ** ** |   |
| Interbank                                 |       | 2,361,721                                  |       |   | 2.03 | ** ** |   | 23,120 |   |   | 0.15 | ** ** |   | 3,275,567 |   |   | 2.92 | ** ** |   |
| Other                                     |       | 235,903                                    |       |   | 0.48 | ** ** |   | 228,460 |   |   | 1.17 | ** ** |   | 405,373 |   |   | 1.62 | ** ** |   |
| Non-Greek  residents or foreigners:       |       |                                       |       |   |   | ** ** |   |   |   |   |   | ** ** |   |   |   |   |   | ** ** |   |
| Interest bearing demand deposits          |       | 74,176                                     |       |   | 0.42 | ** ** |   | 242,476 |   |   | 0.47 | ** ** |   | 140,570 |   |   | 0.37 | ** ** |   |
| Savings(1)                                |       | 20,074                                     |       |   | 0.71 | ** ** |   | 20,336 |   |   | 0.70 | ** ** |   | 20,064 |   |   | 0.81 | ** ** |   |
| Time deposits                             |       | 127,194                                    |       |   | 1.68 | ** ** |   | 150,061 |   |   | 2.94 | ** ** |   | 406,965 |   |   | 3.60 | ** ** |   |
| Interbank                                 |       | 289,453                                    |       |   | 1.27 | ** ** |   | 3,828,041 |   |   | 2.31 | ** ** |   | 1,486,657 |   |   | 3.15 | ** ** |   |
| **Deposits in foreign banking  offices:** | ** ** | ** **                                 | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| Banks located in foreign countries        |       | 1,926,433                                  |       |   | 2.25 | ** ** |   | 1,491,436 |   |   | 2.40 | ** ** |   | 1,727,328 |   |   | 4.19 | ** ** |   |
| Other foreign demand deposits             |       | 901,884                                    |       |   | 1.39 | ** ** |   | 680,425 |   |   | 0.83 | ** ** |   | 1,061,918 |   |   | 1.47 | ** ** |   |
| Other foreign time and savings deposits   |       | 1,656,759                                  |       |   | 3.43 | ** ** |   | 2,742,948 |   |   | 3.10 | ** ** |   | 5,157,902 |   |   | 5.40 | ** ** |   |
| **Total deposits**                        |       | 41,186,301                                 |       |   | 1.10 | ** ** |   | 44,960,606 |   |   | 1.33 | ** ** |   | 53,106,742 |   |   | 2.08 | ** ** |   |

 

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Thetable below shows the amount outstanding of time certificates of deposit andother time deposits in amounts of US$100,000 or more of the Group’s continuingoperations by remaining maturity at December 31, 2006. Determinations ofwhether certain time deposits in currencies other than the U.S. dollar are inamounts of US$100,000 or more have been based on exchange rates at December 31,2006.

| ** **                                                                                  | ** ** | **Year ended  December 31, 2006** | ** **    |
|---------------------------------------------------------------------------------------------|------------|--------------------------------------------------|---------------|
| ** **                                                                                  | ** ** | **(EUR in thousands)**                 | ** **    |
| **Domestic Operations:**                                                                    | ** ** |                                             | ** **    | ** ** |   |
| **Time  certificates of deposit in amounts US$100,000 or more:**                            | ** ** |                                             | ** **    | ** ** |   |
| 3 months or less                                                                            |       |                                             | —        | ** ** |   |
| Over 3 through 6 months                                                                     |       |                                             | 57            | ** ** |   |
| Over 6 through 12 months                                                                    |       |                                             | 130           | ** ** |   |
| Over 12 months                                                                              |       |                                             | —        | ** ** |   |
| **Other  time deposits of US$100,000 or more by time remaining until maturity:**            | ** ** |                                             | ** **    | ** ** |   |
| 3 months or less                                                                            |       |                                             | 7,160,205     | ** ** |   |
| Over 3 through 6 months                                                                     |       |                                             | 896,665       | ** ** |   |
| Over 6 through 12 months                                                                    |       |                                             | 650,610       | ** ** |   |
| Over 12 months                                                                              |       |                                             | 17,649        | ** ** |   |
| **Total  time certificates of deposit and other deposits in amount of US$100,000 or  more** | ** ** |                                             | **8,725,316** | ** ** |   |

 

| **Foreign Operations:**                                                                     | ** ** |   | ** **    | ** ** |   |
|---------------------------------------------------------------------------------------------|------------|--------|---------------|------------|--------|
| **Time  certificates of deposit in amounts US$100,000 or more:**                            | ** ** |   | ** **    | ** ** |   |
| 3 months or less                                                                            |       |   | 35            | ** ** |   |
| Over 3 through 6 months                                                                     |       |   | —        | ** ** |   |
| Over 6 through 12 months                                                                    |       |   | —        | ** ** |   |
| Over 12 months                                                                              |       |   | —        | ** ** |   |
| **Other  time deposits of US$100,000 or more by time remaining until maturity:**            | ** ** |   | ** **    | ** ** |   |
| 3 months or less                                                                            |       |   | 4,310,113     | ** ** |   |
| Over 3 through 6 months                                                                     |       |   | 131,015       | ** ** |   |
| Over 6 through 12 months                                                                    |       |   | 89,929        | ** ** |   |
| Over 12 months                                                                              |       |   | 4,626         | ** ** |   |
| **Total  time certificates of deposit and other deposits in amount of US$100,000 or  more** | ** ** |   | **4,535,718** | ** ** |   |

 

***Short-term Borrowings***

Thetable below shows outstanding amounts of short-term borrowings of Groupcompanies for each of the three years ended December 31, 2004 , 2005 and2006. Approximately the entire balances relate to borrowings of Finansbank.

| ** **                                  | ** ** | **Year ended December 31**                  | ** ** |
|---------------------------------------------|------------|------------------------------------------------------------|------------|
| ** **                                  | ** ** | **2004**                                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                  | ** ** | **(EUR in thousands,  except percentages)** | ** ** |
| End of period                               |       |                                                       | —     |   |   |   | — |   |   | 295,243 |   |
| Maximum month-end  amount during the period |       |                                                       | —     |   |   |   | — |   |   | 491,135 |   |
| Average amount                              |       |                                                       | —     |   |   |   | — |   |   | 136,122 |   |
| Average interest rate                       |       |                                                       | —     |   |   |   | — |   |   | 14.32 | % |

 

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**ITEM4A**           UNRESOLVED STAFFCOMMENTS

There are no unresolvedwritten comments from the SEC regarding periodic Exchange Act reports receivednot less than 180 days before the end of the fiscal year ended December 31,2006.

**ITEM5**                   OPERATING ANDFINANCIAL REVIEW AND PROSPECTS

**General**

The following review isbased upon the selected financial data prepared in accordance with U.S. GAAPand should be read in conjunction with our U.S. GAAP Financial Statements andthe notes explaining those financial statements included elsewhere in thisAnnual Report. The financials we refer to herein present Atlantic Bank of NewYork and NBG Canada as discontinued operations.

**Overview**

We are the largestfinancial institution in Greece in terms of loans and market capitalization,according to an internal review of published financial statements of Greekbanks. We provide a wide range of financial services, including retail (such asmortgage lending and consumer lending), commercial and investment bankingservices and asset management and insurance, through our network of branchesand subsidiaries in Greece and abroad. Our domestic activities for the yearended December 31, 2006, accounted for 62.1% of our net income beforetaxes from continuing operations while our international activities accountedfor the remaining 37.9%. Our principal sources of income have historically beeninterest earned on customer loans and debt securities as well as commissions.We fund our lending activities and our securities portfolio principally throughcustomer deposits in our branch network. As at December 31, 2006, ourgross loans-to-deposits ratio was 78.9%.

Outside Greece, the Groupis active in seven SEE countries: Turkey, Bulgaria, Romania, Serbia, Albania,FYROM and Cyprus, via 874 branches, with approximately 50.3% of our workforceemployed in SEE. For the year ended December 31, 2006, SEE’s contribution(excluding Greece and Turkey) to the Group’s net income before taxes was €139.4million, while Turkey’s contribution to Group net income before taxes from August 18,2006 (the date we acquired Finansbank) until December 31, 2006 was €111.7 million.The total population of SEE, including Greece and Turkey, is 125 million. Formore information on the political and financial environment we operate in andthe risks associated with it, see ITEM 3D “*Risk Factors*”.

One of our strategies isto increase our operating efficiency. As part of this strategy, we are seekingto enhance our revenue generation potential through sales of businesses outsideof our core markets and by modifying our mix of assets in order to reduce theproportion of low yielding assets in our portfolio. Concurrently, we areincreasing our lending to market sectors with higher interest rate margins,such as the small business, mortgage and consumer segments. We are alsostreamlining our structure in order to improve efficiency, reduce costs andfacilitate cross selling among various divisions and companies within the NBGGroup. One of our goals is to preserve our asset quality and reduce the levelof non-performing loans, which has had a significant negative impact on ouroperating results in the period under review and in prior years. We are furtherseeking to increase our fee-related activities, primarily commissions fromretail services and products as well as those related to investment banking andasset management, although these areas are subject to variations in marketconditions.

**Key Factors Affecting Our Results of Operations**

*Non-Performing Loans.**  *Our level of non-performing loanshas declined substantially in recent years, from 14.7% at December 31,1996, to 3.4% of our total customer loans portfolio at December 31, 2006.A key factor that contributed to the level of non-performing loans in the pastwas the methods for approving loans and monitoring troubled loans, which, ingeneral, depended heavily on collateral and did not focus 

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on the cash flow ofthe borrower as an indicator of creditworthiness. In addition, there wereinadequate procedures for monitoring or restructuring troubled loans prior todefault. The lower level of new provisions for problem loans in recent yearshas been largely the result of the application of modern methods for assessingand managing risk in the loan portfolio. All loans, whether to individuals orbusinesses, are now assessed on the basis of our improved credit approval andrisk management procedures. Furthermore, the accumulation of long-termhistorical data within the Bank with regard to the creditworthiness of thegreater part of the economically active population of the country has helped toimplement a strategy of targeting creditworthy retail customers.

Furthermore, non-performing loans have remained on ourbalance sheet significantly longer than would be the case for banks in otherWestern European countries due to Greek regulations regarding provisions andwrite-offs with respect to non-performing loans. Write-offs of non-performingloans can only be made after all legal remedies for recovery, including realizationof collateral, have been exhausted, which can take up to ten years. Ourwrite-offs of non-performing collateralized loans in recent years have beenhigher than in previous years, which reflects the fact that we have exhaustedall legal remedies for recovery of many loans made in the early 1990s. Inaddition, in line with our increased consumer lending, we have begun to writeoff consumer loans which are more than two years past due and which are notcollateralized. The write-off of these loans does not require the exhaustion ofall legal remedies. For U.S. GAAP purposes, all loans written-off during theyears ended December 31, 2004, 2005 and 2006 were fully provided for,taking into account recovered amounts. See Item 4.E, *“Selected Statistical Data—Credit Quality—Non-Performing Loans, LoanLoss Provisions and Loan Loss Experience”.*

As part of our strategy to preserve the quality of ourloan portfolio, we have improved the methods of providing for losses inherentin our loan portfolio. We have provided for all non-performing loans existingas at December 31, 2006, taking into account any collateral with respectto such loans. We have also provided for other probable losses inherent in theportfolio to the extent such losses are reasonably estimable. See *“Selected Statistical Data—Allowance for Loan Losses—Methodology”*in Item 4.E. In 2005 and 2006, provisions increased by 11.8% and 12.1%,respectively, and write offs increased by 88.5% and 12.8%, respectively.

In Greece, we have taken and are continuing to takesteps to improve our credit approval and risk management procedures in order toreduce the amount of non-performing loans that occur in the future. We havedeveloped and implemented a comprehensive credit manual to govern the lendingprocess, and have fully implemented new credit review and monitoringprocedures, which focus on the borrower’s cash flow and ability to repay aswell as on collateral values. See Item 4.E, *“SelectedStatistical Data—Credit Quality”.* One objective in restructuring our credit function is to ensureconsistency in the loan approval process throughout the Bank while tailoringthis process to meet the specific needs of the Bank’s borrowers. We havetherefore established centralized credit centers, taking the decision-makingpower for loan approval out of the hands of the branches. We have also set upspecial divisions to monitor and strengthen our position with respect todelinquent commercial and consumer loans by working flexibly with clients—restructuringpayments and taking additional collateral—to help them meet their paymentobligations.

Outside of Greece, we are in the process of fullyimplementing credit approval and credit review policies throughout the Group’slending operations in order to reduce non-performing loans that occur in thefuture. For a discussion of these policies at the various Group banks, see Item4.E, “*Selected Statistical Data—Credit Quality*”.

*CompoundingLaw.**  *OnJuly 29, 2004, the Greek Government adopted the Compounding law, known locallyas the “Panotokia” law. Effective August 4, 2004, the Compounding lawprovides, among other things, that the total amount due (including, withoutlimitation, capital, accrued interest, compound interest and expenses) underany form of credit or loans granted by Greek banks (including the Bank) to 

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their customers, may notexceed certain limits. Generally, this limit is 300% of the initial principalof the loan for most of our customers. Prior to 1996, the Bank accrued intereston non-performing loans in accordance with Greek GAAP. In 1996, the Bank endedthis practice and began writing off interest and principal on non-performingloans that were not backed by collateral in excess of the 300% threshold.Implementation of the Compounding Law has also obligated us to write offnon-performing loans (interest and capital) that were backed by collateral inexcess of the 300% threshold in the amount of €23.8million in 2004 and €57.7million in 2005. In 2006, the amount of write offs was significantly reduced to€1.7 million.In the future, the effects of the Compounding Law are expected to be morelimited with respect to further write-offs.

*Disposalof Non-Core Assets.**  *Aspart of our strategy to streamline our operations, we are disposing of certaininvestments in non-core businesses. In 2004, we realized aggregate proceeds of €25.3million for disposals, while in 2005, we realized aggregate proceeds amountingto €31.6million from disposals. In 2006, we realized aggregate proceeds of €369.8million, mainly from the disposals of Atlantic Bank of New York, NBGCanada, ASTIR Alexandroupolis and AGRIS. The proceeds received from the sale ofeach of ASTIR Alexandroupolis, NBG Canada and Atlantic Bank of New York in 2006were €6.5million, CAD 71.3 million and US$400 million, respectively. In addition, theBank and our subsidiary, Ethniki Kefalaiou, received proceeds of approximately €39.3million in 2004, €17.3million in 2005 and €97.7million in 2006 from disposals of certain real estate property holdings. Weexpect to continue divestitures of non-core assets in the future.

*Earlyretirement.**  *In2005, NBG Cyprus implemented an early retirement scheme with respect to53 employees. These employees received payment in 2005 and left in 2006.Additional operating expenses for these retirees amounted to €15million in 2005. During 2006, with the aim to streamline their operations andfurther reduce costs, three Group companies implemented voluntary retirementschemes: EH Insurance, National Management and Organization Company (“NMOC”)and Astir Palace Vouliagmenis. The number of employees participating in theschemes was 72, 84 and 189, respectively, and additional operating expenses forthese schemes were €15.0 million,€15.6million and €8.0million, respectively. All three schemes have been completed, and the employeesparticipating have already left the respective Group companies.

*CapitalBase.**  *Wehave taken measures to strengthen our capital base in connection with themodification of our asset mix to comply with Greek capital adequacyrequirements as set by the Basel Committee on Banking Supervision under theCapital Adequacy Directive relating to market risk and to selectively expandour operations. In July 2003, we raised €350 million through theissuance by NBG Funding Ltd. of floating rate preferred notes, which areconsidered Tier I capital. In November 2004, we raised €350million and US$180 million through the issuance by NBG Funding Ltd of CMSPreferred Notes, which are considered Tier I capital. In February 2005, weraised €230million through the issuance by NBG Funding Ltd. of CMS Linked Preferred Notes,which are considered Tier I capital, and in June 2005, we raised JPY 30billion (€227million) through the issuance by NBG Finance of subordinated notes, which areconsidered Tier II capital. On November 8, 2006 we raised GBP 375 millionthrough the issuance by NBG Funding Ltd. of Fixed-to-Floating Rate PreferredSecurities, which are eligible to be considered Tier I capital but whichcurrently are accounted for as Tier II capital, due to certain thresholds setby the Bank of Greece. In addition to the above, in July 2006 we raised €3,000.8 millionthrough the issuance of 135,707,764 new common registered shares with paymentin cash with pre-emptive rights in favor of existing shareholders, at a ratioof 4 new to 10 old shares, chiefly for the purpose of the acquisition of Finansbank.

At December 31, 2006, the Bank and the Group had €5,569million and €5,378million, respectively, of Tier I capital, and €8,071 million and €6,778million of total capital, respectively.

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Sourcesof liquidity are regularly reviewed to maintain a wide diversification bycurrency, geography, provider and product. The ability to raise funds is inpart dependent on maintaining the Bank’s credit ratings. Many factorscontribute to the credit rating process, including the rating agency’sassessment of the Bank’s management capability, the quality of the Bank’scorporate governance and the Bank’s risk management processes. The Bankconsiders capital base and regulatory ratios to be important factors indetermining credit ratings. The table below sets forth the credit ratings thathave been assigned to the Bank by Moody’s Investors Services Limited (referredto below as “Moody’s”), Standard and Poor’s Rating Services (referred to belowas “Standard and Poor’s”), a division of the McGraw Hill Companies, FitchRatings Ltd. (referred to below as “Fitch”) and Capital Intelligence Ltd.(referred to below as “Capital Intelligence”). All credit ratings have beenrecently affirmed. 

| **Rating agency**   | ** ** | ** ** | ** ** | **Long-term  foreign currency  deposit rating**(1) | ** ** | **Short-term  foreign currency  deposit rating**(1) | ** ** | **Outlook for the  Bank’s ratings**(1) | ** ** | **Financial strength  of the Bank—  Individual**(1) | ** ** | **Subordinated debt  of the Bank**(1) | ** ** |
|--------------------------|------------|------------|------------|--------------------------------------------------------------|------------|---------------------------------------------------------------|------------|------------------------------------------------------------|------------|-------------------------------------------------------------------------|------------|------------------------------------------------------|------------|
| Moody’s             |       |       | Aa3        |                                                         |       |                                                          | Prime-1    |                                                       |       |                                                                    | Stable     |                                                 |       |   | C+ |   |   |   | A1 |   |   |
| Standard and Poor’s |       |       | BBB+       |                                                         |       |                                                          | A-2        |                                                       |       |                                                                    | Stable     |                                                 |       |   | — |   |   |   | BBB |   |   |
| Fitch                    |       |       | A-         |                                                         |       |                                                          | F2         |                                                       |       |                                                                    | Stable     |                                                 |       |   | B/C |   |   |   | BBB+ |   |   |
| Capital Intelligence     |       |       | A          |                                                         |       |                                                          | A1         |                                                       |       |                                                                    | Positive   |                                                 |       |   | A |   |   |   | — |   |   |

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(1)             A rating is not arecommendation to buy, sell or hold securities and may be subject to revision,suspension or withdrawal at any time.

***Critical AccountingPolicies and Estimates***

The preparation offinancial statements in accordance with U.S. GAAP requires management to make anumber of judgments, estimates and assumptions that affect the reported amountof assets, liabilities, income and expense in our Consolidated FinancialStatements and accompanying notes. We believe that the judgments, estimates andassumptions used in the preparation of our Consolidated Financial Statementsare appropriate given the factual circumstances as of December 31, 2006.

Various elements of ouraccounting policies, by their nature, are inherently subject to estimationtechniques, valuation assumptions and other subjective assessments. Inparticular, we have identified five accounting policies which, due to thejudgments, estimates and assumptions inherent in those policies, and thesensitivity of our U.S. GAAP financial statements to those judgments, estimatesand assumptions, are critical to an understanding of our financial statements.

*Recognition and measurement of financial instrumentsat fair value*

Assets and liabilitiesthat are trading instruments are recorded at fair value on the balance sheetdate, with changes in fair value reflected in net trading profit/ (loss) in theincome statement. For exchange traded financial instruments, fair value isbased on quoted market prices for the specific instrument. For substantiallyall of our non-exchange traded contracts, fair value is primarily based onpricing models. As a general rule all interest rate products are brokendown into cash flows, which are then discounted using the appropriate marketcurve. For our derivative financial instruments which have optionality, therelevant option model is used. For a further discussion on the effect of achange in interest rates and foreign exchange rates on our portfolio seeItem 11, *“Quantitative and QualitativeDisclosures about Market Risk”* in this document.

Further details on thissubject are given in Note 3, “*Summaryof Significant Accounting Policies”* to our U.S. GAAP financial statementsincluded in this Annual Report.

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*Recognition andmeasurement of identified intangibles upon acquisition*

We account for the acquired businesses using thepurchase method of accounting which requires that the assets acquired andliabilities assumed be recorded at the date of acquisition at their respectivefair values.

The application of the purchase method requirescertain estimates and assumptions especially concerning the determination ofthe fair values of the acquired intangible assets and property, plant andequipment as well as the liabilities assumed at the date of the acquisition.Moreover the useful lives of the acquired intangible assets, property, plantand equipment have to be determined. The judgments made in the context of thepurchase price allocation can materially impact our future results ofoperations. Accordingly, for significant acquisitions, we obtain assistancefrom third party valuation specialists. The valuations are based on informationavailable at the acquisition date.

Significant judgments and assumptions made regardingthe purchase price allocation in the course of the acquisition of Finansbank,included the following: 

For the valuation of core deposits, the alternativesource of funds method was applied. CDI’s value is measured by the presentvalue of the difference, or spread, between the CDI’s ongoing cost and the costof a market alternative replacement. Acquired core deposit accounts typicallyprovide a low-cost source of funds to the buyer. To replace these established,low-cost deposit accounts in a timely manner, any potential buyer’s alternativewould be to utilize higher-cost funds at current market rates. The valuationresults were also subject to sensitivity tests on customer attrition rates.

For the valuation of customer relationships, themulti-period excess of earnings method was applied. Excess earnings can bedefined as the difference between the net operating profit attributable to theexisting customers at the acquisition date; at the required cost of investedcapital on all the other assets (contributory assets such as fixed assets, CDI,trade name, assembled workforce and software) used in order to deliver aproduct or maintain the customer relationship. Value is estimated through thesum of the discounted future excess earnings attributable to these customersover the remaining life span of the customer relationship. A sensitivityanalysis was also performed based on the change of the discount factor and thechurn rate of existing customers. 

For the valuation of brands, the relief-from-royaltymethod was applied which is based on a hypothetically royalty incomeattributable to an asset. In particular, it estimates the expected annualroyalty cost savings that result from the company’s ownership of trademarks andlicenses on which it does not have to pay royalties to a licensor. Theintangible asset is then recognized at the present value of these savings. Asensitivity exercise was performed using different royalty rates. The corporatebrands “Finansbank” “CardFinans” and “Finans” name used by Finansbanksubsidiaries were assumed to have an unlimited life. 

For the valuation ofsoftware, the cost approach method was applied. The cost approach is based uponthe economic principles of substitution and price equilibrium. The costapproach suggests that a prudent investor would not pay, for an intangible,more that its costs to acquire a comparable intangible on the market. Thereproduction cost methodology is based on the assumption that the value of anyintangible asset is the cost incurred to reconstruct or purchase an exactreplica of the given intangible asset. The software intangible has been valuedusing the reproduction cost methodology.

*Goodwill and Equitymethod investments*

The Group regularly reviews goodwill and equity methodinvestments for possible impairment indications. If the impairment indicatorsare identified, we make an assessment as to whether the carrying amount of suchassets remains fully recoverable. When making this assessment we compare thecarrying value to market value, if available, or a fair value determined by aqualified evaluator or pricing model. 

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Determination of a fairvalue by a qualified evaluator or pricing model requires management to makeassumptions and use estimates. We believe that the assumptions and estimatesused are reasonable and supportable in the existing market environment andcommensurate with the risk profile of the assets valued. However, differentones could be used which would lead to different results.

The most significant amount of goodwill relates to ouracquisition of Finansbank in August 2006. The valuation model used todetermine the fair value of Finansbank is sensitive to changes in theassumptions. Adverse changes in any of these factors could lead us to record agoodwill impairment charge.

In 2004, no goodwill impairment was charged as aresult of our annual impairment review.

In 2005, the Group recognized an impairment loss of €16.2million relating to the absorption of National Investment Company by the Bank.

In 2006, the Group recognized an impairment loss of €52million attributed entirely to our logistics business unit.

Further details on thissubject are given in Notes 3, 14 and 16 to the U.S. GAAP financial statementsincluded elsewhere in this Annual Report.

*Allowance for LoanLosses*

The amount of theallowance set aside for loan losses is based upon management’s ongoingassessments of the probable estimated losses inherent in the loan portfolio.Assessments are conducted by members of management responsible for varioustypes of loans employing a methodology and guidelines which are continuallymonitored and improved. This methodology has five primary components: specificallowances, coefficient analysis, homogeneous analysis, allowances for foreignloans and unallocated allowances. Specific allowances are recorded for certainimpaired loans made to commercial customers in the Bank’s four highest riskcategories, after an analysis of the customer’s loan balance, payment history,collateral value and cash flows is undertaken. The Bank performs a coefficientanalysis by grouping commercial loans into eight risk categories based oncommon characteristics, and applying allowance percentages (or coefficients)based on historic loss rates among these groups. Homogeneous analysis similarlytakes our consumer loan portfolio pooled by segment (residential mortgage,credit cards, installment loans, etc.) and estimates an allowance based onhistorical loss rates for each segment applied to current loan balances. Lossallowances for loans made by our foreign subsidiaries are estimated by thesubsidiary using similar criteria as the Bank uses in Greece. We also record anunallocated allowance to account for inherent uncertainties, factors which aredifficult to measure and flaws in the process of estimating allowances. As theprocess for determining the adequacy of the allowance requires subjective andcomplex judgment by management about the effect of matters that are inherentlyuncertain, subsequent evaluations of the loan portfolio, in light of thefactors then prevailing, may result in significant changes in the allowance forloan losses. The estimates and judgments are described in further detail inItem 4E, “*Selected Statistical Data—Allowancefor Loan Losses—Methodology*”.

*Insurance reserves*

Insurance reserves for life insurance operations (long-durationcontracts) are estimated using approved actuarial methods that includeassumptions about future investment yields, mortality, expenses, options andguarantees, morbidity and terminations. Insurance reserves for property andcasualty insurance operations (short-duration contracts) are determinedusing loss estimates, which rely on actuarial observations of loss experiencefor similar historic events.

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Assumptions and observations of loss experience areperiodically adjusted, with the support of qualified actuaries, in order toreflect current conditions. Any additional future losses anticipated from therevision of assumptions and estimations is charged to income for the period.

During 2004 estimatedlosses on life insurance operations increased primarily due to higherhospitalization costs, which, due to intense market competition, could not bematched by an increase in premiums on life contracts with hospitalizationriders. In response to these developments, we further increased insurancereserves in 2004. We continue to monitor potential for changes in lossestimates in order for our recorded reserves in each reporting period toreflect current conditions. While insurance reserves increased slightly in2005, they increased significantly in 2006 due primarily to the significantgrowth in gross written premiums of the life business, reflecting the successof our new bancassurance life products and an increase of outstanding claims inthe motor third party liability line of business following a thoroughreassessment of all existing claim files. Further details on this subject areprovided in “*Key Factors Affecting OurResults of Operations—Insurance activities*” in this Item 5 andNote 3, “*Summary of SignificantAccounting Policies*” to the U.S. GAAP financial statementsincluded elsewhere in this report.

*Net periodicbenefit cost*

The pension benefitobligation is actuarially determined using assumed discount rates, assumedrates of compensation increase and the expected return on plan assets. Theseassumptions are ultimately determined by reviewing the Group’s salary increaseseach year. The expected long-term return on plan assets represents management’sexpectation of the average rate of earnings on the funds invested to providefor the benefits included in the projected benefit obligation. To determine theexpected long-term rate of return assumption the Group and its advisorsmake forward-looking assumptions in the context of historical returns andvolatilities for each asset class as well as correlations among asset classes.The expected long-term rate of return assumption is annually adjustedbased on revised expectations of future investment performance of the overallcapital markets, as well as changes to local regulations affecting investmentstrategy. The weighted average expected long-term rate of returnassumption used in computing the 2006 pension benefit obligation was 7.4%compared to 6.3% for 2005. The rate of compensation increase increased slightlyin 2006 to 4.6% from 4.1% in 2005. The discount rate decreased from 4.4% in2005 to 4.7% in 2006. The change in assumptions, and the voluntary retirementschemes of the NMOC, Ethniki Hellenic Insurance and Astir Palace Vouliagmenis,resulted in a net actuarial loss of €19.1 million. The impactto the pension benefit obligation, as well as to service and benefit cost ifcertain assumptions are changed is further disclosed in Note 38 “*Employee Benefit Plans*” to the U.S. GAAP financialstatements.

**A.**                OperatingResults

***Results of Operations for the year ended December 31,2006 compared with the year ended December 31, 2005.***

*Overview.**  *The year ended December 31, 2006 wasaffected significantly by our acquisition of Finansbank, the fifth largestprivately-owned bank in Turkey in terms of its consolidated assets and equity,with effect from August 18, 2006. As a result, we experienced significantincreases in net interest income, non-interest income, non-interest expense andnet income. Furthermore, in 2006 the Bank sold its North American operations,which led to the classification of income from those operations as income fromdiscontinued operations for both 2005 and 2006.

The year ended December 31, 2006 wascharacterized by significant increases in net interest income before provisions(35.2%), 16.7% of which was due to the effects of the acquisition ofFinansbank, non-interest income (19.8%), 8.2% of which was due to the effectsof the acquisition of Finansbank and non-interest expense (26.8%), 12.5% ofwhich was due to the effects of the acquisition of Finansbank, andsignificantly lower tax costs resulting from a lower statutory tax rate inGreece (24% in 2006 versus 27% in 

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2005). In addition, we benefitedfrom a law permitting banks to distribute reserves taxed at a ratesignificantly lower than the current income tax rate and the deferred tax onaccumulated tax losses of our subsidiary companies, EH Insurance and AstirPalace Vouliagmenis, which according to recent business plans will offsetfuture tax profits within the period permitted by Greek legislation.

*Net Interest Income.**  *Our net interest income fromcontinuing operations before provisions for loan losses increased by 35.2% to €2,100.4million for 2006, compared with €1,553.3 million for2005, of which 16.7% or €260.4 million was related to the effects ofthe acquisition of Finansbank. The remaining increase of 18.5% to €1,840.0 millionfor 2006 was due primarily to the increase in interest income attributable tosignificant growth in our loan portfolio and the increased income on oursecurities portfolios and deposits. This amount was partially offset by anincrease in interest expense triggered by the expansion of our deposit base.Our net interest margin from our continuing operations in 2006 increased to3.2%, (or 2.97% excluding the effects of the acquisition of Finansbank) from2.7% in 2005. The components of our net interest income from continuingoperations for 2005 and 2006 are reflected in the following table:

| ** **                                            | ** ** | **Year ended December 31** | ** ** | **2005/2006** | ** ** |
|-------------------------------------------------------|------------|-------------------------------------------|------------|---------------|------------|
| ** **                                            | ** ** | **2005**                                  | ** ** | **2006**      | ** ** | **Change** | ** ** |
| ** **                                            | ** ** | **(EUR in thousands)**          | ** ** | **(%)**       | ** ** |
| Interest Income:                                      |       |                                      |       |          |       |   |   |   |   |
| Loans                                                 |       | 1,591,972                                 |       | 2,373,241     |       |   | +49,1 | % |   |
| Securities available for sale                         |       | 92,843                                    |       | 185,003       |       |   | +99.3 | % |   |
| Securities held to maturity                           |       | 1,953                                     |       | —        |       |   | — |   |   |
| Trading assets                                        |       | 374,868                                   |       | 480,902       |       |   | +28.3 | % |   |
| Securities purchased under agreements to resell  |       | 108,673                                   |       | 111,378       |       |   | +2.5 | % |   |
| Interest-bearing deposits with banks                  |       | 199,607                                   |       | 285,920       |       |   | +43.2 | % |   |
| Other                                                 |       | 20,472                                    |       | 66,330        |       |   | +224.0 | % |   |
| Total interest  income                                |       | 2,390,388                                 |       | 3,502,774     |       |   | +46.5 | % |   |
| Interest Expense:                                     |       |                                      |       |          |       |   |   |   |   |
| Deposits                                              |       | (598,705                                  | )          | (1,105,197    | )          |   | +84.6 | % |   |
| Securities sold under agreements to repurchase   |       | (141,889                                  | )          | (126,903      | )          |   | -10.6 | % |   |
| Other borrowed funds                                  |       | (4,595                                    | )          | (18,992       | )          |   | +313.3 | % |   |
| Long-term debt                                        |       | (87,240                                   | )          | (144,445      | )          |   | +65.6 | % |   |
| Other                                                 |       | (4,692                                    | )          | (6,882        | )          |   | +46.7 | % |   |
| Total interest  expense                               |       | (837,121                                  | )          | (1,402,419    | )          |   | +67.5 | % |   |
| Net interest  income before provision for loan losses |       | 1,553,267                                 |       | 2,100,355     |       |   | +35.2 | % |   |
| Provision for  loan losses                            |       | (225,013                                  | )          | (261,603      | )          |   | +16.3 | % |   |
| Net interest income  after provision for loan losses  |       | 1,328,254                                 |       | 1,838,752     |       |   | +38.4 | % |   |

 

Total interest income for the Group’s continuingoperations increased by 46.5% to €3,502.8 million for 2006from €2,390.4million for 2005, of which €530.9 million or 22.2% was due to the effectsof  the acquisition of Finansbank. Theincrease was principally attributable to a 49.1% increase in interest income fromloans in 2006 compared with 2005, of which 25.1% was due to the effects of theacquisition of Finansbank, reflecting a robust growth in the Group’s lendingactivities, mainly resulting from the expansion of our retail book. Theexpansion of our lending activities was financed by cash inflows from thegrowth of our deposit base and the issuance of GBP 375 million of PreferredNotes. The increase in interest income from trading assets, securitiesavailable for sale and interest bearing deposits with banks, in addition to theeffect of the acquisition of Finansbank, was due to increases in the interestrates during the year coupled with increases in the relative volumes.

Total interest expense for the Group’s continuingoperations increased by 67.5% to €1,402.4 million for 2006from €837.1million for 2005, (of which €270.5 million or 32.3% wasdue to the effects of the 

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acquisition of Finansbank),due to increases in interest on deposits and long term debt, which was alsoconnected with our acquisition of Finansbank. Interest on deposits increased by84.6% in 2006, (of which 31.9% was due to the effects of the acquisition ofFinansbank), reflecting the expansion of our deposit base in 2006, as well asincreases in the deposit rates following consecutive changes of the ECB rate.Our interest bearing deposits increased by 22.9% from €40,378.7million in 2005 to €49,618.8million in 2006, of which 12.5% or 5,052.4 million was due to the effects ofthe acquisition of Finansbank. Interest expense on long-term debt alsoincreased by 65.6%, (44.4% of which was due to the effects of the acquisitionof Finansbank), due to increased interest rates and the raising of GBP 375million of Preferred Securities in November 2006.

*Provisionfor Loan Losses.**  *TheGroup’s continuing operations recorded provisions of €225.0million for 2005, which increased by 16.3% to €261.6 million for 2006.

Activityin the loan loss allowances for the two years ended December 31, 2004,2005 and 2006 was as follows:

| ** **                                                  | ** ** | **2005**                         | ** ** | **2006**  | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| ** **                                                  | ** ** | **(EUR in thousands)** | ** ** |
| Balance at  beginning of the year                           |       | 1,115,212                        |       | 1,092,545 |       |
| Less: Amounts  attributable to discontinued operations      |       | (15,654                          | )          | —    |       |
| Subsidiaries  acquired                                      |       | —                           |       | 133,227   |       |
| Add: Provisions for loan losses from continuing  operations |       | 225,013                          |       | 261,603   |       |
| Write-offs                                                  |       | (245,881                         | )          | (277,338  | )          |
| Recoveries(1)                                               |       | 7,058                            |       | 20,064    |       |
| Less: Net write-offs                                        |       | (238,823                         | )          | (257,274  | )          |
| Exchange differences and other variations                   |       | 6,797                            |       | (5,344    | )          |
| Balance at end of year                                      |       | 1,092,545                        |       | 1,224,757 |       |

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(1)             Recoveriesafter write-offs of non-performing loans are minimal as, under Greekregulations, non-performing loans cannot be written off until all legalremedies for recovery have been exhausted.

Duringthe period under review, total loan loss allowance from our continuingoperations increased by 12.1% from €1,092.5 million in 2005 to€1,224.8million in 2006. Total loans attributable to our continuing operationsincreased by 42.7% from €30,674.2 million as at December 31, 2005to €43,756.8million as at December 31, 2006, of which 22.1% or €6,786.8million was due to the effects of the acquisition of Finansbank. At the sametime, write-offs increased by 12.8 % from €245.9 million in 2005 to €277.3million in 2006 reflecting the Group’s policy to write off all loans that havebeen determined to be unrecoverable. The level of provisions and net write-offsmade during the year was roughly the same (€261.6 million and €257.3million respectively). The Group’s loan loss allowance consists of fiveprincipal components. These are: specific allowances, coefficient analysis,homogenous analysis, foreign loans and unallocated losses. See Item 4.E, *“Selected Statistical Data—Credit Quality—Allowancefor Loan Losses—Methodology.”*

| ** **                                             | ** ** | **At December 31,** | ** ** |
|--------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                             | ** ** | **2005**                      | ** ** | **2006** | ** ** |
| ** **                                             | ** ** | **(EUR in  thousands)**  | ** ** | **(%)** | ** ** | **(EUR in  thousands)** | ** ** | **(%)** | ** ** |
| Specific  allowances                                   |       | 476,127                       |       | 43.5 |   | 443,673 |   | 36.2 |   |
| Coefficient  analysis                                  |       | 50,808                        |       | 4.7 |   | 67,938 |   | 5.5 |   |
| Homogeneous  analysis                                  |       | 280,800                       |       | 25.7 |   | 356,603 |   | 29.1 |   |
| Foreign loans                                          |       | 231,210                       |       | 21.2 |   | 318,439 |   | 26.0 |   |
| Unallocated                                            |       | 53,600                        |       | 4.9 |   | 38,104 |   | 3.2 |   |
| Total loan loss  allowances from continuing operations |       | 1,092,545                     |       | 100.0 |   | 1,224,757 |   | 100.0 |   |

 

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Specific allowances decreased from €476.1million in 2005 to €443.7million in 2006 due to write-offs of loans to certain large corporatecustomers.

Allowances under the homogeneous analysis increasedfrom €280.8million in 2005 to €356.6million in 2006, due to change in the probable losses of our mortgage portfolioresulting from the ageing of non-performing loans, minimal collections duringthe year and the addition of new past due loans.

Allowances for foreign loans increased from allowances€231.2million in 2005 to €318.4million in 2006, of which €125.9 million represents the minority’s shareof Finansbank allowances. The decrease to €192.5 million not takinginto account the acquisition of Finansbank is attributable to increasedwrite-offs by our foreign entities.

Total loan loss allowance as a percentage ofnon-performing loans increased from 75.5% as at December 31, 2005 to 81.8%as at December 31, 2006, as a result of our acquisition of Finansbank andincreased provision.

Net interest income after provision for loan lossesfrom our continuing operations increased by 38.4% to €1,838.8million in 2006 from €1,328.3 million in 2005.

*Non-interest Income.**  *Non-interest income from ourcontinuing operations increased by 19.8% to €1,757.2 million for 2006,compared to €1,466.8million for 2005, of which 8.2% or €120.5 million was due tothe effects of the acquisition of Finansbank. The following table summarizesthe principal components of non-interest income during each of the two yearsended December 31, 2005 and 2006:

| ** **                                                             | ** ** | **Year ended December 31,** | ** ** | **2005/2006** | ** ** |
|------------------------------------------------------------------------|------------|--------------------------------------------|------------|---------------|------------|
| ** **                                                             | ** ** | **2005**                                   | ** ** | **2006**      | ** ** | **Change** | ** ** |
| ** **                                                             | ** ** | **(EUR in thousands)**           | ** ** | **(%)**       | ** ** |
| Credit card fees                                                       |       | 79,675                                     |       | 126,981       |       |   | +59.4 | % |   |
| Service charges  on deposit accounts                                   |       | 38,218                                     |       | 40,941        |       |   | +7.1 | % |   |
| Other fees and  commissions                                            |       | 369,730                                    |       | 457,269       |       |   | +23.7 | % |   |
| Net trading  profits or (losses)                                       |       | 5,933                                      |       | 6,369         |       |   | +7.3 | % |   |
| Net realized  (losses)/gains on sales of available-for-sale securities |       | 119,523                                    |       | 116,872       |       |   | -2.2 | % |   |
| Equity in  earnings or (losses) of investees                           |       | 36,823                                     |       | 26,890        |       |   | -27.0 | % |   |
| Other                                                                  |       | 816,871                                    |       | 981,961       |       |   | +20.2 | % |   |
| Total non-interest  income                                             |       | 1,466,773                                  |       | 1,757,283     |       |   | +19.8 | % |   |

 

Income from credit card fees increased by 59.4% from €79.7million in 2005 to €127.0million in 2006, of which 58.1 % or €46.3 million was due tothe effects of the acquisition of Finansbank. Service charges on depositaccounts increased from €38.2 million in 2005 to €40.9million in 2006, of which €6.6 million was due to the effects of theacquisition of Finansbank. Other fees and commissions in 2006 increased by23.7% to €457.3million against €369.7million in 2005, of which €45.7 million or 12.4% was due to the effectsof the acquisition of Finansbank. In 2006, sales of available-for-salesecurities proved once again to be a profitable component of the Group’scontinuing operations performance and amounted to €116.9 million in 2006against €119.5million in 2005, and included profits of €2.4 million of Finansbank.Other non-interest income from our continuing operations was €982.0million in 2006, significantly increased by 20.2% from €816.9million in 2005, (of which €6.1 million or 0.7% was due to the effects ofthe acquisition of Finansbank), due primarily to an increase in income frominsurance operations by €117 million coupled by a 57% increase inprofits on sale of properties.

*Non-interestExpense.**  *Non-interestexpense increased by 26.8% to €2,581.5 million for2006, compared with €2,035.3million for 2005, of which €255.7 million or 12.5% was due to the effectsof the acquisition of Finansbank.

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Thefollowing table summarizes the principal components of non-interest expenseduring each of the two years ended December 31, 2005 and 2006.

| ** **                       | ** ** | **Year ended December 31,** | ** ** | **2005/2006** | ** ** |
|----------------------------------|------------|--------------------------------------------|------------|---------------|------------|
| ** **                       | ** ** | **2005**                                   | ** ** | **2006**      | ** ** | **Change** | ** ** |
| ** **                       | ** ** | **(EUR in thousands)**           | ** ** | **(%)**       | ** ** |
| Salaries and  employee benefits  |       | 893,368                                    |       | 1,037, 474    |       |   | 16.1 | % |   |
| Occupancy and  equipment expense |       | 68,811                                     |       | 99,441        |       |   | 44.5 | % |   |
| Amortization and  depreciation   |       | 84,107                                     |       | 98,680        |       |   | 17.3 | % |   |
| Impairment of  goodwill          |       | 16,162                                     |       | 52,860        |       |   | 227.1 | % |   |
| Minority  interests, net of tax  |       | 40,625                                     |       | 96,150        |       |   | 136.7 | % |   |
| Other non-interest  expense      |       | 932,257                                    |       | 1,196,854     |       |   | 28.4 | % |   |
| Total non-interest  expense      |       | 2,035,330                                  |       | 2,581,459     |       |   | 26.8 | % |   |

 

Salaries and employee benefits relating to ourcontinuing operations increased by 16.1% from €893.4 millionfor 2005 to €1,037.5million for 2006, of which 7.4% or €65.7 million was due tothe effects of the acquisition of Finansbank. Employee benefit costs in 2005and 2006 include actuarial adjustments for pension and post-retirement definedbenefit plans. In 2005 and 2006, these adjustments resulted in a charge to theincome statement of €34.6million and €63.4million, respectively. The increase is attributable to the voluntary retirementschemes of EH Insurance, NMOC and Astir Palace Vouliagmenis Group companies,the additional cost of which reached € 38.6 million in 2006. Minorityinterests net of tax increased significantly due to the minority of Finansbank,which amounted to €78million. In 2006, the absorption of National Investment Company in December 2006,resulted in an impairment of goodwill of €16.2million, while in 2006the impairment of goodwill of NationalReal Estate by €52 million was attributed entirely to our logistics business unit.

Other non-interest expense increased by 28.4% from €932.3 millionin 2005 to €1,196.9million in 2006, of which 7.8% or €72.5 million was due tothe effects of the acquisition of Finansbank and a €114.1 million increase ininsurance provisions.

*IncomeBefore Income Tax Expense.**  *In 2006, the Group reported profit from continuingoperations before income tax expense of €1,014.6 million, a 33.6%increase from €759.7million in 2005, of which 14.7% or €111.7 million was due tothe effects of the acquisition of Finansbank.

*IncomeTax Expense.**  *In2006, we recognized a current tax liability of €312.5 million and adeferred tax gain of €97.8 million, of which €19.8 millioncurrent tax liability and €14.4 million deferred tax liability,respectively, was due to the effects of the acquisition of Finansbank, comparedto a current tax liability of €168.2 million and adeferred tax liability of €64.6 million in 2005. Our total tax expensein 2006 amounted to €214.7million compared to €232.8million in 2005. The decrease in our total tax expense in 2006 was primarilydue to the decrease in Greek statutory tax rates discussed below as well as EHInsurance’s and Astir Palace Vouliagmeni’s deferred tax asset on tax losses forthe year.

Following legislation enacted in December 2005,the applicable Greek statutory rate of tax was reduced from 32% for 2005 to 29%for 2006, and 25% for 2007 and thereafter. Pursuant to an incentive law, thestatutory tax rate for the Bank for the years 2005 and 2006 was further reducedby 4 percentage points. The effective tax rate for the Group in 2006 wasapproximately 21.16%.

*NetIncome.**  *Forthe reasons discussed above, and given that our net income from discontinuedoperations increased by 105.7% from €28.3 million in 2005 to €58.2million in 2006, we had net income of €858.1 million for 2006, ofwhich €77.3million was due to the effects of the acquisition of Finansbank, compared with €555.2million for 2005.

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*Exchange Rate Exposure.**  ***The Group is an activeparticipant in the foreign exchange markets and also makes loans denominated inforeign currencies. The Group’s goal in managing exchange rate exposure is tominimize the effect of exchange rate movements on profitability. The Groupadheres to central bank guidelines and other guidelines applicable to the Groupand actively manages its foreign currency position. To the extent that foreigncurrency-denominated assets are not matched with liabilities denominatedin the same currencies, the Group engages in swaps and other hedgingtransactions in order to reduce the effects of these imbalances. Management,therefore, does not consider the Group’s foreign exchange risk to besignificant with respect to the Group’s overall financial position. As at December 31,2006, approximately 26.8% of the Group’s liabilities and 23.4% of the Group’sassets were denominated in currencies other than euro, before taking intoaccount hedging transactions. For more information on foreign exchange risk seeItem 11 “*Quantitative and Qualitative Disclosures About MarketRisk*”.

***Results of Operations for the Year Ended December 31,2005 Compared with the Year Ended December 31, 2004***

*Overview.**  *The year ended December 31,2005, was characterized by improved net interest income significantly highernet realized gains on sales of available for sale securities, substantiallylower employee costs and significantly less provisions for the Group’sinsurance operations, which were partially offset by higher tax expense as theprevious year the Bank had recognized a one-off deferred tax asset.Furthermore, in 2005 the Bank agreed to sell its North American operations(which were sold during the first half of 2006) which led the classification ofincome from those operations as income from discontinued operations and therestatement of the income statement for the previous year.

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*Net Interest Income.**  *Our net interest income fromcontinuing operations before provision for loan losses increased by 9.9% to €1,553.3 millionfor 2005, compared with €1,412.7 million for 2004, due primarily tothe increase in interest income attributable to a significant increase in ourloan portfolio albeit despite the increase in interest expense triggered by theexpansion of our deposit base and the issuance of debt securities. Our netinterest margin increased to 2.74% in 2005 from 2.63% in 2004. The componentsof our net interest income from continuing operations for 2004 and 2005 arereflected in the following table:

| ** **                                                                            | ** ** | **Year ended December 31** | ** ** | **2004/2005** | ** ** |
|---------------------------------------------------------------------------------------|------------|-------------------------------------------|------------|---------------|------------|
| ** **                                                                            | ** ** | **2004**                                  | ** ** | **2005**      | ** ** | **Change** | ** ** |
| ** **                                                                            | ** ** | **(EUR in thousands)**          | ** ** | **(%)**       | ** ** |
| Interest Income:                                                                      |       |                                      |       |          |       |   |   |   |   |
| Loans                                                                                 |       | 1,315,110                                 |       | 1,591,972     |       |   | +21.1 | % |   |
| Securities available for sale                                                         |       | 76,074                                    |       | 92,843        |       |   | +22.0 | % |   |
| Securities held to maturity                                                           |       | —                                    |       | 1,953         |       |   | — |   |   |
| Trading assets                                                                        |       | 404,999                                   |       | 374,868       |       |   | -7.4 | % |   |
| Federal funds sold and securities purchased under  agreements to resell     |       | 116,153                                   |       | 108,673       |       |   | -6.4 | % |   |
| Interest-bearing deposits with banks                                                  |       | 137,221                                   |       | 199,607       |       |   | +45.5 | % |   |
| Other                                                                                 |       | 25,059                                    |       | 20,472        |       |   | -18.3 | % |   |
| Total interest  income                                                                |       | 2,074,616                                 |       | 2,390,388     |       |   | +15.2 | % |   |
| Interest Expense:                                                                     |       |                                      |       |          |       |   |   |   |   |
| Deposits                                                                              |       | (454,460                                  | )          | (598,705      | )          |   | +31.7 | % |   |
| Federal funds purchased and securities sold under  agreements to repurchase |       | (153,962                                  | )          | (141,889      | )          |   | -7.8 | % |   |
| Other borrowed funds                                                                  |       | (3,349                                    | )          | (4,595        | )          |   | +37.2 | % |   |
| Long-term debt                                                                        |       | (44,706                                   | )          | (87,240       | )          |   | +95.1 | % |   |
| Other                                                                                 |       | (5,430                                    | )          | (4,692        | )          |   | -13.6 | % |   |
| Total interest  expense                                                               |       | (661,907                                  | )          | (837,121      | )          |   | +26.5 | % |   |
| Net interest  income before provision for loan losses                                 |       | 1,412,709                                 |       | 1,553,267     |       |   | +9.9 | % |   |
| Provision for  loan losses                                                            |       | (201,234                                  | )          | (225,013      | )          |   | +11.8 | % |   |
| Net interest income  after provision for loan losses                                  |       | 1,211,475                                 |       | 1,328,254     |       |   | +9.6 | % |   |

 

Total interest income for the Group’s continuingoperations increased by 15.2% to €2,390.4 million for 2005from €2,074.6 millionfor 2004. The increase is principally attributable to a 21.1% increase ininterest income from loans in 2005 compared with 2004, reflecting a robustgrowth in the Group’s lending activities, mainly resulting from the expansionof our retail book. We believe this growth was largely due to our ability tocross-sell to our existing customer base in Greece and to an increase inthe types of products offered to customers in the SEE region. Relativelystable-lending spreads also contributed to the growth in interest income fromloans in 2005. The expansion of our lending activities was financed by cashinflows from our securities portfolio and the issuance of €230million of CMS Linked Preferred Notes, which are counted as Tier I capital, andJPY 30 billion of subordinated notes. As a result, interest incomefrom our securities portfolio decreased, while interest expense on long-termdebt increased. Other interest income for the Group’s continuing operations indecreased from €25.1 millionin 2004 to €20.5million in 2005.

Total interest expense for the Group’s continuingoperations increased by 26.5% to €837.1 million for 2005from €661.9 millionfor 2004 due to an increase in interest on deposits and long term debt.Interest on deposits increased by 31.7% in 2005, reflecting the expansion ofour deposit base in 2005. Our interest bearing deposits increased by 15.3% from€35,027.0million in 2004 to €40.378.7million in 2005. Interest expense on long-term debt also increased by 95.1% dueto the raising of €350million and USD $180 million in November 2004 and of €230 millionin February 2005 through the issuance by NBG 

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Funding Limited of CMSLinked Preferred Notes, which are counted as Tier I capital, and JPY30 billion in June 2005 through the issuance by NBG Finance ofsubordinated notes.

*Provisionfor Loan Losses.**  *TheGroup’s continuing operations recorded provisions of €201.2million for 2004, which increased by 11.8% to €225.0 million for2005 due principally to increased provisions by NBG, and UBB.

Activityin the loan loss allowances for the two years ended December 31, 2004 and2005 was as follows:

| ** **                                                  | ** ** | **2004**                         | ** ** | **2005**  | ** ** |
|-------------------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| ** **                                                  | ** ** | **(EUR in thousands)** | ** ** |
| Balance at  beginning of the year                           |       | 1,047,493                        |       | 1,115,212 |       |
| Less: Amounts  attributable to discontinued operations      |       | —                           |       | (15,654   | )          |
| Add: Provisions for loan losses from continuing  operations |       | 201,234                          |       | 225,013   |       |
| Provisions for loan losses from discontinued  operations    |       | (1,393                           | )          | —    |       |
| Write-offs                                                  |       | (130,431                         | )          | (245,881  | )          |
| Recoveries(1)                                               |       | 1,929                            |       | 7,058     |       |
| Less: Net write-offs                                        |       | (128,502                         | )          | (238,823  | )          |
| Exchange differences and other variations                   |       | (3,620                           | )          | 6,797     |       |
| Balance at end of year                                      |       | 1,115,212                        |       | 1,092,545 |       |

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(1)             Recoveries afterwrite-offs of non-performing loans are minimal as, under Greek regulations,non-performing loans cannot be written off until all legal remedies forrecovery have been exhausted.

During the period under review, total loan lossallowance from our continuing operations decreased by 0.6% from €1,099.6million in 2004 to €1,092.5 millionin 2005, due to increased write-offs and generally, as well as €57.7 millionin write-offs taken by the Bank following the implementation of the compoundinglaw. The decrease in our loan loss allowance occurred despite the increase inour provisions from €201.2 millionto €225.0 millionin 2005. Total loans attributable to our continuing operations increased by18.5% from €25,892.7 millionas at December 31, 2004 to €30,674.2 million asat December 31, 2005. At the same time, write- -offs increased by 88.6%from €130.4 millionin 2004 to €245.9 millionin 2005 reflecting the Group’s policy to write off all loans that have beendetermined to be unrecoverable as well as write- -offs due to the effectsof the Compounding law.

TheGroup’s loan loss allowance consists of five principal components. These are:specific allowances, coefficient analysis, homogenous analysis, foreign loansand unallocated losses. See Item 4.E, *“SelectedStatistical Data—Credit Quality—Allowance for Loan Losses—Methodology.”*

| ** **                                                    | ** ** | **At December 31,** | ** ** |
|---------------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                                    | ** ** | **2004**                      | ** ** | **2005** | ** ** |
| ** **                                                    | ** ** | **(EUR in  thousands)**  | ** ** | **(%)** | ** ** | **(EUR in  thousands)** | ** ** | **(%)** | ** ** |
| Specific  allowances                                          |       | 438,439                       |       | 39.3 |   | 476,127 |   | 43.1 |   |
| Coefficient  analysis                                         |       | 112,182                       |       | 10.1 |   | 50,808 |   | 4.6 |   |
| Homogeneous  analysis                                         |       | 300,900                       |       | 27.0 |   | 280,800 |   | 25.4 |   |
| Foreign loans                                                 |       | 186,958                       |       | 16.7 |   | 231,210 |   | 20.9 |   |
| Unallocated                                                   |       | 61,079                        |       | 5.5 |   | 53,600 |   | 4.8 |   |
| Total loan loss  allowances form from continuing operations   |       | 1,099,558                     |       | 98.6 |   | 1,092,545 |   | 98.8 |   |
| Total loan loss  allowances form from discontinued operations |       | 15,654                        |       | 1.4 |   | 13,148 |   | 1.2 |   |
| Total loan loss  allowances                                   |       | 1,115,212                     |       | 100.0 |   | 1,105,693 |   | 100.0 |   |

 

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Specific allowances increased from €438.4 millionin 2004 to €476.1million in 2005 due to the economic deterioration of certain large corporatecustomers.

Allowances under the coefficient analysis decreasedfrom €112.2million in 2004 to €50.8million in 2005 due to write- offs.

Allowances under the homogeneous analysis decreasedfrom €300.9 millionin 2004 to €280.8 millionin 2005, due to write- offs.

The increase in allowances for foreign loans from €186.9 millionin 2004 to €231.2 millionin 2005, is attributable to the expansion of our non- Greek branches andsubsidiaries’ loan portfolio s.

Total loan loss allowance as a percentage ofnon-performing loans dropped from 79.6% as at December 31, 2004 and to75.5% as at December 31, 2005, as a result of increased write- -offs.

Net interest income after provision for loan lossesfrom our continuing operations increased by 9.6% to €1,328.3million in 2005 from €1,211.5 million in 2004.

*Non-interest Income.**  *Non-interest income from ourcontinuing operations increased by 13.9% to €1,466.8 million for 2005,compared to €1,288.3 millionfor 2004. The following table summarizes the principal components ofnon-interest income during each of the two years ended December 31, 2004and 2005:

| ** **                                                             | ** ** | **Year ended December 31,** | ** ** | **2004/2005** | ** ** |
|------------------------------------------------------------------------|------------|--------------------------------------------|------------|---------------|------------|
| ** **                                                             | ** ** | **2004**                                   | ** ** | **2005**      | ** ** | **Change** | ** ** |
| ** **                                                             | ** ** | **(EUR in thousands)**           | ** ** | **(%)**       | ** ** |
| Credit card fees                                                       |       | 75,220                                     |       | 79,675        |       |   | +5.9 | % |   |
| Service charges  on deposit accounts                                   |       | 43,293                                     |       | 38,218        |       |   | -11.7 | % |   |
| Other fees and  commissions                                            |       | 336,438                                    |       | 369,730       |       |   | +9.9 | % |   |
| Net trading  profits or (losses)                                       |       | 5,451                                      |       | 5,933         |       |   | +8.8 | % |   |
| Net realized  (losses)/gains on sales of available-for-sale securities |       | 16,305                                     |       | 119,523       |       |   | +633.0 | % |   |
| Equity in  earnings or (losses) of investees                           |       | 3,822                                      |       | 36,823        |       |   | +863.4 | % |   |
| Other                                                                  |       | 807,745                                    |       | 816,871       |       |   | +1.1 | % |   |
| Total non-interest  income                                             |       | 1,288,274                                  |       | 1,466,773     |       |   | +13.9 | % |   |

 

Income from credit card fees from our continuingoperations increased by 5.9% from €75.2 million in 2004to €79.7 millionin 2005 reflecting the expansion of our credit cards business in SEE. In 2005,trading profits from our continuing operations were almost flat and amounted to€5.9 millioncompared to €5.5 millionin 2004. In 2005, sales of available-for-sale securities proved to be aprofitable component of the Group’s continuing operations performance and amountedto €119.5 millionas against €16.3 millionin 2004 mainly due to our long bond and equity exposure and improved marketconditions. Equity in earnings of investees increased by 863.4% amounting to €36.8million compared to €3.8million in 2004 reflecting the good performance of our non-financial equityinvestee companies in 2005. Other non-interest income from our continuingoperations was €817.0 millionin 2005, slightly increased by 1.1% from €807.7 million in2004. This result was mainly due to a €4.1 million increasein income from insurance operations, a €1.3 million increase inhotel revenues and a €1.3 million increase in profit from sales ofproperties and a €3.6 millionincrease in income from miscellaneous items against a €0.7million of losses in warehouse fees.

*Non-interestExpense.**  *Non-interestexpense decreased by 12.5% to €2,035.3 million for2005, compared with €2,327.0 millionfor 2004.

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Thefollowing table summarizes the principal components of non-interest expenseduring each of the two years ended December 31, 2004 and 2005.

| ** **                                                        | ** ** | ** **                                 | ** ** | ** **    | ** ** |
|-------------------------------------------------------------------|------------|--------------------------------------------|------------|---------------|------------|
| ** **                                                        | ** ** | **Year ended December 31,** | ** ** | **2004/2005** | ** ** |
| ** **                                                        | ** ** | **2004**                                   | ** ** | **2005**      | ** ** | **Change** | ** ** |
| ** **                                                        | ** ** | **(EUR in thousands)**           | ** ** | **(%)**       | ** ** |
| Salaries and  employee benefits                                   |       | 956,871                                    |       | 893,368       |       |   | -6.6% |   |   |
| Occupancy and equipment  expense                                  |       | 71,038                                     |       | 68,811        |       |   | -3.1% |   |   |
| Amortization and  depreciation                                    |       | 105,177                                    |       | 84,107        |       |   | -20.0% |   |   |
| Other than  temporary impairment in available for sale securities |       | 7,980                                      |       | —        |       |   | — |   |   |
| Impairment of  goodwill                                           |       | —                                     |       | 16,162        |       |   | — |   |   |
| Other non-interest  expense                                       |       | 1,185,930                                  |       | 972,882       |       |   | -18.0% |   |   |
| Total non-interest  expense                                       |       | 2,326,996                                  |       | 2,035,330     |       |   | -12.5% |   |   |

 

Salaries and employee benefits relating to ourcontinuing operations decreased by 6.6% from €956.9 millionfor 2004 to €893.4 millionfor 2005. The burden of costs associated with the Bank’s and EH’s voluntaryearly retirement schemes, under which 1,511 of the Bank’s employees and 224 ofEH employees retired in 2004. Employee benefit costs in 2004 and 2005 includeactuarial adjustments for pension and post-retirement defined benefit plans. In2004 and 2005, these adjustments resulted in a charge to the income statementof €44.9 millionand €34.6 million,respectively, to reflect shortfalls in the Group’s continuing operationsdefined benefit pension plans. In 2005, we did not record any other thantemporary impairment in available for sale securities compared to €8.0 millionin 2004 representing the unrealized losses of certain equity securities. Theabsorption of National Investment Company in December 2005, resulted in animpairment of goodwill of €16.2 million.

Other non-interest expense decreased by 18.0% from €1,185.9 millionin 2004 to €972.9million in 2005, due principally to approximately €205 million ofdecreased insurance provisions.

*IncomeBefore Income Tax Expense.**  *In 2005, the Group reported income from continuingoperations before income tax expense of €759.7 million, a 339.8%increase from €172.8 millionin 2004, due to the benefits from the Bank’s and EH’s voluntary earlyretirement program, and the increase in our net interest income for the year,the gains from available for sale securities and decreased insuranceprovisions.

*IncomeTax Expense.**  *In2005, we recognized a current tax liability of €168.2 million and adeferred tax liability of €64.6 million compared to a current taxliability of €182.0 millionand a deferred tax gain of €188.0 million, respectively, in 2004.Our total tax expense in 2005 amounted to €232.8 millioncompared to a tax benefit of €6.0 million in 2004.The decrease in our current tax expense in 2005 is primarily due to the changein Greek statutory tax rates discussed below.

The applicable Greek statutory rate of tax for theGroup was 32% in 2005 compared to 35% in 2004. Following legislation enacted inDecember 2004, the applicable Greek statutory rate of tax was reduced from35% for 2004 to 32% for 2005, 29% for 2006 and 25% for 2007 and thereafter.Pursuant to an incentive law, the statutory tax rate for the Bank for the years2005 and 2006 is further reduced by 5 percentage points. Furthermore, thedeferred tax gain in 2004 is principally attributable to the recognition of adeferred tax asset of €281.7 million stemming froma revaluation of fixed assets to market values as allowed by Greek legislationfor tax purposes. The effective tax rate for the Group was approximately 29% (SeeNote 31 to the U.S. GAAP financial statements included in this Annual Report).

*NetIncome.**  *Forthe reasons discussed above, and given that our net income from discontinuedoperations decreased by 10.2 % from € 31.5 million in 2004 to €28.3million in 2005, we had net income of €555.2 million for 2005compared to €210.3 millionfor 2004.

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*Exchange Rate Exposure.**  *The Group is an active participantin the foreign exchange markets and also makes loans denominated in foreigncurrencies. The Group’s goal in managing exchange rate exposure is to minimizethe effect of exchange rate movements on profitability. The Group adheres tocentral bank guidelines and other guidelines applicable to the Group andactively manages its foreign currency position. To the extent that foreigncurrency-denominated assets are not matched with liabilities denominatedin the same currencies, the Group engages in swaps and other hedgingtransactions in order to reduce the effects of these imbalances. Management,therefore, does not consider the Group’s foreign exchange risk to besignificant with respect to the Group’s overall financial position. As at December 31,2005, approximately 14.6% of the Group’s liabilities and 21.4% of the Group’sassets were denominated in currencies other than euro, before taking intoaccount hedging transactions.

**Recently IssuedAccounting Pronouncements**

On March 31, 2006 the Financial AccountingStandards Board (“FASB”) issued an exposure draft, “Employers’ Accounting forDefined Benefit Pension and Other Postretirement Plans- an amendment of FASBStatements No.87, 88,106 and 132(R).” The exposure draft requires therecognition of a plan’s over-funded or under-funded status as an asset orliability and an adjustment to accumulated other comprehensive income.Additionally, the exposure draft requires determination of the fair values ofthe plan’s assets at a company’s year-end and recognition of actuarial gainsand losses, and prior service costs and credits, as a component of othercomprehensive income. The exposure draft is expected to be effective December 31,2006.

On March 17, 2006, the FASB issued SFAS No.156, “Accountingfor Servicing of Financial Assets, an amendment to FASB Statement No. 140”(SFAS 156), which permits but does not require, an entity to account for one ormore classes of servicing rights at fair value, with changes in fair valuerecorded in Consolidated Statement of Income. The standard is effective January 1,2007. The adoption of this standard is not expected to have a material impacton the Group’s results of operation or financial position.

On February 16, 2006, the FASB issued SFAS No. 155“Accounting for Certain Hybrid Instruments” (SFAS 155), which permits, but doesnot require, fair value accounting for any hybrid financial instrument thatcontains an embedded derivative and would otherwise require bifurcation inaccordance with SFAS 133. The statement is effective as of January 1,2007, with earlier adoption permitted. The Group elected to early adopt thestandard as of January 1, 2005.

In September 2006, the FASB issued SFAS No. 158,“Employers’ Accounting for Defined Benefit Pension and Other PostretirementPlans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (SFAS158), which requires the recognition of a plan’s over funded or under-fundedstatus as an asset or liability with an offsetting adjustment to AccumulatedOther Comprehensive Income (OCI). SFAS 158 further requires the determinationof the fair values of a plan’s assets at a company’s year-end and recognitionof actuarial gains and losses, prior service costs or credits, and transitionassets or obligations as a component of Accumulated OCI. This statement waseffective as of December 31, 2006. The adoption of SFAS 158 reducedAccumulated OCI by approximately EUR 57,337 thousand after tax in 2006.

In September 2006, the FASB issued SFAS No. 157,“Fair Value Measurements” (SFAS 157). SFAS 157 defines fair value,establishes a framework for measuring fair value under GAAP and enhancesdisclosures about fair value measurements. SFAS 157 defines fair value as theexchange price that would be received for an asset or paid to transfer aliability (an exit price) in the principal or most advantageous market for theasset or liability in an orderly transaction between market participants on themeasurement date. SFAS 157 is effective for the Corporation’s financialstatements issued for the year beginning on January 1, 2008, with earlieradoption permitted. Management is currently evaluating the impact of theadoption of SFAS 157 on the Groups financial condition and results ofoperations.

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In July 2006, the FASB released FASBInterpretation No. 48, “Accounting for Uncertainty in Income Taxes, aninterpretation of FASB Statement No. 109” (FIN 48). FIN 48 clarifies theaccounting and reporting for income taxes where interpretation of the tax lawmay be uncertain. FIN 48 prescribes a comprehensive model for the financialstatement recognition, measurement, presentation and disclosure of income taxuncertainties with respect to positions taken or expected to be taken in incometax returns. The Group will adopt FIN 48 on January 1 2007. The adoptionof FIN 48 is not expected to have a material impact on the Group’s financialcondition and results of operation.

In February 2007, the Financial AccountingStandards Board (FASB) issued Statement of Financial Accounting Standards(SFAS) No. 159, “The Fair Value Option for Financial Assets and FinancialLiabilities” (SFAS 159), which allows an entity the irrevocable option to electfair value for the initial and subsequent measurement for certain financialassets and liabilities on a contract-by-contract basis. Subsequent changes infair value of these financial assets and liabilities would be recognized inearnings when they occur. SFAS 159 further establishes certain additionaldisclosure requirements. SFAS 159 is effective for the Group’s financialstatements for the year beginning on January 1, 2008, with earlieradoption permitted. Management is currently evaluating the impact and timing ofthe adoption of SFAS 159 on the Group’s financial condition and results ofoperations.

For further information,please see Note 3 to the U.S. GAAP financial statements.

**B.   Liquidityand Capital Resources**

Our principal sources of liquidity are our depositbase and, to a lesser extent, interbank borrowings and long-term debt. We alsoderive liquidity from the results of our operations and disposals of securitiesand other assets.

In recent years, we have generally been in a positionof excess liquidity due to our large domestic deposit base. Deposits havefunded the securities portfolio, loans to customers and reserve balances heldat the central bank.

We participate in the interbank deposit market(denominated in euro and all major currencies) and enter into foreign exchangeforward transactions with maturities up to a year. The net open positionscarried are small and largely offset against the deposit base in the respectivecurrency.

Thefollowing table provides a summary of our interbank borrowing activity for eachof the three years ended December 31, 2004, 2005 and 2006.

| ** **                         | ** ** | **Year ended December 31,** | ** ** |
|------------------------------------|------------|--------------------------------------------|------------|
| ** **                         | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                         | ** ** | **(EUR in thousands)**           | ** ** |
| Interbank lending                  |       | 4,859,268                                  |       | 1,322,015 |   | 2,272,043 |   |
| Interbank  borrowing               |       | (1,488,955                                 | )          | (2,300,087 | ) | (2,846,301 | ) |
| Net interbank  lending/(borrowing) |       | 3,370,313                                  |       | (978,072 | ) | (574,258 | ) |

 

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Operatingcash flow also provides us with an important source of liquidity. The followingtable provides a summary of our cash flows for each of the three years endedDecember 31, 2004 ,2005 and 2006.

| ** **                                                           | ** ** | **Year ended December 31,** | ** ** |
|----------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                           | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                           | ** ** | **Restated**                               | ** ** | **Restated** | ** ** | ** ** | ** ** |
| ** **                                                           | ** ** | **(EUR in thousands)**           | ** ** |
| Cash flows from  operating activities from continuing operations     |       | 3,249,907                                  |       | (1,788,310 | ) | 2,017,509 |   |
| Cash flows from  operating activities from discontinued  operations  |       | 39,687                                     |       | 48,878 |   | (2,297 | ) |
| Cash flows from  investing activities from continuing operations     |       | (2,602,185                                 | )          | (1,288,149 | ) | (7,976,758 | ) |
| Cash flows from  investing activities from discontinued operations   |       | 23,015                                     |       | (72,821 | ) | 824 |   |
| Cash flows from  financing activities from continuing operations     |       | (623,391                                   | )          | 3,951,018 |   | 6,255,873 |   |
| Cash flows from  financing activities from discontinued   operations |       | (166,921                                   | )          | (4,608 | ) | — |   |
| Effect of  exchange rate change on cash and cash equivalents         |       | (6,624                                     | )          | 13,470 |   | 5,937 |   |
| Net (decrease)/increase  in cash and cash equivalents                |       | (86,512                                    | )          | 859,478 |   | 301,088 |   |

 

During 2004, our loan portfolio increased by €4,242.4 millionwhile our investments in securities decreased by €1,966.2 million. Inaddition, federal funds sold and securities purchased under agreements toresell increased by €326.2 million.This lending activity was funded primarily by cash inflows due to the decreasein trading assets of €3,233.3 million and an increase inlong-term debt of €476.8 million.

During 2005, our loan portfolio attributable to ourcontinuing operations increased by €4,781.5 million. Thislending activity was funded by excess liquidity from deposits which increasedby €6,584.2 million.

During 2006, our loan portfolio attributable tocontinuing operations increased by € 13,082.6 million, ofwhich €6,786.8million was due to the effects of the acquisition of Finansbank, and ouracquisitions of Finansbank and Vojvodjanska resulted in an increase in goodwillof €2,044.8million. This lending activity was funded by excess liquidity from deposits,which increased by €10,634million and an increase in long-term debt of €2,293.6 million, of which €5,943.9million and €1,601.1million, respectively, was due to the effects of the acquisition of Finansbank,whereas our acquisitions were funded by our share capital increase of €3,000.8million in July 2006.

Our capital expenditure requirements, excludinginterests in other companies, have been principally for upgrading ourinformation technology and other electronic systems and for general plant andequipment. Capital expenditure for the Bank, excluding such interests in othercompanies, amounted to €92 million in 2006. SeeItem 4.A, *“History and Development ofthe Company”.*We fund our capital expenditure requirementsprincipally through operating cash flow.

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Our capital expenditures also include interestsacquired in other companies, amounting to an additional €2,642.8million for the year ended December 31, 2006. This amount principallyrepresents the acquisition of a 46% stake in Finansbank in August 2006, theacquisition of a 99.4% stake in Vojvodjanska in December 2006 and theparticipation in Banca Romaneasca’s capital increase in February 2006.

The Group’s Treasury is active across a broad spectrumof capital market products and operations, including bonds and securities,interbank placements in the international money and forex markets andmarket-traded and OTC financial derivatives. For more information on theactivities of our Treasury Division, See ITEM 4 *“Informationon the Company/Treasury Activities”*.

At December 31, 2006, total assets were €75,713.7million, a 26.1% increase from the Group’s total assets of €60,007.5 million,at December 31, 2005, which in turn was a 9.8% increase from the Group’stotal assets of €54,652.8 millionat December 31, 2004. Deposits with the central bank were €2,110.2million in 2006, €1,184.4million in 2005 and €390.8 millionin 2004. Federal funds sold and securities purchased under agreements to resellfrom our continuing operations were €2,398 million in 2006, €2,495.7million in 2005 and €3,773.5 millionin 2004. Interest-bearing deposits with other banks from our continuingoperations were €2,272.0million in 2006, €1,322.0million in 2005 and €4,842.5 millionin 2004. The Group’s continuing operations securities portfolio was €11,529.3million at December 31, 2006, €11,186.5 million at December 31,  2005 and €12,903.1 million at December 31,2004.

The Group’s continuing operations loan portfolio grewfrom €25,892.7 millionat December 31, 2004 to €30,674.2 million at December 31,2005 and to €43,756.8million at December 31, 2006. At December 31, 2006, the Group’s loanportfolio accounted for 57.8% of total assets. Allowance for loan losses fromcontinuing operations decreased slightly from €1,099.6 million in2004 and to €1,092.5million in 2005 and then increased to 1,224.8 in 2006. See Item 4.E, *“Selected Statistical Data—Assets—Loan Portfolio”.*

Deposits attributable to our continuing operationsincreased from €38,679.1 million at December 31,2004 to €45,251.1million at December 31, 2005 and to €55,885 million at December 31,2006. Of these, interbank deposits increased from €1,636.9 million atyear-end 2004 to €2,400.0million in 2005 and then increased to €3,035.9 million in 2006.

Although, subject to certain exceptions, Greek lawdoes not allow an entity to acquire and own its own shares, subsidiaries inGreece were allowed to own and trade in the market shares of their parentcompany until March 16, 2001, and may continue to own shares acquiredprior to such date. Treasury stock in our financial statements representsshares of the Bank owned by the Bank or our subsidiaries. Treasury stock hasincreased to €26.8 million at December 31, 2006 from €1.1million at December 31, 2005 but has decreased from €210.1 millionat December 31, 2004.

Greek law substantivelyprohibits subsidiaries from transferring funds to their parent company throughloans or advances by deeming such transfers null and void. Subsidiaries arealso constrained in their ability to transfer funds to a parent company in theform of dividends by applicable corporate laws. For example, under Greek law,no distribution of dividends can be effected if, on the closing date of therelevant financial year, the total shareholders’ equity is, or would be as aresult of such a distribution, lower than the sum of the company’s sharecapital and reserve amounts. See Item 8.A(8), *“Financial Information—Consolidated Statements and Other FinancialInformation”.* We do not believe that any of these legal provisionshave had, or will have, a material impact on the Bank’s ability to meet itscash obligations. We believe that our working capital is sufficient for ourpresent requirements. For further discussion of Liquidity and CapitalResources, see Notes 22, 23, 27 and 28 to the U.S. GAAP Financial Statements.

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**Asset/Liability,Internal Audit and Risk Management**

We consider effective riskmanagement to be a key factor in our ability to deliver sustained returns toour shareholders. We allocate substantial resources to upgrading our policies,methods and infrastructure to ensure compliance with best internationalpractices and the guidelines of the Basel Committee for Banking Supervision.For a discussion of management’s specific risks, see Item 11, *“Quantitative and Qualitative Disclosures aboutMarket Risk”.*

***Risk Management Policies***

Group risk management policies are approved the Bank’sRisk Management Committee  (the “RMC”),which is composed of the Chief Executive Officer, the Deputy Chief ExecutiveOfficer and one non-executive member of the Board of Directors. The RMC isresponsible for all strategic risk management decisions including the approvaland review of risk strategy, policies and capital adequacy and allocation aswell as overseeing the GRMD. For more information on the Board Risk Committee,see Item 6C, *“Board Committees”*.

The GRMD is responsiblefor protecting the Group against unforeseen losses and maintaining earningsstability through independent identification and assessment of risks,developing the Group organizational structure under best banking practices forrisk management, developing transparent, objective and consistent risk managementinformation as the basis for sound decision making and maximizing the Bank’searnings potential by measuring performance on a risk-adjusted basis andallocating capital accordingly. In addition, the GRMD is responsible forproviding the RMC and the Senior Executive Committee with accurate data andanalysis required for measuring, monitoring and managing risks and forsupporting the implementation of risk management decisions. For moreinformation on the Senior Executive Committee, see Item 6A, *“Board of Directors and Senior Management”.*

***ALCO***

Ourasset/liability and risk management policy is designed to structure our balancesheet in order to control exposure to liquidity, interest rate and exchangerate risks, as well as to enable us to take advantage of market opportunitieswhich we believe may contribute to our profitability.

Currently, the asset/liability management policies ofthe Bank and the other subsidiaries in the Group are planned and implementedseparately. The Bank’s Asset and Liability Committee, referred to in thisAnnual Report as “ALCO,” is responsible for determining the broadasset/liability management of the Bank and for supervising its implementation.This committee meets every month and is comprised of the Chief ExecutiveOfficer and Deputy Chief Executive Officer of the Bank and the General Managersand managers of the Bank involved in the asset allocation functions. Day-to-dayasset/liability management is delegated to the Bank’s Treasury Department,which is divided into several operating units. The subsidiaries in the Groupfollow asset and liability management policies similar to those of the Bank.

The members of ALCO are:

Takis Arapoglou (Chairman)Ioannis Pechlivanidis (member)Anthimos Thomopoulos (member)Paul Mylonas (member)Petros Christodoulou (member)Michael Oratis (member)Demetrios LefakisIoannis Kyriakopoulos (member)Leonidas Fragiadakis (member)

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***Internal Audit***

The Internal Audit—Inspection Division of the Bank &Group (IAID) is administratively independent from the other Bank Units and isauthorized to conduct planned and special audits to assist the Bank inachieving its objectives by (a) offering a systematic, disciplinedapproach in evaluating the effectiveness of risk management, internal controlsand corporate governance, (b) recommending appropriate measures to improvetheir efficiency and effectiveness and (c) monitoring the implementationof corrective actions.

The Audit Committee, composed of five non executive/independent members of the Board of Directors, supervises the activity of theIAID. The Chief Audit Executive is a General Manager of the Bank who isassigned or discharged only by the NBG Board of Directors, in accordance withthe Audit Committee proposal and relevant recommendation by the Bank’s CEO,under notification to the Regulatory Authorities (Bank of Greece). The ChiefAudit Executive reports on the IAID’s activities to the Audit Committee, duringregular monthly meetings and to the Board of Directors of the Bank, through theAudit Committee, quarterly.

In the frame of the NBG Group strategic planning, theIAID develops a three year rotating business plan to accomplish its strategicgoals. The current plan for 2007 -2009 is in the process of beingimplemented.

Given the rapid expansion of the NBG Group in the SEEand the recent guidelines regarding the operation of the Internal Audit Units,issued by the Regulatory Authorities, the Board of Directors of the Bankrecently approved a new Charter and a new organization structure for the IAIDto enable it to operate effectively at a Group level. On the basis of the newCharter the IAID is the central coordinating Unit for all the Internal AuditUnits (IADs) of the Group and is charged to develop and enforce consistentstandards for their operations, in full compliance with the RegulatoryGuidelines and the International Standards for the Professional Practice of theInternal Auditing of the Institute of Internal Auditors (IIA).

The IAID in order to fulfill its new role, completedsuccessfully an aggressive recruitment plan in 2006, incorporating 25 qualifiedsenior auditors and audit managers from the market, the majority of whom holdPostgraduate Degrees and/or Certifications (CIA, CISA, ACCA, etc), as well as25 promising Bank employees. At the same time, several senior auditors withsignificant number of years of service at the IAID, were promoted out to keypositions at various units within the Group. As a result of this restructuringthe Division’s headcount was 154 employees, as at December 31, 2006, butafter the completion of the restructuring program, in 2007, the headcount was135, not including the Chief Audit Executive. Out of the 135 employees, 21 areManagers, 100 Auditors and 14 Administrative staff. It should be noted that theheadcount of the staff of the other IAUs of the Group was 121, as at December 31,2006.

The IAID uses an in house developed risk assessmentmethodology based on international practices to construct its annual auditplan, which is submitted for approval to the Bank’s Audit Committee. The IAIDis currently developing a uniform internal audit methodology that is going tobe adopted across all the IAUs of the Group, and is aiming to construct thefirst integrated Group wide Annual Audit Plan on a pilot basis in 2008. TheGroup wide Audit Plan will be materialized, utilizing resources from the IAID,the local IAUs, or jointly from both, depending on the criticality of theauditable unit and the specialized know-how that is required. According to theIAID’s methodology the high risk areas will be audited on a yearly basis whilethe medium and low risk at least every three years.

During the second semester of 2006 following aresolution of the NBG’s Board of Directors, IAID allocated a significant partof its resources to the Sarbanes-Oxley, Section 404 compliance project, asit was considered of major importance for the Bank.

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Since mid 2006,senior Managers and Auditors participated as coordinators, Heads or members ofcommittees and work groups in all of the phases of the Project (72 persons atpeak), mainly for the assessment of the controls’ design and operatingeffectiveness, the deficiencies’ identification and the submission of proposalsfor their remediation. The participation concentrated mainly in the auditing ofa) Entity level Controls, b) Financial Statements Closing Processes, c)Information Technology General Controls, and d) Manual, IT Dependant and ITapplication Controls.

Regardless theparticipation to the SOX project, the IAID managed to complete the Annual AuditPlan nearly in its entirety.

***Liquidity Exposure***

Liquidity risk is defined as the risk that a financialinstitution will not to be able to meet its obligations as they become due,because of lack of the required liquidity.

Liquidity risk management seeks to ensure that, evenunder adverse conditions, we have access to the funds necessary to covercustomer needs, maturing liabilities and the capital requirements of ouroperations. Liquidity risk arises in the general funding of our financing,trading and investment activities and in the management of positions. This riskinvolves both the risk of unexpected increases in the cost of funding theportfolio of assets at appropriate maturities and rates, and the risk of beingunable to liquidate a position in a timely manner on reasonable terms.

The RMC monitors differences in maturities betweenassets and liabilities by analyzing funding requirements based on variousassumptions, including conditions that might have an adverse impact on our abilityto liquidate investment and trading positions and our ability to access thecapital markets.

The Group’s principal source of liquidity is thedeposit base of the Bank. The Bank’s principal sources of liquidity are itsdeposit base and, to a lesser extent, interbank borrowings. The Bank operates anetwork of 557 branches in Greece, and its domestic customer deposit baseaccounts for 28.8% of the Greek deposit market (savings and sight accounts) asat December 31, 2006. This provides the Bank with sufficient euro andforeign currency liquidity to fund its operations and treasury positions. Wealso derive liquidity from the results of our operations and disposals ofsecurities and other assets. In recent years, we have generally been in aposition of excess liquidity due to our large domestic deposit base. Depositshave funded the securities portfolio, loans to customers and reserve balancesheld at the central bank. Although the Bank was required to deposit a highproportion of foreign currency with the Greek central bank pursuant to reserverequirements, we were able to fund foreign currency assets, including foreigncurrency loans to domestic customers, through our foreign currency depositbase. We participate in the interbank deposit market (denominated in euro andall major currencies) and enter into foreign exchange forward transactions withmaturities up to a year. The net open positions carried are small and largelyoffset against the deposit base in the respective currency.

The maturities of the Group’s assets and liabilitiestraditionally have been heavily weighted toward short-term maturities. As at December 31,2006, approximately 11% of the Group’s deposits were demand deposits with nospecified maturity. Approximately 93% of the Group’s deposits had maturities ofless than three months at December 31, 2006. At December 31, 2006, 38.8%of the Group’s loans with customers had a maturity of less than one year. Loansto customers with maturities in excess of 5 years represented 32.7% of theGroup’s total loan portfolio at December 31, 2006. Over 88.6% of the Group’sinterest bearing deposits with banks had maturities of less than three monthsat December 31, 2006. As a result medium-term and long-term liabilities ofthe Group were insignificant. In the course of its euro-denominated lendingactivities, the Group permits mismatched positions resulting from liabilitieshaving shorter average maturities than assets as it considers demand andsavings deposits to be relatively stable given past experience.

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Typically, the Group’snon-euro-denominated assets and liabilities are managed and matchedindividually. Usually, a non-euro loan or other asset will give rise to amatching funding operation that takes into account respective maturities aswell as currencies and interest rate and repricing terms.

***Interest Rate Exposure***

Exposure to interest rate risk arises when the Grouphas a mismatch of assets and liabilities on which interest rates change fromtime to time. The Group closely monitors its overall exposure to interest raterisk and the impact that individual transactions may have on such exposure. TheGroup’s aim in managing interest rate exposure is to limit the potentiallyadverse consequences of interest rate movements on profitability, while seekingto take advantage of opportunities presented by prevailing or expected trendsin market interest rates.

At December 31, 2006, 56.5% of the interestbearing securities of the Group, including securities purchased under agreementsto resell, and 81.5% of customer loans, were at floating rates of interest.These assets are funded by liabilities having an average maturity of less thanone year.

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***Assets and Liabilities by Currency Denominations***

Thefollowing table sets forth the assets and liabilities and shareholders’ equityby those denominated in euro and those denominated in other currencies for theGroup under U.S. GAAP at December 31, 2004, 2005 and 2006.
|                                                                                   | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                        | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                                        | ** ** | **EUR**                                    | ** ** | **Other  Currency** | ** ** | **Total** | ** ** | **EUR** | ** ** | **Other  Currency** | ** ** | **Total** | ** ** | **EUR** | ** ** | **Other  Currency** | ** ** | **Total** | ** ** |
| ** **                                                                        | ** ** | **(in thousands)**                         | ** ** |
| **Assets:**                                                                       | ** ** | ** **                                 | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash and due from  banks                                                          |       | 440,460                                    |       |   | 262,948 |   |   | 703,408 |   | 1,167,654 |   |   | 343,318 |   |   | 1,510,972 |   | 1,087,724 |   | 776,250 |   | 1,863,974 |   |
| Deposits with central Bank                                                        |       | 283,848                                    |       |   | 106,920 |   |   | 390,768 |   | 1,067,670 |   |   | 116,713 |   |   | 1,184,383 |   | 1,644,698 |   | 465,493 |   | 2,110,191 |   |
| Federal funds sold and securities purchased  under agreements to resell |       | 3,765,176                                  |       |   | 19,294 |   |   | 3,784,470 |   | 2,493,680 |   |   | 2,053 |   |   | 2,495,733 |   | 2,385,914 |   | 12,183 |   | 2,398,097 |   |
| Interest bearing deposits with Banks                                         |       | 3,294,423                                  |       |   | 1,564,845 |   |   | 4,859,268 |   | 277,620 |   |   | 1,044,395 |   |   | 1,322,015 |   | 511,735 |   | 1,760,308 |   | 2,272,043 |   |
| Money market investments                                                          |       | 79,614                                     |       |   | 70,409 |   |   | 150,023 |   | 67,897 |   |   | 111,176 |   |   | 179,073 |   | 168,653 |   | 199,000 |   | 367,653 |   |
| Trading assets and derivative Instruments                                    |       | 10,174,565                                 |       |   | 567,031 |   |   | 10,741,596 |   | 13,711,152 |   |   | 236,736 |   |   | 13,947,888 |   | 12,522,908 |   | 484,258 |   | 13,007,166 |   |
| Available- for-sale, at fair value                                           |       | 2,018,111                                  |       |   | 1,530,270 |   |   | 3,548,381 |   | 2,050,985 |   |   | 556,024 |   |   | 2,607,009 |   | 2,564,009 |   | 1,591,057 |   | 4,155,066 |   |
| Held to maturity                                                                  |       | —                                     |       |   | — |   |   | — |   | 20,867 |   |   | — |   |   | 20,867 |   | — |   | — |   | — |   |
| Equity method investments                                                         |       | 200,972                                    |       |   | — |   |   | 200,972 |   | 230,117 |   |   | — |   |   | 230,117 |   | 228,521 |   | 6,049 |   | 234,570 |   |
| Loans                                                                             |       | 22,748,031                                 |       |   | 4,427,374 |   |   | 27,175,405 |   | 27,176,041 |   |   | 3,498,132 |   |   | 30,674,173 |   | 34,215,388 |   | 9,541,455 |   | 43,756,843 |   |
| Less: Allowance for loan losses                                              |       | (926,081                                   | )          |   | (189,131 | ) |   | (1,115,212 | ) | (893,005 | ) |   | (199,540 | ) |   | (1,092,545 | ) | (960,751 | ) | (264,006 | ) | (1,224,757 | ) |
| Net loans                                                                         |       | 21,821,950                                 |       |   | 4,238,243 |   |   | 26,060,193 |   | 26,283,036 |   |   | 3,298,592 |   |   | 29,581,628 |   | 33,254,637 |   | 9,277,449 |   | 42,532,086 |   |
| Intangible assets                                                                 |       | 331,109                                    |       |   | 33,895 |   |   | 365,004 |   | 327,984 |   |   | 19,402 |   |   | 347,386 |   | 609,599 |   | 1,949,897 |   | 2,559,496 |   |
| Premises and equipment net                                                   |       | 658,308                                    |       |   | 129,969 |   |   | 788,277 |   | 646,145 |   |   | 99,035 |   |   | 745,180 |   | 614,064 |   | 336,498 |   | 950,562 |   |
| Customers’ liability on acceptances                                          |       | 12                                         |       |   | 699 |   |   | 711 |   | — |   |   | 205 |   |   | 205 |   | — |   | — |   | — |   |
| Accrued interest receivable                                                       |       | 551,930                                    |       |   | 35,354 |   |   | 587,284 |   | 515,522 |   |   | 19,072 |   |   | 534,594 |   | 502,686 |   | 197,974 |   | 700,660 |   |
| Other assets                                                                      |       | 1,220,103                                  |       |   | 1,252,322 |   |   | 2,472,425 |   | 2,071,232 |   |   | 474,700 |   |   | 2,545,932 |   | 2,032,918 |   | 529,256 |   | 2,562,174 |   |
| Assets held for sale                                                              |       | —                                     |       |   | — |   |   | — |   | — |   |   | 2,754,517 |   |   | 2,754,517 |   | — |   | — |   | — |   |
| Total assets                                                                      |       | 44,840,581                                 |       |   | 9,812,199 |   |   | 54,652,780 |   | 50,931,561 |   |   | 9,075,938 |   |   | 60,007,499 |   | 58,128,066 |   | 17,585,672 |   | 75,713,738 |   |

 

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|                                                           | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                | ** ** | **EUR**                                    | ** ** | **Other  Currency** | ** ** | **Total** | ** ** | **EUR** | ** ** | **Other  Currency** | ** ** | **Total** | ** ** | **EUR** | ** ** | **Other  Currency** | ** ** | **Total** | ** ** |
| ** **                                                | ** ** | **(in thousands)**                    | ** ** |
| **Liabilities and Shareholders’  Equity:**           | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total deposits                                            |       | 31,131,829                                 |       | 9,110,847 |   | 40,242,676 |   | 36,277,754 |   | 8,973,330 |   | 45,251,084 |   | 42,316,583 |   | 13,568,478 |   | 55,885,061 |   |
| Central bank borrowings                                   |       | —                                     |       | 1,411 |   | 1,411 |   | — |   | 353 |   | 353 |   | 22 |   | 1,002 |   | 1,024 |   |
| Securities sold  under  agreements to repurchase          |       | 6,080,123                                  |       | 584,659 |   | 6,664,782 |   | 2,682,877 |   | 43,940 |   | 2,726,817 |   | 2,961,896 |   | 75,607 |   | 3,037,503 |   |
| Other borrowed funds                                      |       | 14,708                                     |       | 181,915 |   | 196,623 |   |   |   | 195,690 |   | 195,690 |   | 2,004 |   | 293,239 |   | 295,243 |   |
| Acceptances outstanding                                   |       | 12                                         |       | 699 |   | 711 |   | 204 |   | 1 |   | 205 |   | — |   | — |   | — |   |
| Accounts payable, accrued expenses and other  liabilities |       | 2,468,093                                  |       | 158,564 |   | 2,626,657 |   | 2,981,786 |   | 444,737 |   | 3,426,523 |   | 1,848,937 |   | 2,039,637 |   | 3,888,574 |   |
| Long-term debt                                            |       | 1,503,847                                  |       | 144,400 |   | 1,648,247 |   | 2,147,691 |   | 4,251 |   | 2,151,942 |   | 1,950,829 |   | 2,494,736 |   | 4,445,565 |   |
| Insurance reserves                                        |       | 1,513,175                                  |       | — |   | 1,513,175 |   | 1,499,971 |   | 37,157 |   | 1,537,128 |   | 1,679,442 |   | 54,124 |   | 1,733,566 |   |
| Liabilities held for sale                                 |       | —                                     |       | — |   | — |   | — |   | 2,255,132 |   | 2,255,132 |   | — |   | — |   | — |   |
| Total liabilities                                         |       | 42,711,787                                 |       | 10,182,495 |   | 52,894,282 |   | 45,590,283 |   | 11,954,591 |   | 57,544,874 |   | 50,759,713 |   | 18,526,823 |   | 69,286,536 |   |
| Minority interests                                        |       | 167,336                                    |       | 14,604 |   | 181,940 |   | 69,505 |   | 19,672 |   | 89,177 |   | 33,671 |   | 754,974 |   | 788,645 |   |
| Total shareholders’ equity                           |       | 1,440,386                                  |       | 136,172 |   | 1,576,558 |   | 2,113,908 |   | 259,540 |   | 2,373,448 |   | 5,381,916 |   | 256,641 |   | 5,638,557 |   |
| Total liabilities  and shareholders’ equity          |       | 44,319,509                                 |       | 10,333,271 |   | 54,652,780 |   | 47,773,696 |   | 12,233,803 |   | 60,007,499 |   | 56,175,300 |   | 19,538,438 |   | 75,713,738 |   |

 

**Capital Adequacy**

The capital adequacy ratios applicable to Greek banksconform to EU requirements, in particular the Own Funds Directive, the SolvencyRatio Directive and the Capital Adequacy Directive. See Item 4.B, *“Business Overview—Regulation and Supervision ofBanks in Greece”*. It is the aim of the Bank to maintain a capitalratio in excess of the 8% ratio required by the Greek supervisory authority. AtDecember 31, 2005, the Bank and the Group had €2,526 millionand €3,855 million,respectively, of Tier I capital and €4,575 million and €4,757 millionof total capital, respectively. At December 31, 2006, the Bank and theGroup had €5,569million and €5,378million, respectively, of Tier I capital and €8,071 million and €6,778million of total capital, respectively.

The following table shows the EU capital adequacyratios for the Bank and the Group at December 31, 2002, 2003, 2004 , 2005and 2006.

| ** ** | ** ** | **Year ended December 31,** | ** ** |
|------------|------------|--------------------------------------------|------------|
| ** ** | ** ** | **2002**                                   | ** ** | ** ** | ** ** | **2003** | ** ** | ** ** | ** ** | **2004** | ** ** | ** ** | ** ** | **2005** | ** ** | ** ** | ** ** | **2006** | ** ** | ** ** | ** ** |
| ** ** | ** ** | **Tier I**                            | ** ** | **Total** | ** ** | **Tier I** | ** ** | **Total** | ** ** | **Tier I** | ** ** | **Total** | ** ** | **Tier I** | ** ** | **Total** | ** ** | **Tier I** | ** ** | **Total** | ** ** |
| Bank       |       |                                       | 9.5        | % |   |   | 12.6 | % |   |   | 9.9 | % |   |   | 11.3 | % |   |   | 10.3 | % |   |   | 15.8 | % |   |   | 9.3 | % |   |   | 16.8 | % |   |   | 15.9 | % |   |   | 23.1 | % |   |
| Group      |       |                                       | 7.4        | % |   |   | 10.4 | % |   |   | 9.0 | % |   |   | 10.2 | % |   |   | 11.9 | % |   |   | 14.8 | % |   |   | 12.3 | % |   |   | 15.2 | % |   |   | 12.4 | % |   |   | 15.6 | % |   |

 

**C.   Researchand Development, Patents and Licenses**

We have not engaged in anysignificant research and development activities during any of the last threefinancial years.

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**D.   TrendInformation**

The recent months havebeen characterized by fluctuating economic activity in the Eurozone, and highcrude oil prices. Further, despite prior depreciation, the Turkish Lira hasappreciated against the euro since our acquisition of Finansbank in August 2006.We do not know how these counteracting forces will evolve in the future and howthese could influence the demand for our products and services, the creditquality of borrowers (with the corresponding pressures on our risk management)as well as income from foreign operations and revenues from foreign exchangedealing. In addition, a flattening of the yield curve has had a negative impacton our net interest income both in the United States and the Euro zone.However, we expect that in 2007 the decline in the asset yield will slow andthat the negative impact of the flattening of the yield curve will becompensated by growth in loan volume.

**E.   Off-balanceSheet Arrangements**

In the normal course of business, the Group entersinto a number of contractual commitments on behalf of its customers and is aparty to financial instruments with off-balance sheet risk to meet thefinancing needs of its customers. These contractual commitments consist ofcommitments to extend credit, commercial letters of credit and standby lettersof credit and guarantees. Commitments to extend credit are agreements to lendto a customer as long as there is no violation of the conditions established inthe contract. Commercial letters of credit ensure payment by a bank to a thirdparty for a customer’s foreign or domestic trade transactions, generally tofinance a commercial contract for the shipment of goods. Standby letters ofcredit and financial guarantees are conditional commitments issued by the Groupto guarantee the performance of a customer to a third party. See Note 28to the U.S. GAAP Financial Statements included in this Annual Report. All ofthese arrangements are related to the normal lending activities of the Group.

The Group’s exposure to credit loss in the event ofnon-performance by the other party to the financial instrument for commitmentsto extend credit and commercial and standby letters of credit is represented bythe contractual notional amount of those instruments. The Group uses the samecredit policies in making commitments and conditional obligations as it doesfor on-balance- sheet instruments.

Thefollowing tables summarize the Group’s off-balance-sheet financialinstruments, whose contract amounts represent credit risk, as of December 31,2004 , 2005 and 2006:

| ** **                                                           | ** ** | **2005**                         | ** ** | **2006**   | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|------------|------------|
| ** **                                                           | ** ** | **(EUR in thousands)** | ** ** |
| Financial  instruments whose contract amounts represent credit risk: |       |                             |       |       |       |
| Commitments to extend credit:                                        |       |                             |       |       |       |
| Commercial and personal                                              |       | 10,090,651                       |       | 22,739,661 |       |
| Commercial real estate                                               |       | 60,807                           |       | 44,991     |       |
| Residential real estate                                              |       | 681,003                          |       | 622,607    |       |
| Commercial letters of credit                                         |       | 207,544                          |       | 184,782    |       |
| Standby letters of credit and financial guarantees  written          |       | 2,921,104                        |       | 5,769,479  |       |
| Total                                                                |       | 13,961,109                       |       | 29,361,520 |       |

 

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**F.   TabularDisclosure of Contractual Obligations**

Ourcontractual obligations as at December 31, 2006, can be summarized asfollows:

| ** **                           | ** ** | **Year ended December 31, 2006** | ** ** |
|--------------------------------------|------------|------------------------------------------------------|------------|
| ** **                           | ** ** | **Less than  1 year**                      | ** ** | **1 to  3 years** | ** ** | **3 to  5 years** | ** ** | **After  5 years** | ** ** | **Total** | ** ** |
| ** **                           | ** ** | **(amounts in EUR thousands)**        | ** ** |
| Long-Term Debt  Obligations          |       |                                                 | —     |   |   | — |   | 62 |   | — |   | 62 |   |
| Capital (Finance)  Lease Obligations |       |                                                 | 24,499     |   |   | 43,659 |   | 37,811 |   | 73,501 |   | 179,470 |   |
| Operating Lease  Obligations         |       |                                                 | 50,705     |   |   | 119,134 |   | 49,191 |   | 126,145 |   | 345,175 |   |
| Purchase  Obligations                |       |                                                 | 121,840    |   |   | — |   | — |   | — |   | 121,840 |   |
| Total                                |       |                                                 | 197,044    |   |   | 162,793 |   | 87,064 |   | 199,646 |   | 646,547 |   |

 

**G.   Safe Harbor**

See “*Special NoteRegarding Forward-Looking Statements*” in the Introduction to thisAnnual Report.

**ITEM 6**                   DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES

**A.   Board ofDirectors and Senior Management**

The Chief Executive Officer is responsible for themanagement of the Bank, under the supervision of the Board of Directors. TheBoard of Directors is composed of fifteen members (two executive and thirteennon-executive members, of which at least two shall be independent, inaccordance with the provisions of Greek Law 3016/2002), including the ChiefExecutive Officer (who also serves as chairman) and the Deputy Chief ExecutiveOfficer. The members are elected by the shareholders at their general meetingfor a term of three years and may be re-elected.

While the Greek Government has no statutory right toappoint directors of the Bank, it has significant indirect influence on theBank through the 17.9% owned by pension funds (as at June 11, 2007) andtherefore may have the de facto ability to appoint certain or all directorsthrough the exercise of its voting rights. The chairman is elected by the Boardof Directors.

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The Board of Directorsmeets monthly, at a minimum, as required pursuant to Article 20 of GreekCodified Law 2190/1920 and the Bank’s Articles of Association, andextraordinarily when the Chairman considers necessary or at the request of anytwo directors. The quorum for a Board of Directors meeting is a majority of allBoard members. In addition, at least five directors must be physically presentat the meeting. Resolutions are adopted by majority vote of those present andthose who have submitted proxies. Each director has one vote but may alsorepresent one other director by written proxy. Following the Bank’s AnnualGeneral Meeting held on May 25, 2007, the Board of Directors is now asfollows:

| **Executive Members**                        |   |                                                                                       |
|----------------------------------------------|--------|--------------------------------------------------------------------------------------------|
| Efstratios-Georgios (Takis) A. Arapoglou     |   | Chairman—Chief Executive Officer                                                      |
| Ioannis G. Pechlivanidis                     |   | Vice Chairman—Deputy Chief Executive Officer                                          |
| **Non-Executive Members**                    |   |                                                                                       |
| Ioannis C. Yiannidis                         |   | Professor, University of Athens Law School                                                 |
| George Z. Lanaras                            |   | Shipowner                                                                                  |
| Achilleas D. Mylonopoulos                    |   | Employees’ representative                                                             |
| John P. Panagopoulos                         |   | Employees’ representative, Chairman, Federation of  Greek workers                     |
| Stefanos G. Pantzopoulos                     |   | Business consultant, former certified auditor                                              |
| **Independent Non-Executive  Members**       |   |                                                                                       |
| H.E. the Metropolitan of Ioannina Theoklitos |   |                                                                                       |
| Stefanos C. Vavalidis                        |   | Member of the Board of Directors, European Bank for  Reconstruction & Development |
| Dimitrios A. Daskalopoulos                   |   | Chairman and Managing Director, Delta S.A.,  Chairman, Federation of Greek Industrialists  |
| Nikolaos D. Efthymiou                        |   | Chairman, Association of Greek Shipowners                                                  |
| George I. Mergos                             |   | Professor, University of Athens, Governor of IKA  (Social Security Fund)                   |
| Constantinos D. Pilarinos                    |   | Economist, General Manager of Finances and Technical  Services, Church of Greece           |
| Ploutarchos K. Sakellaris                    |   | Professor, University of Athens, and Chairman,  Council of Economic Advisors               |
| Drakoulis K. Fountoukakos-Kyriakakos         |   | Chairman, Athens Chamber of Commerce and Industry                                          |

 

On August 30, 2006, Mr. Mylonopoulos,the employees’ representative, was elected as a non-executive member of theboard after the resignation of Mr. G. Athanasopoulos. On February 21,2007, Mr. Stavrou was elected as a non-executive board member in theposition of the deceased I. Vartholomeos. Furthermore, on March 15, 2007, Mr. Mergoswas elected as a non-executive board member in the position of Mr. Stavrou.

**Curricula vitae**

Below are the curriculavitae of the Chief Executive Officer and Deputy Chief Executive Officer, aswell as those of the principal managers running various businesses of the Bank.

**Chairman—ChiefExecutive Officer**

***Efstratios-Georgios(Takis) Arapoglou.***   Mr. Arapoglou,age 56, became Chairman and Chief Executive Officer of the Bank on March 19,2004. He is a graduate of the University of Athens School of Mathematics(1974), and holds a BSc in Naval Architecture from the University of Glasgow(1977) and an 

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MSc in Management from theUniversity of Brunel, London (1978). From 1978 to 1991 he worked for PaineWebber, Citicorp Investment Bank and Chase Investment Bank in Londonspecializing in debt and equity capital markets, derivatives and strategicconsulting for multinational companies, financial organizations and governmentsin North America, Scandinavia and Western Europe. In 1991, he became Presidentand Chief Executive Officer of the Ionian and Popular Bank of Greece Group. Hewas also appointed President of DIAS Interbanking Systems S.A., overseeing thecompletion of the project, which was delivered to the Greek banking system in1993. From 1994 to 1997, he served as General Manager of AmericanExpress-Greece and in 1997 became General Manager of Citibank/Citigroup-Greece.In 2000, he joined Citigroup in London as managing director and global banksindustry head, and at the beginning of 2004 became senior advisor on globalcorporate and investment banking.

He has served as a memberof the Supervisory Boards of Citibank-Sweden (1984/85) and Chase ManhattanBank-Finland (1989/90), the Boards of the Hellenic Bank Association (1991/93)and the Egyptian American Bank, an American Express subsidiary in Egypt(1994/96), and the Asset and Liability Committee of Citigroup Europe. Since2005, he has served as President of the Hellenic Banks Association.

**Vice Chairman andDeputy Chief Executive Officer**

***IoannisPechlivanidis.***   Mr. Pechlivanidis, age 54,was appointed Vice President and Deputy Chief Executive Officer of the Bank on April 22,2004. He holds a BA in Economics from Wesleyan University, USA, and an MSc inEconomics from the London School of Economics. He worked at The First NationalBank of Chicago from 1980 to 1989, subsequently becoming Loan Manager at theBank of America. In 1990, he joined Xiosbank, becoming General Manager in 1997.In 1999, he was appointed to the post of Deputy Managing Director of Piraeus Bank,going on to become Managing Director of Millennium bank in Athens. Since 2003,until taking up his new appointment, he held the post of first Vice-Chairman ofBank Post (a subsidiary of Eurobank in Romania).

In line with the new organizational structure of theBank, all the General Divisions, as well as the Marketing Division and theHistorical Archive Sub-Division, report directly to the Chief Executive Officerand Deputy Chief Executive Officer.

The business address ofthe Chief Executive Officer and Deputy Chief Executive Officer is 86 EolouStreet, 10232 Athens, Greece.

**Key Management**

***Dr. Ömer A.Aras,******age 53 is Vice Chairman of theBoard of Directors and CEO of Finansbank. Dr. Aras graduated from theAcademy of Economic and Commercial Sciences, Department of Economics, in 1975.He received an MBA in 1978 and a PhD in Business Administration in 1981 fromSyracuse University. From 1981 to 1984, he was a faculty member at the BusinessAdministration Department of Ohio State University and worked as a consultant.Between 1984 and 1987, he served as Credit Marketing Manager and CreditCommittee Member at Citibank and worked as the Head of Yapı KrediSecurities. Dr. Aras participated in the founding of Finansbank in 1987,where he served as Assistant General Manager for two years, as General Managerfor six years and as an Executive Board Member of Finansbank and Vice Chairmanof Fiba Holding from 1989 to 2006. Between 2003 and 2007, he also served as aBoard Member of the Turkish Industrialists’ Businessmen’s Association (TUSIAD).***

***Doucas J.Palaiologos,*********age 55, isPresident and Managing Director of Ethniki Hellenic General Insurance Company. Mr. Palaiologoswas trained in the United Kingdom from 1970 to 1972 by the Century InsuranceCo. Ltd. and Glanvil Enthoven Insurance Brokers, and since 1972 he has workedcontinuously for Hellenobretaniki Insurance Company. He has been Chairman andManaging Director of Hellenobretaniki, Vice President of Palmafone HellenicMobile Communications and President of Unifon Company. He has also been VicePresident of ICAP S.A., and has been a Board Member of Air Liquide 

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and IOBE. Mr. Palaiologoshas also been Chairman of the Association of Insurance Companies—Greece for theterms 1989-1990, 1990-1992, 1996-1998 and 2005-2007, and Secretary General from2003 to 2004. Currently, he is the Vice President of the Association ofInsurance Companies—Greece. Additionally, Mr. Palaiologos is the Chairmanof the Board of Directors for the following companies: Garanta InsuranceCompany (Romania), Ethniki Insurance Company (Cyprus) and Alpha InsuranceBrokers S.A. He holds a law degree from Athens Law School, an MBA from INSEADFountainebleau and he is a Fellow of the Chartered Insurance Institute.

***MarinosStratopoulos,*** age 43, is the President of theExecutive Board of Vojvodjanska since its acquisition by the Group in December 2006.He started his career in banking in 1993 in Xiosbank S.A. and then served inseveral managerial positions in Piraeus Bank S.A., Egnatia Bank Romania S.A.,Egnatia Banka S.A. and NBG S.A.- Serbia. In parallel to his banking career, heworked from 1993 to 2000 as a part time instructor in Accounting, Mathematicsof Finance, Business Administration and Business Finance at the AmericanCollege of Greece. He holds a Diploma of Deck Officer of the Merchant Marine, aBSc degree in Business Administration from the American College of Greece and aMSc degree from the University of Lancaster.

***Hector Zarca,***age 47, is Managing Director and Chief Executive Officer of the South AfricanBank of Athens Limited. He joined the Bank in November 2001 as ChiefFinancial Officer and was elected as a member of the Board of Directors in August 2002,after which he was appointed to his present position in December 2003. Hewas previously Group Financial Director of Sasfin Holdings Limited for fiveyears from August 1996, after seven years of service with the StandardBank of SA Limited, rising to the position of Chief Financial OfficerCommercial Banking. Mr. Zarca obtained BComm and BAcc degrees from theUniversity of the Witwatersrand and thereafter qualified as a CharteredAccountant in 1985.

***Stilian Vatev,***age 50, is the Chief Executive Officer and a member of the board of directorsof UBB and Interlease. He joined UBB in 1993 after serving in severalmanagerial positions at the Bulgarian National Bank. He is also a member of theboard of directors of the Bulgarian Central Depository, “Bankservice” AD,Interlease AD, Interlease Auto AD, and UBB Asset Management AD. Further, Mr. Vatevis the Chairman of the Board of Directors of UBB-AIG Life AD and UBB—AIGInsurance and Reinsurance AD, and is a member of the SEE Regional AdvisoryBoard of MasterCard—Europe. Mr. Vatev holds a Master’s Degree in Financeand Credit and has attended several banking related programs in the UnitedKingdom, Switzerland and Japan.

***Gligor Bishev,***age 49, is the First General Manager of Stopanska Banka. He joined StopanskaBanka in 2000 after serving as Deputy Governor of the Central Bank of FYROM. Mr. Bishevis an associate Professor at the Faculty of Economics, Prilep, and Professor atthe Post-Graduate studies at the Faculty of Economics, Skopje and at theInstitute of Economics, Skopje. He participated in the monetary reform in thecountry as well as in several research projects in banking, monetary policy,applied economics, and economic development. He holds a PhD in Economics andhas attended various seminars and training courses in Austria, the UK andSwitzerland.

***Michalis Kokkinos,***age 63, is the Managing Director and a member of the Board of Directors of NBG(Cyprus) Ltd since March 2007. He is also member of the Board of Directorsof Ethniki Insurance (Cyprus) Ltd and represents the Bank as member of theBoard of Directors of the Association of Cyprus Commercial Banks. He has 40years experience in the banking sector and has held several senior managerialpositions with the Group, as well as Aspis Bank, a Greek Bank located inAthens.

***Andreas Maragoudakis,*** age63, is the General Manager and member of the Board of Directors of BancaRomaneasca SA He joined Banca Romaneasca in November 2004, after servingfor one year as Risk Management Executive and Deputy Chief Executive Officer inBancpost in Romania. His previous working experience includes managerialpositions in various banks such as Alpha Bank SA, Piraeus Bank 

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and AmericanExpress Bank. Mr. Maragoudakis holds a Master of Arts in InternationalRelations from Ottawa University, Canada. He has attended a number of seminarsin Banking and Management.

**General Managers**

In July 2002,the Board of Directors appointed General Managers whose role is to superviseand coordinate the tasks of the various divisions or groups of divisions. TheGeneral Managers each report to the Chief Executive Officer and the DeputyChief Executive Officer and are responsible for:

·       supervisingand coordinating the activities of their respective units;

·       monitoringprogress with regard to the Bank’s business targets and goals;

·       approvingexpenditures, investments and financing within set limits; and

·       contributingto the Bank’s management regarding the design of the Bank’s strategy, settingtargets for the Bank and drawing up an annual budget for their respectiveDivisions.

There are currently elevenGeneral Managers:

***Core Business lines***

***AlexandrosTourkolias,*** age 60, is the General Manager ofCorporate and Investment Banking. He is a member of the Bank’s CreditCommittee, Chief Executive Officer and Vice President of Ethniki leasing, VicePresident of NBG Bancassurance, 1st Vice President of Ethniki Hellenic GeneralInsurance and on the Board of NBG Cyprus, UBB and NBGI.

***AlexandrosGeorgitsis,*** age 62, is the General Manager ofRetail Banking. He is Vice President of National Management &Organization. He is also on the Board of Ethniki Insurance, Diethniki MutualFunds and NBG Bancassurance.

***Petros Christodoulou,*** age46, is the General Manager of Treasury and Private Banking. He is the VicePresident of National Securities S.A. He is also a member of the InvestmentCommittee of Ethniki Hellenic General Insurance and the Foundation for Economicand Industrial Research.

***Operations and Support***

***AnthimosThomopoulos,*** age 46, is the Chief FinancialOfficer and Chief Operations Officer. He joined the Bank in 1998 as Group RiskDirector after serving as a Managing Partner of KPMG Greece. He is Chairman ofthe Board of Ektenepol, Protypos, Ethnoplan, and Ethnodata, and Vice Chairmanof Astir Palace Vouliagmeni. He is on the Board of National Management &Organization, SABA, UBB, Finansbank SA, Vojvodjanska, Siemens Televiomichaniki,the Hellenic Deposit Guarantee Fund and ETAT.

***Demetrios Lefakis,***age 46, is the Chief Risk Officer. Before joining NBG, he worked for Citigroupin various senior positions in the United States, Latin America and Asia. He ison the Board of Finansbank and P&K Securities SA.

***Michael Oratis,***age 50, is the General Manager of Risk Management. Before joining the Bank in1999, he worked for ABN AMRO Bank, Mytilinaios SA and Citibank as CountryTreasurer. He is a Board Member of SABA.

***Agis Leopoulos,***age 39, is the Chief of International. He is also the Chairman of Interleaseand South African Bank of Athens, and a board member of NBG Cyprus, StopanskaBanka, UBB, Banca Romaneasca, Vojvodjanska and National Securities.

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***Petros Economou,***age 70, is the General Counsel. He joined the Bank in September 2005 afterserving as Manager of the Legal Division of Ionian and Popular Bank andAmerican Express in Greece. He is Vice Chairman of Ethniki Kefalaiou SA andVice Chairman of Diethniki Mutual Fund Management.

***Stavros Gatopoulos,***age 63, is the Head of Human Resources and Group Internal Communications. Hejoined the Bank in September 2005 after serving as Head of the HumanResources Division of Citibank Athens. He is the Chairman of NBG TrainingCenter.

***Paul Mylonas,***age 48, is the Chief Economist, Chief Strategist and Head of InvestorRelations. Before joining the Bank, he worked at the OECD and the IMF. He is amember of the Board of the Foundation for Economic and Industrial Research andthe Hellenic Center for Investment.

***George Paschas,*** age 51,is the Chief Internal Auditor.

**Senior ExecutiveCommittee**

The Senior Executive Committee was established byManagement’s Act No. 1311/28.09.2006 and is the supreme body of the Bankwith approving authority. It may decide, under the authority vested in it bythe Bank’s Board of Directors on issues regarding the implementation of theBank’s business plan, which do not fall under the authority of other committeesor Bank’s Executives.

The following aremembers of the Senior Executive Committee:

**·****      *Takis Arapoglou (Chairman)***

**·****      *Ioannis Pechlivanidis***

**·****      *Alexandros Georgitsis***

**·****      *Anthimos Thomopoulos***

**·****      *Alexandros Tourkolias***

**·****      *Demetrios Lefakis***

**B.   Compensation**

In 2006, total remuneration received from Groupcompanies to the members of the Bank’s Board of Directors and the Bank’sGeneral Managers amounted to €8.2 million.

For more information on related party transactions,see Note 32 of the Financial Statements included elsewhere in this report.

Total remuneration comprises salaries, fees, bonusesand other short-term benefits, post employmentand other long-term benefits, and termination benefits.

The above persons were also granted 810,220 options,respectively, in November 2006, under the stock option program approved by theGeneral Meeting of Shareholders on June 22, 2005. For more information onthe Bank’s stock option program see Item 6.E *“ShareOwnership”.*

According to the Bank’s management, apart from theabove amounts, the Bank’s directors and general managers are not entitled toany further amounts from the Bank or our subsidiaries.

We do not set aside or accrue amounts to providepension, retirement or similar benefits for the Bank’s Board of Directors ormembers of management apart from their participation in social securityschemes.

In 2006, employeesreceived a cash bonus related to an assessment of their performance.

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**C.   BoardPractices**

We do not have directors’ service contracts or otheragreements that provide for benefits on termination of employment.

Thefollowing list summarizes the terms of office of the members of the Board ofDirectors of the National Bank of Greece.
| Name                                          | ** ** | ** **             | ** ** | **Start of Term** | ** ** | **End of Term** |
|-----------------------------------------------|------------|------------------------|------------|-----------------------------|------------|---------------------------|
| Efstratios-Georgios  (Takis) Arapoglou        |       | March 17, 2004    |       | 2010                        |
| Ioannis Pechlivanidis                         |       | April 22, 2004    |       | 2010                        |
| H.E. The Metropolitan of  Ioannina Theoklitos |       | June 28, 1994     |       | 2010                        |
| Stefanos Vavalidis                            |       | April 22, 2004    |       | 2010                        |
| Ioannis Yiannidis                             |       | April 22, 2004    |       | 2010                        |
| Dimitrios Daskalopoulos                       |       | April 24, 2002    |       | 2010                        |
| Nikolaos Efthymiou                            |       | April 22, 2004    |       | 2010                        |
| Georgios Lanaras                              |       | December 23, 1993 |       | 2010                        |
| Achilleas Mylonopoulos                        |       | August 30, 2006   |       | 2010                        |
| Ioannis Panagopoulos                          |       | June 28, 1994     |       | 2010                        |
| Stefanos Pantzopoulos                         |       | April 22, 2004    |       | 2010                        |
| George Mergos                                 |       | March 15, 2007    |       | 2010                        |
| Constantinos Pilarinos                        |       | April 22, 2004    |       | 2010                        |
| Ploutarchos Sakellaris                        |       | April 22, 2004    |       | 2010                        |
| Drakoulis Fountoukakos-Kyriakakos             |       | April 22, 2004    |       | 2010                        |

 

The Bank’s corporate governance practices closelyfollow the requirements imposed by the laws of Greece. The most significantdifferences between the Bank’s corporate governance practices, including theprovisions of the Sarbanes-Oxley Act, and those followed by US based companiesunder the New York Stock Exchange listing standards have been posted on theBank’s website at the following address: http://*www.nbg.gr*.

The Bank adopted a corporate governance improvementplan in 2005, focusing on ten key objectives. The Bank’s action in corporategovernance is part of a broader effort of the Bank’s new management and boardto improve long-term shareholder value.

The 10 keycorporate governance objectives adopted and achieved are:

·       toincrease the number of designated independent members of the Bank’s Board;

·       toupgrade the role of the Board in the development of our long-term strategy andrisk philosophy;

·       toestablish a Corporate Governance and Nominations Committee of the Board whosemain task is to review and upgrade the Bank’s current set of corporategovernance rules.

·       toestablish a Human Resources Committee whose first task is to review managementand personnel values and incentives.

·       tostrengthen the Audit Committee’s planning and review capacity, in view of therequirements of the Sarbanes-Oxley Act;

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·       toadopt Corporate Governance Guidelines and a Board Charter;

·       tostrengthen the Bank’s compliance and risk functions;

·       tostrengthen the Board’s support and corporate secretary functions;

·       toimprove communication and consultation with shareholders on corporategovernance issues; and

·       to develop systems for theregular performance review of the Board and senior executive management.

**Board Committees**

***Audit Committee***

The Audit Committee of the Bank was established inMay 1999, following the Act of the Governor of the Bank of Greece2438/1998, and at present consists of five members. The Bank’s Board ofDirectors appoints the members of the Audit Committee for a three-year term.The Board of Directors of the Bank is responsible for appointing and replacingany member of the Audit Committee.

The purpose of theAudit Committee is:

·       tomonitor the financial statements of the Company;

·       tomake recommendations to the Board in relation to the appointment of theexternal auditor and to approve the remuneration and terms of engagement of theexternal auditor following appointment by the shareholders in general meeting;

·       tomonitor and review the external auditor’s independence, objectivity andeffectiveness;

·       todevelop and implement policy on the engagement of the external auditor tosupply non-audit services;

·       tomonitor and review the effectiveness of the company’s internal audit function;and

·       toreview the Company’s internal control and regulatory compliance systems.

All Audit Committee members fulfill the independencecriteria for the purposes of US legislation.

The following list sets forth the members of the Bank’sAudit Committee, as at June 11, 2007:

Georgios Lanaras(Chairman)Stefanos Pantzopoulos (Audit Committee Financial Expert)Ploutarchos SakellarisDrakoulis Fountoukakos-KyriakakosGeorge Mergos

***Human Resources and Remuneration Committee***

The purpose of the Human Resources and RemunerationCommittee (“HRR Committee”) is to assist the Board of Directors in fulfillingits responsibilities with regards to attracting, retaining, developing andmotivating executives and employees of the Bank, the development of a cultureof fairly evaluating effort and rewarding performance, the development andmaintenance of a coherent system of values and incentives for human resourcedevelopment throughout the Bank. In 2006 the HRR Committee has adopted itsCharter, reviewed current HR policies, developed guidelines for the evaluationof senior management, made proposals to the Board on performance relatedremuneration for the Chief Executive Officer and Deputy Chief Executive Officerand made proposals to the Board on service contracts for the Chief ExecutiveOfficer and Deputy Chief Executive Officer. All the HRR Committee membersfulfill the 

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independence criteria forthe purposes of applicable Greek law and were determined to be independent bythe General Meeting of Shareholders in 2007.

The following list sets forth the current members ofthe Bank’s HRR Committee:

Nikolaos Efthymiou(Chairman)Dimitrios DaskalopoulosDrakoulis Fountoukakos-Kyriakakos

***Corporate Governance and Nominations Committee***

The purpose of the Corporate Governance andNominations Committee (the “CGN Committee”) is to assist the Board of Directorsin ensuring that its composition, structure, policies and processes meet allrelevant legal and regulatory requirements, strive to achieve global corporategovernance best practice standards and facilitate the Board and management’stask to increase the long-term value of the Bank.

The following list sets forth the current members ofthe Corporate Governance and Nominations Committee:

Stefanos Vavalidis (Chairman)Ioannis YiannidisPloutarchos Sakellaris

Mr. Vavalidis and Mr. Sakellaris fulfill theindependence requirements of applicable Greek law and have been determined tobe independent by the General Meeting of Shareholders in May 2007.

In 2005, the Board of Directors adopted the corporategovernance framework of the Bank, including Corporate Governance Guidelines,with the assistance of the CGN Committee.

In July 2006,pursuant to the Bank of Greece Governor’s Act 2577 of March 9, 2006, theBank established the Risk Management Committee. The purpose of the RiskManagement Committee is 

·       todevelop NBG’s risk assumption and capital management strategy in line with thebusiness objectives;

·       tocontrol the function of the Group Risk Management Division;

·       toensure the development and ongoing effectiveness of NBG’s internal riskmanagement system;

·       todetermine the principles governing NBG’s risk management function;

·       tobe regularly apprised of and monitor the overall risk profile of the Bank andthe Group and provide the Risk Management Division with guidance;

·       toensure that our Board of Directors is adequately apprised of all mattersrelating to NBG’s risk assumption strategy, risk bearing capacity and riskprofile in the exercise of its supervisory and strategy functions.

The following list sets forth the current members ofthe Bank’s Risk Management Committee:

Takis Arapoglou (Chairman)Ioannis Pechlivanidis (member)Stefanos Vavalidis (member)

**D.**   Employees

TheBank employed a total of 12,866 full-time equivalent staff in Greece as at December 31,2006, compared to 13,669 as at December 31, 2005. Additionally, the Group’ssubsidiaries in Greece and abroad employed approximately 18,065 employees, asat December 31, 2006 compared to 8,157 as at 

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December 31, 2005. The fluctuation relates to theacquisition of Finansbank and Vojvodjanska in 2006. We also employapproximately 500 temporary employees in the summer months in our hotelproperties. The table below sets forth the principal concentrations of ouremployees by geographic location, as at December 31, 2006:

| **Country**      | ** ** | ** ** | ** ** | **Average number of  Group Employees  (during 2006)** | ** ** |
|------------------|------------|------------|------------|---------------------------------------------------------------------------|------------|
| Greece           |       |       | 15,885     |                                                                      |       |
| Bulgaria         |       |       | 2,155      |                                                                      |       |
| FYROM            |       |       | 1,050      |                                                                      |       |
| Romania          |       |       | 979        |                                                                      |       |
| United States(1) |       |       | 3          |                                                                      |       |
| Cyprus           |       |       | 279        |                                                                      |       |
| Serbia           |       |       | 586        |                                                                      |       |
| South Africa     |       |       | 175        |                                                                      |       |
| United Kingdom   |       |       | 100        |                                                                      |       |
| Albania          |       |       | 131        |                                                                      |       |
| Egypt            |       |       | 37         |                                                                      |       |
| Turkey           |       |       | 2,807      |                                                                      |       |
| **Total**        | ** ** | ** ** | **24,187** |                                                                      |       |

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(1)             Discontinuedoperations.

The average number of our full-time equivalentemployees, on a Group-wide basis, during the financial years ended December 31,2004, 2005 and 2006 was 21,415, 21,718 and 24,187 respectively. In addition thenumber of employees employed in our representative offices in Australia and Swedenis 7.

Thetable below sets forth the main categories of activity in which our employeeswere engaged, domestically and internationally, during 2006:

| **Division**                   | ** ** | ** ** | ** ** | **Average number of  Group Employees  (during 2006)** | ** ** |
|--------------------------------|------------|------------|------------|---------------------------------------------------------------------------|------------|
| Commercial and  retail banking |       |       | 21,659     |                                                                      |       |
| Insurance                      |       |       | 1,444      |                                                                      |       |
| Investment  banking            |       |       | 183        |                                                                      |       |
| Asset management               |       |       | 96         |                                                                      |       |
| Other Group  companies         |       |       | 805        |                                                                      |       |
| **Total**                      | ** ** | ** ** | **24,187** |                                                                      |       |

 

Almost all of the Bank’s staff (including ManagingOfficers) are members of one of the various unions operating within the bankingsector. A high level of union membership is common in most Greek industries.Each union that represents the Bank’s employees is affiliated with a larger,general union of employees in the banking sector known as the Union of GreekBank Employees (“OTOE”). OTOE, in turn, sits under the umbrella of amulti-industry union, the General Confederation of Greek Workers. Accordingly,almost all of our Greek employees, including those not employed in the bankingsector, are ultimately affiliated with the General Confederation of GreekWorkers. Collective bargaining arrangements are normally made betweenrepresentatives of the Greek banks and OTOE based on the Government’s inflationestimates, and then implemented by each bank (including the Bank) in agreement withits own unions. OTOE and the Association of Greek Banks agreed to a two-yearagreement (for years 2006-2007) allowing a 5.24% increase in 2006 and5.32% increase in 2007. In addition, the union of Bank employees has agreed ona two-year agreement with the Bank’s management allowing an increase in 

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certain types of benefitsamounting to approximately 2% cumulatively of the average salary over twoyears. In 2006, the Bank declared its intention not to oppose a collectiveagreement with OTOE in the event a sufficient number of banks so desire. Theunion of the Bank’s employees and the Bank’s management have signed anagreement for the years 2005 and 2006 which provides for salary increases of anaverage of 1% per year.

Like other Greek banks, the Bank has experienced anumber of strikes and other industrial actions in the past. From 1992 through May 2005,there had been no stoppages or other industrial actions involving ouremployees other than a limited number of one-or two-day country-wide generalstrikes that occurred in Greece. On June 7, 2005, OTOE commenced strikesover proposed pension reform legislation. The strikes ended on June 30,when the pension reform proposals were passed into law by the Greek Government.There are still one or two day strikes occurring sporadically over this issueand other issues.

As part of our strategy of rationalizing activitiesand improving efficiencies, we have implemented and intend to continue aprogram to reduce our overall number of employees. In 2005, NBG Cyprus implementedan early retirement scheme with respect to 53 employees. These employeesreceived payment in 2005 and left in 2006. Additional operating expenses forthese retirees amounted to €15 million in 2005. During2006, with the aim to streamline their operations and further reduce costs,three Group companies implemented voluntary retirement schemes: EH Insurance,NMOC and Astir Palace Vouliagmenis. The number of employees participating inthe schemes was 72, 84 and 189 respectively and additional operating expensesfor these schemes were €15.0million, €15.6 million and €8.0million respectively. All three schemes have been completed, and the employeesparticipating have already left the respective Group companies.

Our ability toreduce staff is limited, however, by:

·       Greeklabor laws;

·       ourcompany collective agreement and current employment regulation; and

·       ourdesire to maintain good labor relations with our employees.

The Bank’s policy is to continue implementing ouron-going reduction strategy by a program of limited hiring, voluntaryretirement schemes and natural attrition. As a result of this strategy, thetotal number of the Bank’s staff fell from 13,669 in 2005 to13,557 in 2006. Weintend to continue to redeploy personnel to optimize the operations of the Bankand to rely on strict hiring controls and natural attrition to reduce the totalnumber of employees.

Under Greek law, all employees must contribute towelfare schemes for the provision of pensions, healthcare and childcare. Foremployed persons, these programs replace the pensions and welfare schemesoperated by Greece. Our employees participate in independent welfare schemes orin schemes operated by the Greek Government. Each such scheme maintains apension fund which is managed by a board of directors appointed by thecontributing employees and the managers.

As far as the Main Pension Fund is concerned, Law2084/1992 provides that certain Greek companies, including the Bank, are notliable to make up any shortfall in the fund beyond a specified figure which, inthe case of the Bank’s employees’ Main Pension Fund, would be an amount of €25.2million per year. In recent years, the Bank’s employees’ Main Pension Fund hasnot recorded any shortfall.

In 2002, the Greek Government passed legislation underwhich it provided that the plans that operate in the form of public-lawentities, including the Bank’s employees’ Main Pension Fund, would merge withthe main state sponsored Social Security Fund (“IKA”) by 2008. In 2005 and2006, the Greek Government passed further legislation (Law 3371/2005, asamended) permitting certain bank employee main pension schemes to merge intoIKA earlier than in 2008, and permitting other bank employee auxiliary pensionschemes to merge into the new Insurance Fund of Bank Employees (“ETAT”). Thenew law provides that, 

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in connection with themerger of auxiliary schemes into ETAT, the relevant employer shall make apayment to ETAT solely in an amount to be determined by an independent economicstudy commissioned by the Ministry of Finance pursuant to this legislation.

In April 2006, theBank applied under Law 3371/2005, as amended, to merge its Auxiliary PensionFund into ETAT, and to merge the Main Pension Fund into IKA earlier than 2008.It is possible that we may make a significant cash payment to ETAT inconnection with the merger of the Bank’s employees pension schemes into ETAT.For risks associated with the new pension reform legislation, seeItem 3.D, *“Risk Factors—We could beexposed to significant future pension and post-retirement benefit liabilities*”.

**E.**   ShareOwnership

On June 22, 2005, at a General Meeting ofShareholders, a stock option program (“Program A”) was approved for theexecutive members of the Board of Directors, management and staff of the Group.Program A shall last for five years and expires in 2010. The Bank’s Board ofDirectors may decide to grant the options one-off or in parts at any time atits discretion. The maximum number of new ordinary shares to issue underProgram A shall be 3.5 million. The strike price shall be within the range of €5to 70% of the average price thereof within the time period from January 1of the year the options are granted until the date they can be exercised.

At the repeat General Meeting of Shareholders on June 1,2006, a new Group-wide stock option program (“Program B”) was approved for theBank’s executive members of the Board of Directors, management and staff of theGroup. Program B provided that a maximum number of 3.5 million new ordinaryshares should be issued at a price floating within a range of a minimum pricewhich is the nominal value of €5 per share to a maximumprice which is 70% of the average market price thereof within the time periodfrom the date following the date of the General Meeting (i.e. June 1,2006) until the date the options can be exercised for the first time. Program Bexpires in 2011. No options have yet been issued under this program.

On June 28, 2007 the repeat General Meeting ofthe Shareholders of the Bank approved a new Group-wide stock option plan (“Program C”).The new Program shall last 8 years and expires in 2015. The stock optionmust be granted up until 2010. The maximum number of new ordinary shares toissue under the Program shall be 12 million. The maximum number of optionsthat can be granted per year cannot exceed 1% of the total number of sharesoutstanding. The strike price shall be within the range of EUR 5 to 85% ofthe average price thereof within the time period from 1 January of theyear the options are granted until the October 31, of the same year.

On November 29, 2006, the Board of Directorsapproved the issue of 2,992,620 share options under Program A. The exerciseprice was set at €23.8 per share. The fairvalue of the granted share options amounted to €32.6 million. The vestingconditions are as follows:

15% of the options: None, vest immediately

35% of the options: after 1 year

50% of the options: after 2 years

The vested options are exercisable between December 6and December 15 for 2006 and between December 1 and December 10for each subsequent year until 2010. After that date the unexercised optionsare cancelled. The options are forfeited if the employee leaves the Groupbefore the options vest. 

Between December 6 and December 15, 2006,310,043 out of a maximum 448,893 vested share options, with a fair value of €3.4million, were exercised. The balance of 138,850 vested share options had notbeen exercised by December 31, 2006. The total cash received from theexercised share options 

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amounted to €7,379,of which €1,550increased common stock while the remaining increase additional paid-in capital.

At the Annual General Meeting of Shareholders on April 27,2006, a share buy-back program in accordance with article 16 par. 5 et seq. ofLaw 2190/1920 was approved, allowing the buy-back of shares up to 10% of theaggregate amount of the shares of the Bank with a minimum purchase price of €5and a maximum of €60per share for the time period between May 5, 2006 and April 27, 2007.

At the Annual General Meeting of Shareholders on May 25,2007 a share buy-back program in accordance with article 16 par. 5 et seq. ofLaw 2190/1920 was approved, allowing the buy-back of shares up to 10% of theaggregate amount of the shares of the Bank with a minimum purchase price of €5and a maximum of €60per share for the time period between June 1, 2007 and May 24, 2008.The Bank intends to purchase up to 20,000,000 own shares with a minimumpurchase price of €5and a maximum of €60per share, for the time between June 11, 2007 and September 30, 2007.

The Annual General Meeting of Shareholders on May 25,2007 approved the distribution to the Bank’s staff of bonus shares to derivefrom the Bank’s share capital increase by €1.75million (through the issue of 350,000 new shares of a par value of €5each) through capitalization of profits.

Shareownership as of June 12, 2007 (the most recent practicable date) of themembers of the Bank’s Board of Directors, the Bank’s General Managers and keymanagement of subsidiaries, as listed in section A “*Board ofDirectors and Senior Management*”, as well as stock options grantedto those persons under stock option Program A are as follows:

| ** **                                    | ** ** | **Share**        | ** ** | **Stock options** | ** ** | **Stock options** | ** ** |
|-----------------------------------------------|------------|------------------|------------|------------------------|------------|------------------------|------------|
| ** **                                    | ** ** | **ownership(1)** | ** ** | **granted**            | ** ** | **excercised**         | ** ** |
| Efstratios-Georgios  (Takis) Arapoglou        |       |             | —     |                   |       |                   | 110,000    |   |   |   | — |   |   |
| Ioannis  Pechlivanides                        |       |             | 19,823     |                   |       |                   | 95,000     |   |   |   | 14,250 |   |   |
| H.E. the  Metropolitan of Ioannina Theoklitos |       |             | 2,843      |                   |       |                   | 4,000      |   |   |   | 600 |   |   |
| Ioannis Yiannidis                             |       |             | 1,706      |                   |       |                   | —     |   |   |   | — |   |   |
| Nikolaos  Efthymiou                           |       |             | 7,402      |                   |       |                   | —     |   |   |   | — |   |   |
| Achilleas  Mylonopoulos                       |       |             | 1,083      |                   |       |                   | —     |   |   |   | — |   |   |
| Ioannis  Panagopoulos                         |       |             | 713        |                   |       |                   | —     |   |   |   | — |   |   |
| Stefanos  Pantzopoulos                        |       |             | 10,700     |                   |       |                   | —     |   |   |   | — |   |   |
| Drakoulis  Fountoukakos-Kyriakakos            |       |             | 473        |                   |       |                   | —     |   |   |   | — |   |   |
| Alexandros Tourkolias                         |       |             | 4,405      |                   |       |                   | 74,100     |   |   |   | 11,115 |   |   |
| Alexandros  Georgitsis                        |       |             | —     |                   |       |                   | 74,100     |   |   |   | — |   |   |
| Petros  Christodoulou                         |       |             | 5,000      |                   |       |                   | 61,720     |   |   |   | 9,258 |   |   |
| Anthimos  Thomopoulos                         |       |             | 14,945     |                   |       |                   | 86,500     |   |   |   | 12,975 |   |   |
| Demetrios Lefakis                             |       |             | —     |                   |       |                   | 57,600     |   |   |   | — |   |   |
| Michael Oratis                                |       |             | 6,180      |                   |       |                   | 41,200     |   |   |   | 6,180 |   |   |
| Agis Leopoulos                                |       |             | 7,681      |                   |       |                   | 41,200     |   |   |   | 6,180 |   |   |
| Petros Economou                               |       |             | 4,639      |                   |       |                   | 41,200     |   |   |   | 4,000 |   |   |
| Stavros  Gatopoulos                           |       |             | 1,880      |                   |       |                   | 41,200     |   |   |   | — |   |   |
| Paul Mylonas                                  |       |             | —     |                   |       |                   | 41,200     |   |   |   | — |   |   |

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| George Pashas         |   |   | 2,500  |   |   |   | 41,200 |   |   |   | 6,180  |   |   |
|-----------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Omer A. Aras          |   |   | — |   |   |   | 30,700 |   |   |   | — |   |   |
| Doucas  Palaiologos   |   |   | 6,000  |   |   |   | 40,000 |   |   |   | 6,000  |   |   |
| Marinos  Stratopoulos |   |   | — |   |   |   | 20,000 |   |   |   | 3,000  |   |   |
| Hector Zarca          |   |   | — |   |   |   | 10,000 |   |   |   | — |   |   |
| Stilian Vatev         |   |   | — |   |   |   | 25,000 |   |   |   | 3,750  |   |   |
| Gligor Bishev         |   |   | — |   |   |   | 10,000 |   |   |   | 1,500  |   |   |
| Andreas  Maragoudakis |   |   | — |   |   |   | 20,000 |   |   |   | — |   |   |

 

**ITEM 7**                   MAJORSHAREHOLDERS AND RELATED PARTY TRANSACTIONS

**A.**   MajorShareholders

As of June 11,2007, the Bank’s outstanding issued share capital consisted of 475,287,219Ordinary Shares. No single shareholder beneficially owns more than 3% of theBank’s shares. The following table sets forth certain information regarding theBank’s shareholders.

| ** **                                     | ** ** | **As at June 11, 2007** | ** ** |
|------------------------------------------------|------------|---------------------------------------------|------------|
| ** **                                     | ** ** | **Number  of shares**                  | ** ** | **Percentage  holding** | ** ** |
| Legal Entities  and Individuals Outside Greece |       | 244,210,240                                 |       |   | 51.4 | % |   |
| Domestic Private  Investors                    |       | 88,604,151                                  |       |   | 18.6 | % |   |
| Pension Funds and  Other Public Sector         |       | 84,926,241                                  |       |   | 17.9 | % |   |
| Other Domestic  Legal Entities                 |       | 56,878,883                                  |       |   | 12.0 | % |   |
| NBG Own Stock                                  |       | 667,704                                     |       |   | 0.1 | % |   |
| **Total**                                      |       | 475,287,219                                 |       |   | 100.0 | % |   |

 

The Bank’s major shareholders do not possess differentvoting rights from the Bank’s other shareholders. Other than the GreekGovernment through certain state-related entities, the Bank does not know ofany other persons who, directly or indirectly, jointly or individually,exercise or could exercise control over the Bank.

Based on information known to or ascertainable by theBank, there were 9,111 record holders of the Bank’s shares and 38 recordholders of the Bank’s ADRs in the United States on June 14, 2007, and theportion of the Bank’s shares held in the United States as a percentage of totalshares outstanding was approximately 1.8% as at that date. There were 9,149total holders (registered and beneficial owners) of the Bank’s ADRs in theUnited States as at May 10, 2007 (the most recent practicable date forthis information).

Although, subject tocertain exceptions, Greek law does not allow an entity to acquire and own itsown shares, subsidiaries in Greece were allowed to own and trade in the marketshares of their parent company until March 16, 2001, and may continue toown shares acquired prior to such date. Treasury stock in our financialstatements represents shares of the Bank owned by the Bank or our subsidiaries.

**State Interests**

The Greek Government no longer holds directly any ofthe Bank’s shares. However, certain state-related entities, primarily pensionfunds (most of whose boards of directors are appointed by the Greek 

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Government) still controlshares representing approximately 17.9% of the issued share capital of the Bankas at June 11, 2007.

See Item 10.J, *“Additional Information—Relationship with the Hellenic Republic”*.

**B.**   RelatedParty Transactions

There are no loans or transactionsbetween the Bank and any related parties other than those made in the ordinarycourse of business, on substantially the same terms as those prevailing at thetime for comparable transactions with other persons and not involving more thanthe normal risk of collectibility or presenting other unfavorable features. SeeNote 32 to the U.S. GAAP Financial Statements for details of certainordinary course transactions between the Bank and related parties.

**C.**   Interestsof Experts and Counsel

Not applicable.

**ITEM 8**                   FINANCIALINFORMATION

**A.   ConsolidatedStatements and Other Financial Information**

1.                 Please refer toItem 18 for the consolidated financial statements of NBG.

2.                 Please refer toItem 18 for the comparative financial statements of NBG.

3.                 Please refer toItem 18 for the Report of Independent Registered Certified Public Accountantsgiven by Deloitte Hadjipavlou Sofianos & Cambanis S.A.

4.                 The last year ofaudited financial statements is not older than 15 months.

5.                 Not applicable.

6.                 Income fromcontinuing operations derived from non-Greek sources was €1,407.6million and represents 26.7% of our total revenues.

7.                 The Bank is adefendant in certain claims and legal actions arising in the ordinary course ofbusiness. In the opinion of management, after consultation with legal counsel,the ultimate disposition of these matters has not had during the current orpreceding financial year, and is not expected to have, a material adverseeffect on the consolidated financial condition of the Bank. There are nomaterial proceedings pending in which any director of the Bank, any member ofits senior management, or any of the Bank’s affiliates is either a partyadverse to the Bank or any of its subsidiaries or has a material interestadverse to the Bank or any of its subsidiaries.

8.                 UnderGreek law, the Bank can pay dividends out of:

·       distributableprofits for the year, comprising profits net of tax, losses carried forward,and prior years’ tax audit differences; and

·       retainedearnings, special reserves or ordinary reserves to the extent they exceed theamount required to be maintained by law.

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Before payingdividends, the Bank, in accordance with our Articles of Association andGreek corporate law (codified law 2190/20) must allocate between 5% and20% of our net profits to an ordinary reserve until this reserve equals atleast one-half of the Bank’s share capital. Under the Bank’s Articles ofAssociation and Greek corporate law, and subject to the limitations describedabove and below, each year the Bank is required to pay a minimum dividend outof the net profits for the year, if any, equal to the greater of:

·       6%of the Bank’s share capital; or

·       35%of the net profits of the Bank on a standalone basis for the year (after thededuction of statutory reserves and any profits resulting from the sale ofequity participations that represent at least 20% of the paid-up share capitalof a subsidiary company in which the Bank has held an equity participation forat least ten years). According to a recent law, unrealized profits from markingsecurities to market will be deducted from net profits in order to determinethe minimum dividend.

Calculation of all such amounts is based on thefinancial statements of the Bank prepared in accordance with IFRS.

Any distribution of distributable profits in excess ofthe required dividend payments described above must be approved by a “GeneralMeeting of Shareholders” (the Bank’s annual general meeting, which is referredto in this Offering Circular as the “General Meeting”), with ordinary quorumand majority voting requirements, following a proposal of the Bank’s board ofdirectors (which we refer to in this Offering Circular as the “Board ofDirectors” or the “Board”). No distribution can be effected if, on the closingdate of the last financial year, the total shareholders’ equity is, or willbecome after that distribution, lower than the total of the Bank’s sharecapital and the reserves, the distribution of which is prohibited by Greek lawor the Bank’s Articles of Association. In any event, dividends may not exceednet profits for the last financial year, as increased by distributablereserves, the distribution of which is permitted as resolved at the GeneralMeeting, and profits carried forward from previous years, and as decreased byany loss in the previous financial year and any compulsory reserves required bylaw or the Bank’s Articles of Association.

In the event that the mandatory minimum dividendpayments equal 35% of the net profits for the year (after the deduction ofstatutory reserves and any profits resulting from the sale of equity participationsthat represent at least 20% of the paid-up share capital of a subsidiarycompany in which the Bank has held an equity participation for at least tenyears), the Bank’s shareholders have twooptions. According to Greek Compulsory Law 148/1967, as amended by Greek Law2753/1999, a majority representing at least 65% of the paid-up share capitalmay vote to pay the lower dividend of 6% of the Bank’s share capital. Theremaining undistributed dividend must then be transferred to a special reservewhich must, within four years following the General Meeting, be distributed inthe form of a share dividend. Furthermore, a majority representing 70% of theBank’s paid-up capital may vote to waive this share dividend. Once approved,dividends must be paid to shareholders within two months of the date on whichthe Bank’s annual financial statements are approved. Normally, dividends aredeclared and paid in the year subsequent to the reporting period. Dividends areforfeited to the Greek Government if they are not claimed by shareholderswithin five years following December 31 of the year in which they weredeclared. See Item 3.A, “*Selected FinancialData—Dividends”* for information with respect to the actual dividendspaid by the Bank for the past five financial years.

The Bank currently expectsto continue to pay dividends in accordance with the formula described above,subject to the financial condition of the Bank, the funding needs of ourinvestment program and other relevant considerations.

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**B.**   SignificantChanges

For a discussion ofsignificant changes that have occurred since December 31, 2006, the dateof the last audited financial statements included in this Annual Report, pleasesee Note 42 to the U.S. GAAP Financial Statements which describes postbalance sheet events.

**ITEM 9**                   THEOFFER AND LISTING

**A.   Offer andListing Details**

Theannual high and low market prices of the Bank’s shares on the ATHEX for thefive most recent financial years are shown below, expressed in euro.

| **Year** | ** ** | ** **                   | ** ** | **High (date)**       | ** ** | **Low (date)** | ** ** |
|----------|------------|------------------------------|------------|----------------------------|------------|---------------------|------------|
| 2002     |       | 17.75  (on January 29)  |       | 8.67  (on October 9)  |       |
| 2003     |       | 15.43  (on August 26)   |       | 5.80  (on April 1)    |       |
| 2004     |       | 22.80  (on December 30) |       | 14.15  (on March 24)  |       |
| 2005     |       | 34.66  (on December 19) |       | 22.63  (on January 3) |       |
| 2006     |       | 41.57 (on  February 27) |       | 25.88 (on June 6)     |       |

 

The Bank’s share price for 2002, 2003, 2004, 2005 and2006 is adjusted to reflect the issuance of new shares in connection with theshare-for-share merger with the National Investment Company (adjustmenteffective as at December 30, 2005), the share-for-share merger withNational Real Estate (adjustment effective as at April 10, 2006), therights issue of four new shares for every ten shares at a price of €22.11 pernew share (adjustment effective as at June 14, 2006) and the share capitalincrease due to the exercise of stock options (adjustment effective as atJanuary 25, 2007).

Thequarterly high and low market prices of the Bank’s shares on the ATHEX for thetwo most recent financial years are shown below, expressed in euro.

| **Quarter** | ** ** | ** **                    | ** ** | **High (date)**            | ** ** | **Low (date)** |
|-------------|------------|-------------------------------|------------|----------------------------|------------|----------------|
| Q1 2005     |       | 27.94 (on March 15)      |       | 22.63 (on  January 3) |
| Q2 2005     |       | 27.64 (on June 10)       |       | 23.67 (on May 4)      |
| Q3 2005     |       | 31.19 (on  September 30) |       | 26.73 (on July 7)     |
| Q4 2005     |       | 34.66 (on December 19)   |       | 28.49 (on October 19) |

 

| **Quarter** | ** ** | ** **                    | ** ** | **High (date)**            | ** ** | **Low (date)** |
|-------------|------------|-------------------------------|------------|----------------------------|------------|----------------|
| Q1 2006     |       | 41.57 (on  February 27)  |       | 33.54 (on  January 2) |
| Q2 2006     |       | 39.10 (on April 7)       |       | 25.88 (on June 6)     |
| Q3 2006     |       | 24.82 (on  September 21) |       | 27.54 (on July 7)     |
| Q4 2006     |       | 37.56 (on November 22)   |       | 33.10 (on October 3)  |

 

Thehigh and low market prices of the Bank’s shares on the ATHEX for the quarterfollowing the most recent financial year are shown below, expressed in euro.

| **Quarter** | ** ** | ** **                  | ** ** | **High (date)**           | ** ** | **Low (date)** |
|-------------|------------|-----------------------------|------------|---------------------------|------------|----------------|
| Q1 2007     |       | 42.18 (on February 23) |       | 35.10 (on January 2) |

 

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Themonthly high and low market prices of the Bank’s shares on the ATHEX for thesix most recent months are shown below, expressed in euro.

| **Month**          | ** ** | ** **                   | ** ** | **High (date)**              | ** ** | **Low (date)** |
|--------------------|------------|------------------------------|------------|------------------------------|------------|----------------|
| December 2006 |       | 35.86 (on  December 18) |       | 33.46 (on  December 8)  |
| January 2007  |       | 39.98 (on  January 26)  |       | 35.10 (on  January 2)   |
| February 2007 |       | 42.18 (on  February 23) |       | 38.14 (on  February 28) |
| March 2007    |       | 36.54 (on March 5)      |       | 41.42 (on March 26)     |
| April 2007    |       | 43.60 (on April 17)     |       | 39.00 (on April 2)      |
| May 2007      |       | 44.38 (on May 31)       |       | 40.00 (on May 11)       |

 

On June 1, 2006, the Bank’s shareholders at the AnnualGeneral Meeting approved the increase in the share capital of the Bank by €678,538,820,with payment in cash with pre-emptive rights in favor of existing shareholders,at a ratio of 4 new to 10 old shares. The share capital increase was completedon July 5, 2006. A total of 135,707,764 new common registered shares were issued,of a nominal value of €5 and offer price of €22.11,chiefly for the purpose of the implementation of Finansbank’s acquisition. 

Themarket prices of the Bank’s shares on the ATHEX for the first trading day inthe most recent six months before the share capital increase are shownbelow, expressed in euro:

| **Month**        | ** ** | ** ** | ** ** | **Historical Closing Price** | ** ** | **Adjusted Closing Price** | ** ** |
|------------------|------------|------------|------------|----------------------------------------|------------|--------------------------------------|------------|
| February 2, 2006 |       |       | 38.30      |                                   |       |                                 | 35.69      |   |   |
| March 1, 2006    |       |       | 41.66      |                                   |       |                                 | 38.82      |   |   |
| April 4, 2006    |       |       | 40.26      |                                   |       |                                 | 37.51      |   |   |
| May 2, 2006      |       |       | 40.00      |                                   |       |                                 | 37.28      |   |   |
| June 1, 2006     |       |       | 31.38      |                                   |       |                                 | 29.25      |   |   |
| July 3, 2006     |       |       | 29.62      |                                   |       |                                 | 29.62      |   |   |

 

The historical closing price and adjusted closingprice of the Bank’s shares on the ATHEX on March 3 2006 (the last tradingday before the announcement of the share capital increase) was €38.80and €36.15respectively.

The adjusted closing price reflects the issuance ofnew shares in connection with the share-for-share merger with National RealEstate (adjustment effective as at April 10, 2006), and the rights issue offour new shares for every ten shares at a price of €22.11per new share (adjustment effective as at June 14, 2006).

Theannual high and low market prices of the Bank’s ADRs on the New York StockExchange are shown below, expressed in U.S. dollars, for the five mostrecent financial years:

| **Year** | ** ** | ** **                  | ** ** | **High (date)**            | ** ** | **Low (date)** |
|----------|------------|-----------------------------|------------|----------------------------|------------|----------------|
| 2002     |       | 3.50 (on  January 15)  |       | 1.78 (on  October 16) |
| 2003     |       | 4.15 (on  December 30) |       | 1.41 (on March 17)    |
| 2004     |       | 6.88 (on  December 30) |       | 3.77 (on March 11)    |
| 2005     |       | 9.00 (on  December 19) |       | 6.34 (on  January 10) |
| 2006     |       | 10.53 (on February 27) |       | 6.81 (on June 14)     |

 

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Thequarterly high and low market prices of the Bank’s ADRs on the New York StockExchange for the two most recent fiscal years are shown below, expressed inU.S. dollars.

| **Quarter** | ** ** | ** **                   | ** ** | **High (date)**            | ** ** | **Low (date)** |
|-------------|------------|------------------------------|------------|----------------------------|------------|----------------|
| Q1 2005     |       | 8.09 (on March 11)      |       | 6.34 (on  January 10) |
| Q2 2005     |       | 7.33 (on June 9)        |       | 6.55 (on May 19)      |
| Q3 2005     |       | 7.97 (on  September 30) |       | 6.76 (on July 6)      |
| Q4 2005     |       | 9.00 (on December 19)   |       | 7.24 (on October 24)  |

 

| **Quarter** | ** ** | ** **                   | ** ** | **High (date)**          | ** ** | **Low (date)** |
|-------------|------------|------------------------------|------------|--------------------------|------------|----------------|
| Q1 2006     |       | 10.53 (on  February 27) |       | 8.61 (on January 3) |
| Q2 2006     |       | 10.22 (on April 7)      |       | 6.81 (on June 14)   |
| Q3 2006     |       | 9.03 (on  September 21) |       | 6.96 (on July 17)   |
| Q4 2006     |       | 9.72 (on November 24)   |       | 8.43 (on October 9) |

 

Thehigh and low market prices of the Bank’s ADRs on the New York Stock Exchangefor the quarter following the most recent financial year are shown below,expressed in U.S. dollars.

| **Quarter** | ** ** | ** **                   | ** ** | **High (date)**            | ** ** | **Low (date)** |
|-------------|------------|------------------------------|------------|----------------------------|------------|----------------|
| Q1 2007     |       | 11.24 (on  February 23) |       | 9.38 (on  January 10) |
| Q2 2007     |       |                         |       |                       |

 

Themonthly high and low market prices of the Bank’s ADRs on the New York StockExchange for the six most recent months are shown below, expressed inU.S. dollars.

| **Month**          | ** ** | ** **                   | ** ** | **High (date)**              | ** ** | **Low (date)** |
|--------------------|------------|------------------------------|------------|------------------------------|------------|----------------|
| December 2006 |       | 9.50 (on  December 28)  |       | 8.90 (on  December 8)   |
| January 2007  |       | 10.44 (on  January 31)  |       | 9.38 (on  January 10)   |
| February 2007 |       | 11.24 (on  February 23) |       | 10.00 (on  February 12) |
| March 2007    |       | 11.17 (on March 20)     |       | 9.50 (on March 1)       |
| April 2007    |       | 11.91 (on April 16)     |       | 10.46 (on April 2)      |
| May 2007      |       | 12.10 (on May 29)       |       | 10.79 (on May 11)       |

 

Other than the suspensionof trading of shares on the ATHEX and of ADRs on the New York Stock Exchange onApril 3, 2006, in anticipation of the announcement of the Acquisition,there have been no trading suspensions with respect to the Bank’s shares on theATHEX during the past three years ended December 31, 2006, nor have therebeen any trading suspensions with respect to the Bank’s ADRs on the New YorkStock Exchange since the Bank’s listing thereon in October 1999.

**B.   Plan ofDistribution**

Not applicable.

**C.   Markets**

The Bank’s shares arelisted on the ATHEX, as well as the Copenhagen Stock Exchange and LuxembourgStock Exchange. In addition, the Bank’s Global Depositary Receipts are listedon the London Stock Exchange and its ADRs are listed on the New York StockExchange.

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**The Athens Exchange (ATHEX)**

**General**

The ATHEX was establishedin 1876, with Greek Government bonds and the shares of the Bank as the firstsecurities to be traded on the ATHEX. Four years later, the ATHEX officiallyopened as an exchange, following the election of its first board of directors.Today, the ATHEX is the operator of the Greek Securities Market and theDerivatives Market.

Today, 100% of the sharesin the ATHEX, and 66.1% of the shares in the Thessaloniki Stock Exchange Centerare controlled by a holding company that trades on the ATHEX as HellenicExchanges S.A. (“HELEX”), which was formed on March 29, 2000. HELEX has ashare capital of €122.97 million, dividedinto 70,271,463 ordinary registered shares with a nominal value of €1.75each and is held by banks, institutional investors, listed companies and retailinvestors.

On May 31, 2001, theATHEX was upgraded by the Morgan Stanley Composite Index from emerging todeveloped market status.

Forthe year ended December 31, 2006, the average daily value traded on theATHEX was €342 million. From January 1, 2007 to April 30,2007, the average daily value traded on the ATHEX was €446million. On April 30, 2007, 298 companies had shares listed on the CashMarket of the ATHEX. In relation to the market capitalization of the ATHEX, on April 30,2007:

·       thetotal market capitalization was €172.8 billion;

·       thetop 25 companies accounted for 76.3% of the total market capitalization; and

·       ourmarket capitalization was €19.6 billion or 11.3% of the total marketcapitalization on the ATHEX.

The Greek capital marketand the ATHEX in particular are regulated under a series of laws enacted by theGreek Parliament, decisions and regulations issued by the Ministry of Economyand Finance, the board of directors of the CMC, and the board of directors ofthe ATHEX. Following authorization by Law 3152/2003, the ATHEX issued on June 8,2004, the Athens Exchange Regulation (the “Regulation”) which came into effecton June 16, 2004. The Athens Exchange Regulation was amended and reissuedon November 8, 2006. The Regulation contains, in a consolidated form,provisions which were previously included in a large number of decisions thatwere issued by ATHEX itself and certain other competent bodies (such as, butnot limited to, the former Derivatives Exchange) either in their original formor amended.

**Membership of the ATHEX**

Membership is required forbrokerage firms in order to effect transactions on the ATHEX. As at March 31,2007, there were 74 members of the ATHEX, the vast majority of which arebrokerage firms limited by shares (*société anonyme*).Membership is subject to approval by the ATHEX board of directors and licensingby the HCMC. In addition, brokerage firms must appoint at least one officialrepresentative who is authorized to conduct ATHEX transactions. Suchrepresentative must fulfill certain qualifications required by law and pass anexamination given by the Hellenic Capital Market Commission.

ATHEX members may engagein transactions through the Automated Exchange Trading System (“OASIS”), anelectronic trading system, on behalf of their clients or on their own behalf.Brokerage firms and Investment Services Firms with a share capital in excess of€3million are also permitted to provide underwriting and market making services.Pursuant to the EU Investment Services Directive 1993/22/EC (“EU ISD”),implemented in Greece in April 1996 pursuant to Law 2396/1996, investmentservices may be provided in Greece by Investment Services Firms established inGreece with a minimum share capital of €0.6 million, or €3million if engaging in underwriting, that have received an appropriateoperating license 

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from theHCMC, as well as by European Union Investment Services Firms benefiting from a “Europeanpassport” in accordance with the EU ISD and Law 2396/1996. Investment serviceswithin the scope of the EU ISD include the receipt and transfer of orders frominvestors to effect stock exchange transactions, the execution of such orders(or engagement in stock exchange transactions on behalf of client investors)and the underwriting, in total or in part, of an issue of securities. Inaddition, the HCMC has recently introduced rules relating to theperformance of portfolio management by Investment Services Firms. “OrdersCompanies” are companies that are only allowed to receive and transfer theirclients’ orders to Investment Services Firms, and are prohibited from dealingin ATHEX transactions on behalf of their client or from acting as a custodianfor their clients’ shares or cash. The receipt and transfer of shares by OrdersCompanies is governed by Law 2396/1996 and the HCMC’s decisions.

**Stock Market Indices**

The ATHEX Composite Indexis the most commonly followed index in Greece. It is a marketcapitalization-based index that tracks the share price movement of 60 leadingGreek companies. The Bank constituted approximately 14.80% of the index, as at May 31,2007.

Thetable below sets out the movement of the ATHEX Composite Index. The highs andlows are for the periods indicated and the close is on the last trading day ofthe period.

| **Year**                          | ** ** | ** ** | ** ** | **High** | ** ** | **Low** | ** ** | **Close** | ** ** |
|-----------------------------------|------------|------------|------------|----------|------------|---------|------------|-----------|------------|
| 1994                              |       | 1,194.6    |       | 804.4    |       | 868.9   |       |
| 1995                              |       | 992.6      |       | 787.7    |       | 914.1   |       |
| 1996                              |       | 1,026.0    |       | 870.9    |       | 933.5   |       |
| 1997                              |       | 1,794.1    |       | 933.5    |       | 1,479.6 |       |
| 1998                              |       | 2,825.6    |       | 1,380.1  |       | 2,737.6 |       |
| 1999                              |       | 6,355.0    |       | 2,798.2  |       | 5,535.1 |       |
| 2000                              |       | 5,794.8    |       | 3,071.8  |       | 3,388.9 |       |
| 2001                              |       | 3,456.0    |       | 1,997.8  |       | 2,591.6 |       |
| 2002                              |       | 2,655.1    |       | 1,704.7  |       | 1,748.4 |       |
| 2003                              |       | 2,326.6    |       | 1,462.2  |       | 2,263.6 |       |
| 2004                              |       | 2,801.7    |       | 2,225.2  |       | 2,786,2 |       |
| 2005                              |       | 3,663.9    |       | 2,770.9  |       | 2,786.2 |       |
| 2006                              |       | 4,404.4    |       | 3,362.2  |       | 4,394.1 |       |
| 2007 (through  May 31, 2007) |       | 4,979.1    |       | 4,245.2  |       | 4,972.2 |       |

 

*Source: ATHEXStatistical Department*

Another composite index, called the FTSE/ASE 20, wasintroduced in September 1997. This index is made up of the 20 largestcompanies by market capitalization listed on the ATHEX, including the Bank. TheBank constituted approximately 23% of the FTSE/ASE 20 index, as at May 31,2007. On December 9, 1999, another composite index was introduced, theFTSE/ASE Mid40, which is made up of 40 medium capitalization companies (i.e.,the 40 largest companies by capitalization, ranking after those listed on theFTSE/ASE 20, according to Ground Rules for the Management of the FTSE/ASE20, FTSE/ASE Mid 40 and FTSE/ASE SmallCap Indices). On June 1, 2001, theFTSE/ASE SmallCap 80 composite index was introduced, which is made up of 80small capitalization companies (i.e., the 80 largest companies bycapitalization ranking after those listed on the FTSE/ASE 20 and FTSE/ASE Mid40 Indices). On January 2, 2003, the FTSE/ASE 140 composite index wasintroduced, a new benchmark comprising the constituents of the FTSE/ASE 20, 40and Small Cap, tracking their cumulative performance exactly. OnJanuary 2, 2006, the FTSE ATHEX International Index was introduced, arepresentative index for eligible companies, Greek and non-Greek, that trade onthe ATHEX Common Trading Platform and are eligible for the Big Cap segment ofthe ATHEX.

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Morgan Stanley CapitalInternational, also known as “MSCI”, reviewed the composition of its GreekIndex in view of Greece’s reclassification among developed markets. The newindex is part of the matured indices’ group as at May 31, 2001. Thereclassification of the MSCI Greece Index to the standard MSCI Developed MarketIndex Series resulted in a net market capitalization increase of 0.46% and0.13% in the MSCI Europe Index and the MSCI Standard All Country World FreeIndex, respectively. The MSCI Greek Index is currently made up of 21 companieslisted on the ATHEX, including the National Bank of Greece. The weighting ofthe Bank to the MSCI Greece Index following the Annual Full Country IndexReview as at May 2007, is currently 16.6452% (closing of May 31, 2007).

**Trading on theATHEX**

Trading on the ATHEX takes place every week fromMonday to Friday, except for public holidays. The daily trading session startsat 10:30 a.m. and ends at 5:00 p.m., Athens time. The ATHEX consistsof the Securities Market and Derivatives Market, while in the Securities Marketthe following types of securities are being traded: shares, rights on shares,fixed income securities, certificates representing shares and any othersecurity falling within the ambit of article 1 of Law 3371/2005. The ATHEX isfurther separated into five segments based on certain criteria. On April 30,2007, 90 companies had 94 shares listed on the Big Cap Segment of the ATHEX,172 companies had 179 shares listed on the Medium & Small Segment ofthe ATHEX, 16 companies had 17 shares listed on the Special Stock ExchangeCharacteristics Segment and 20 companies had 23 shares listed on the UnderSupervision Segment.

The trading of shares on the ATHEX is conductedthrough the remote placing of orders into OASIS from the ATHEX member officeson the basis of six trading methods and the different segments of the CashMarket. Trading, depending on the period of time during which buy and sellorders can be placed into OASIS and subsequently executed, varies between 10:00 a.m.and 5:00 p.m., Athens time.

Prices of securities of the Big Capitalization Segmentand Small Medium Segment are eligible to +/-10% fluctuations from the closingprice of the preceding trading session extended by a further 10%. The extendedlimit does not apply to securities listed on FTSE/ASE 20, whose pricesafter the breaking of the first +/-10% limit fluctuate freely.Prices of securities of the Special Stock Exchange Characteristics Segment &Under Supervision Segment are eligible to +/-20% fluctuations from theclosing price of the preceding trading session while the prices of securitiestrading in the Bonds Market fluctuate freely.

Block trades ofshares with a value exceeding €0.6 million, orrepresenting at least 5.0% of a listed company’s share capital, may beconducted through the ATHEX by following a special procedure under which theparties involved, the number of shares to be sold and the price are pre-agreed.There is a limit to the number of parties involved in a block trade; in particular,up to three persons may participate as either buyers or sellers, with only oneperson on the other side of the trade. This limitation in the number of partiesinvolved does not apply to block trades made in the context of new listings orofferings of existing shares. Block trades may take place at prices that followcertain rules based on the price deviation percentage from the latesttraded price and if no such price exists, the closing price for the shares onthe previous session:

·       atthe current price of the share, when the value of the block trade ranges from €0.6million to €1.2 million;

·       at+/-5.0%from the current price of the share, when the value of the block trade rangesfrom €1.2 millionto €2.4million;

·       at+/-10.0%from the current price of the share, when the value of the block trade exceeds €2.4 million.

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Price limitationsdo not apply in the following circumstances:

·       whenthe shares traded represent 5.0% or more of the total number of shares of aparticular category (i.e., preferred or common);

·       forblock trades exceeding €30.0 million of (i) listed companies’shares, which are majority-owned by Greece or (ii) shares of listedcompanies with total assets exceeding €1.5 billion; and

·       fortransfer of share blocks by underwriters who acquired shares for stabilizationpurposes to shareholders that previously sold the shares for the same purposesin the context of an initial public offering or in the context of an initialpublic offering and a private placement.

For the purposes of calculating the allowed pricedeviation for a block trade, all block trades effected simultaneously areaggregated in order to determine the block trade size, provided that theselling parties do not appear as buying parties in other block tradesaggregated under this rule.

All prices of completed block trades are communicatedto the ATHEX members through OASIS and published in a separate section of theOfficial List of the ATHEX, although such prices are not shown as the lasttraded price. Trades are noted in the official register of the ATHEX, and allinformation on bids and offers is made available to Telerate and Reuters on acontinuous basis.

The trading lot size is one share. Prices of allsecurities listed on the ATHEX are published in the electronic Official List ofthe ATHEX.

Over the counter transactions involving listedsecurities are limited. The most notable exception is that shares representingup to 0.5% of the total number of shares of the same class of a listed companymay be traded outside the scope and the procedures of the ATHEX, provided thatnone of the sellers or purchasers are professionally engaged in securitiestrading and provided this trade is settled in cash.

Pursuant to PD 51/1992, when, as a result of atransfer of shares listed on the ATHEX, a person owns or indirectly controls apercentage equal to or in excess of 5.0%, 10.0%, 20.0%, 1/3, 50.0% or 2/3 ofthe voting rights of the relevant company, or such ownership or control fallsbelow these levels, the holder is required to notify the company and the HCMCof his holdings and percentage of voting rights in writing within one calendarday. When a person holds an interest of more than 10% of the voting rights of acompany whose shares are listed on the ATHEX or is a member of the board ofdirectors and that person’s interest increases or decreases by more than 3% (or1.5% when the shares of the company have been listed on the ATHEX for less than12 months) of the total voting rights in the company, then that person issimilarly required to notify the company and the HCMC the next calendar day.

PD 51/1992 shall beabolished as of July 2, 2007 by Law 3556/2007, which implements Directive2004/109/EC on the harmonization of the transparency requirements in relationto information about issuers whose securities are admitted to trading on aregulated market.

**Settlement,Clearance and the Central Securities Depository**

Settlement of both registered and bearer shares listedon the ATHEX is effected through the Central Securities Depository. The CentralSecurities Depository is responsible for settling and clearing ATHEXtransactions, and holding the shares deposited with it in book entry form. In2006, Central Securities Depository and Athens Derivatives Exchange ClearingHouse merged with HELEX.

Book entry of listed shares was introduced by virtueof Law 2396/1996, as amended. The dematerialization of Greek shares commencedin March 1999, with the market becoming fully dematerialized in December 1999.

To participate in the dematerialized system ofsecurities (“SAT”) each investor is required to open a dematerializationaccount, which is identified by a dematerialized account number (“SAT account”).A 

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shareholder who wishes toopen a SAT account can appoint one or more ATHEX members or custodian banks asauthorized operators (“Operators”) of its SAT account. Only Operators haveaccess to information concerning a SAT account such as account balances.

The clearanceprocedure through the Central Securities Depository consists of three principalstages:

·       First,notification by the ATHEX to theCentral Securities Depository of the transactions concluded within each tradingday;

·       Second,the notification by the Operators of the SAT account of the seller and thebuyer of the number of shares to be debited and credited to their respectiveSAT accounts. Following the notification of the SAT account of the seller theshares sold are blocked for transfer purposes.

·       Third,the system ensures that the shares sold are debited from the SAT account of theseller and credited to the SAT account of the buyer. Under Greek law, a personis prohibited from entering into sales of shares on the ATHEX if such persondoes not have full and unencumbered title to, and possession of, the sharesbeing sold at the time the order is matched, except in the context of shortsale transactions conducted strictly in accordance with the rules issuedby the Hellenic Capital Market Commission; and

·       Fourth,settlement of the transaction is effected by delivery versus payment on amultilateral basis. Bilateral settlement is also possible in exceptional circumstances,in particular in block trades. The transfer of shares is effected by debitingthe SAT account of the seller and crediting the SAT account of the buyer on thesettlement date. The settlement and clearing of shares in book entry form iscarried out by the Central Securities Depository on the third day after thetrade day (T+3). In the case of block trades, the settlement may take placefrom T+0 to T+3.

The ATHEX may invalidate a transaction if it considersit necessary for the protection of the investors, in particular in cases offraud.

Liabilities of investmentservices firms resulting from their trading activities on the ATHEX areguaranteed, up to the amount of €30,000, by the AthensExchange Member Guarantee Fund, to which each ATHEX member contributes, andwhich is operated as a separate legal entity. In addition, another fund, theSupplementary Clearing Fund, provides—if the ATHEX so deems—immediate coverageagainst liabilities of ATHEX members that have forwarded trading orders whichresult from delayed clearing due to the fact that shares or cash have not beendelivered. The manager and custodian of the Supplementary Clearing Fund is theATHEX.

**Requirements forListed Companies**

Greek Law provides for a number of requirements forlisted companies on the ATHEX. A significant part of such requirements iscontained in Law 3340/2005 (which implemented Directive 2003/6/EC on insiderdealing and market manipulation and implementing Directives 2003/124/EC and2004/72/EC) and HCMC Decision No. 3/367/12.7.2005. Other similarrequirements are also contained in HCMC Decision No. 5/204/14.11.2000, Law3016/2002 on corporate governance and Law 3556/2007, which will come into forceas of July 2, 2007, as mentioned above.

According to the aboveprovisions, the listed companies on the ATHEX are required, *inter alia*, to publicly disclose inside information such aschange of activity, execution of important business deals, participation inmergers and acquisitions, take over bids, etc., to provide HCMC with a list ofinsiders, to notify HCMC on managers transactions, to issue an annual report,annual, semi/annual and quarterly financial reports, to appoint internalauditors and draft bylaws related to the operation of the company.

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**Foreign Investment**

There are currently noexchange controls in Greece that would restrict the payment of dividends orother capital distributions to a holder of our ordinary shares outside Greece,and there are currently no restrictions in Greece that would affect the rightof a non-Greek holder of our ordinary shares to dispose of such shares andreceive the proceeds of such disposal outside Greece.

**The DerivativesMarket of the Athens Exchange**

In 1997, Greek Law 2533/1997 created a derivativesexchange modeled after other European derivatives exchanges. According to thislaw, the Athens Derivatives Exchange, known as “ADEX”, operated separately fromthe ATHEX, was organized as a corporate entity. In 2002, by virtue of Law2937/2001, ADEX S.A. merged with Athens Securities Exchange SA (“ASE”). TheDerivatives Market of the ATHEX (the “Derivatives Market”) now constitutes oneof the two markets of the ATHEX.

The Derivatives Marketposted an increase in the volume of transactions in 2006. The 2006 averagedaily number of contracts amounted to 28,741, an increase of 33% compared to anaverage volume of 21,563 contracts in 2005. The average daily trading volume inthe first three months of 2007 was 36,542 contracts.

*Stock Lending andShort Selling*

In connection with thedevelopment of the Greek capital markets, the ATHEX, in cooperation with theAthens Derivatives Exchange Clearing House (or “ADECH”) and the CSD (bothcurrently under HELEX), have been developing the ability for investors toengage in stock lending transactions, by short selling shares listed on theATHEX, with a simultaneous or previous borrowing of shares to be sold by theADECH. The stock lending from the ADECH is made through an agreement of purchaseof shares with a stock reverse repo through trading of the correspondingproduct.

*Margin Accounts*

The purchase of shares on credit (margin accounts) canbe made available by members of the ATHEX to their clients/investors, usingtheir investments as collateral, pursuant to a written agreement between theATHEX member and its client. The provision of credit is possible following thecompletion of the relevant regulatory framework, i.e., decisions of the HCMC,in accordance with article 6 paragraph 1 of Greek Law 2843/2000, the amendmentsof the DSS Regulation, as well as the Act of the Governor of the Bank ofGreece, in accordance with the article 6 paragraph 2 of the Greek Law2843/2000.

Under Greek Law 2843/2000, the initial margin is setto 40% (minimum) of the market value of the investor’s “collateral portfolio”.This percentage level can be changed by act of the Governor of the Bank ofGreece after a decision by the Board of Directors of the HCMC. It should benoticed that the ATHEX members have the flexibility to require higher initialand maintenance margins provided that the investor is given prior notice and anexpress provision is included in the relevant contract.

Pursuant to Act No. 2474/31.5.2001, as amended byAct No. 2567/23.11.05, of the Governor of the Bank of Greece, themaintenance margin on brokerage margin accounts is set at 30% of the marketvalue of the investors’ “collateral portfolio” whereas investors buying shareson margin can borrow funds up to a limit of €1,000,000.According to this Act, the same limit applies to credit institutions offeringcredit to individuals to finance stock purchases.

Margin accounts contribute to the improvement of theliquidity of the market. They enable the investor to buy new shares by offeringas “collateral” the shares that composed his or her initial portfolio.Investors generally use margin accounts to increase their purchasing power.

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Law 3301/2004 transposedinto Greek law the Collateral Directive (Directive 2002/47/EC), therebyfacilitating the use of securities listed on the ATHEX as collateral forentities falling within its scope, in particular simplifying the procedure forthe enforcement of such collateral.

**D.   SellingShareholders**

Not applicable.

**E.   Dilution**

Not applicable.

**F.   Expensesof the Issue**

Not applicable.

**ITEM 10**            ADDITIONALINFORMATION

**A.   ShareCapital**

Not applicable.

**B.   Memorandumand Articles of Association**

Our Articles ofAssociation (and English translation thereof), as amended on July 7, 2006,are included as Exhibit 1 to this Annual Report.

1.                 The Bank isincorporated under the register of Companies Limited by Shares of the Ministryof Trade (currently known as the Ministry of Development) under No. 6062/06/B/86/01.

The Bank’s objects and purposes, as defined in Article 3of its Articles of Association, are the following:

The Bank shall engage in all such banking andfinancial activities in general, both at home and abroad, as shall be allowedto banking sociétés anonymes by Greek and EU legislation as is in force eachtime.

To the extent permitted by standing legislation, theBank may also carry out the said activities on behalf of third parties, eitheron a joint venture basis, or in association with other legal entities or individualsof any nationality.

The objects of theBank’s activities shall, in particular, be to:

(a)          Extend all types ofloans, credits or guarantees;

(b)         Acquire or assign claimshereunder;

(c)          Provide intermediaryservices in the financing of business, inter-business cooperation or inthe underwriting of share capital issues through public subscription or bondissues; also to represent bond holders or other lenders;

(d)         Borrow funds, obtaincredits or guarantees and issue bond loans;

(e)          Accept cash deposits orother refundable funds, in euro and in foreign exchange or in foreign currency;

(f)            Purchase, sell,safekeeping, manage or collect negotiable instruments; also securities (whetherquoted on the Stock Exchange or not), foreign exchange or foreign currency;

(g)          Issue and manage meansof payment (credit cards, travelers checks and letters of credit);

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(h)         Participatein security issues and provide related services;

(i)            Provideconsulting services to companies in respect of the capital structure,industrial strategy and related matters; also to provide consultation andservices with regard to mergers, acquisitions or liquidations of companies;

(j)             Provideintermediary services in the interbank markets;

(k)         Manageportfolios and provide related consulting services;

(l)            Providecredit information reports;

(m)     Leasesafe deposit boxes;

(n)         Participatein businesses at home and abroad; and

TheBank may establish associations, foundations and firms engaged in cultural,educational and financial activities, as well as participate in such firmsalready existing.

2.                 (a)   Article 26 of the Bank’s Articlesdefines the general voting powers of the Bank’s Board of Directors (which werefer to in this Annual Report as the “Board of Directors”, collectively, andeach as a “Director”). There is no specific provision in the Articles thatspeaks directly to a Director’s power to vote on a proposal, arrangement orcontract in which the Director is materially interested. However, Article 28of the Bank’s Articles provides, in governing remunerative relationshipsbetween the Bank and members of its Board of Directors, that: Subject to theprovisions governing the legality of transactions between the Bank and membersof its Board of Directors, all fees and remuneration paid to a member of theBoard for whatever reason shall be considered legal and shall be borne by theBank only if approved by a special resolution of the ordinary General Meeting.

(b)         Thereis no specific provision in the Bank’s Articles with respect to the Directors’power, in the absence of an independent quorum, to vote compensation tothemselves or any members of their body. However, pursuant to Greek CodifiedLaw 2190/1920, Article 24, compensation to a company’s board members outof the company’s net profits is to be paid after deductions for ordinaryreserves and the amount required for distribution to shareholders of the firstdividend declared for the relevant financial year, equal to at least 6% of thecompany’s paid-up share capital. Any other compensation must be approved by aspecial resolution of the ordinary general meeting of its shareholders. Theamount of such compensation granted to a company’s board member, or members,may be reduced by a Greek court if an objection is raised by shareholdersrepresenting at least one-tenth of the company’s share capital and if the courtfinds such compensation to be “exorbitant”.

Under Article 6of the Bank’s Articles, the general meeting of the Bank’s shareholders (knownas the “General Meeting”) may establish a plan for allocating the Bank’s sharesto the Directors and employees of the Bank and associated companies in the formof stock purchase options. The General Meeting will designate, in particular,the maximum number of shares that may be issued and the price and allocationterms of the shares. The Board of Directors will have the power to arrange allother details not otherwise arranged by the General Meeting.

(c)          TheBank’s Articles do not contain any provisions with respect to borrowing powersexercisable by the Bank’s Board of Directors, or how such borrowing powers canbe varied.

(d)         TheBank’s Articles do not contain any provision with respect to the retirement ornon-retirement of Directors under an age limit requirement.

(e)          The Bank’s Articles donot contain any provision with respect to the number of shares required forDirector’s qualification.

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3.                 (a)   For a description of the dividend rightsattaching to the Bank’s shares, see Item 8.A(8), “Financial Information—ConsolidatedStatements and Other Financial Information”. Once approved at a GeneralMeeting, dividends must be paid to shareholders within two months of the dateon which the Bank’s annual financial statements were approved. Dividends areforfeited to the Hellenic Republic if they are not claimed by shareholderswithin five years following December 31 of the year in which they weredeclared.

(b)         Under Article 8 ofthe Bank’s Articles, all of the Bank’s shareholders have the right toparticipate in General Meetings, and the number of each shareholder’s votes atsuch meetings shall be equal to the number of his or her shares because each ofthe Bank’s shares entitles its holder to one vote.

Pursuant to Article 19of the Bank’s Articles, subject to Article 18 paragraph 3, the Bank’sDirectors are elected by the General Meeting, with each Director elected for aterm of three years. There is no provision in the Bank’s Articles with respectto cumulative voting.

(c)          Rights of the Bank’sshareholders to share in the Bank’s profits are defined by the Bank’s dividendpolicy. See, in this Item 10.B, 3(a), above.

(d)         On a liquidation of theBank, a General Meeting shall appoint three liquidators who shall, among otherthings, take an inventory of corporate assets, draw up and publish a balancesheet in the press and in the Greek Government Gazette and complete the Bank’soutstanding matters. Subsequently, the General Meeting shall approve the annualfinancial statements as well as the financial statements issued upon completionof the liquidation. Upon completion, the liquidators shall refund shareholders’contributions and distribute the balance of the Bank’s liquidated property tothe shareholders in proportion to their paid-up equity holdings.

(e)          Not applicable.

(f)            Not applicable.

(g)          The Bank’s shareholdersare not liable to further capital calls by the Bank. A two-thirds quorum of theBank’s shareholders and a two-thirds majority of the votes represented at theGeneral Meeting would be required to approve any resolution concerning anincrease in shareholders’ obligations. See Article 15(2) of the Bank’sArticles, which comprise Exhibit 1 to this Annual Report and areincorporated by reference from the Bank’s Annual Report on Form 20-Ffor the fiscal year ended December 31, 2005.

(h)         There are no provisionsin the Bank’s Articles that discriminate against any existing or prospectiveholder of the Bank’s shares as a result of such shareholder owning asubstantial number of the Bank’s shares. However, subject to EU regulations,new and significant holdings (concentrations) must be reported to the GreekCompetition Commission according to Greek Law 703/1977, in force.

4.                 Decisions withrespect to which the rights of the Bank’s shareholders may be changed—includingdecisions with respect to increases in the shareholders’ obligations, increasesor decreases in the Bank’s share capital, changes in the method of distributionof the Bank’s profits and merger or dissolution of the Bank—are voted upon bythe Bank’s shareholders at the General Meeting, in accordance with theprovisions of Article 15(2) of the Bank’s Articles. The requisitequorum for such decisions is satisfied when shareholders owning two-thirds ofthe Bank’s paid-up share capital are present or represented. Decisions on suchissues are reached by a two-thirds majority of the votes represented at theGeneral Meeting, pursuant to Article 16(2). These conditions are not moresignificant than those required by Greek law.

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For example, pursuant to Article 5 of the Bank’sArticles, whenever the Bank’s share capital is increased (unless effected bycontribution in kind) or a bond loan convertible into the Bank’s shares isissued, preference rights on the entire new share capital or bond loan aregiven to existing shareholders at the time of issue in proportion to therespective equity holdings of such shareholders at that time. Such preferencerights may be limited or abolished, however, by a resolution adopted by theGeneral Meeting, under Article 5(6) and pursuant to the procedures ofGreek Codified Law 2190/20, Article 13, Paragraphs 6 and 7.

In addition,pursuant to Greek Codified Law 2190/20, Article 13, the General Meetingmay grant to the Board of Directors the power to increase the Bank’s sharecapital or to issue a bond loan. Such an increase in share capital may be up tothe sum of capital which has been paid up at the date of the delegation of thepower to the Board, and such an issuance of a bond loan may not exceed half ofthe sum of the share capital which has been paid up at such date.

5.                 The GeneralMeeting of the Bank’s shareholders is to be held at least once a year, withinsix months after the end of the Bank’s financial year in order, among otherthings, to approve the annual financial statements and to discharge Boardmembers and auditors from liability in respect of their tenure of office in therelevant year. Extraordinary General Meetings (referred to in this AnnualReport as “EGMs”) may be convened by the Board in cases required by law or atother times when a meeting is deemed appropriate by the Board. The Board shallconvene an extraordinary General Meeting pursuant to a request of holders of 5%or more of the paid-up share capital. At the request of shareholdersrepresenting 5% or more of the paid-up share capital the Chairman of theGeneral Meeting shall adjourn, only once, the passing of resolutions by theGeneral Meeting, whether ordinary or extraordinary. The adjourned GeneralMeeting shall be a continuation of the previous meeting and shall not requirerepetition of the publication formalities regarding notice to shareholders.

Pursuant to Greek law and the Bank’s Articles, inorder to participate in the General Meeting, either in person or by proxy,shareholders holding dematerialized shares not posted in the Special SecuritiesAccount should have their shares blocked, in whole or part, through theirSecurities Account Operators, receive from them a “Certificate of SecuritiesBlocking” issued by the CSD, and deposit the certificate with the head officeand network branch of the Bank or the Bank’s Shareholders Department in Athensat least five days prior to the General Meeting date. Similarly, shareholdersholding dematerialized shares posted in the Special Securities Account shouldhave their shares blocked, in whole or in part, through a declaration to theCSD which consequently shall issue and deliver the “Certificate of SecuritiesBlocking”. This certificate must be deposited at the head office and networkbranch of the Bank or the Bank’s Shareholders Department in Athens at leastfive days prior to the General Meeting date. By contrast, shareholders who havenot dematerialized their shares should, at least five days prior to the GeneralMeeting, deposit such shares with the head office and network branch of theBank or with the Deposits and Loans Fund or with any banking *société anonyme* in Greece. Shareholdersabroad, in particular, should deposit their shares with the local Bank branchor representative office or otherwise with another bank designated by the Boardof Directors in convening the General Meeting. The relevant share depositsreceipts should be delivered to the Bank within the same time limit.

Shareholders who are legal entities should, at leastfive days prior to the General Meeting, deposit their legalization documentsprovided for by Greek law, unless such documents have already been depositedwith the Bank. If such documents have already been deposited with the Bank, itis sufficient to mention in the proxy form where such documents have beendelivered. In the event of voting by proxy, the relevant proxy documents shouldbe delivered to the Bank at least five days prior to the General Meeting date.Legal entities may participate in the General Meeting, designating up to threepersons as their representatives.

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Pursuant to Article 12(3) of the Bank’sArticles, shareholders that have not complied with the provisions above maytake part in and vote at a General Meeting only upon permission of such GeneralMeeting.

The quorum requirement is met when shareholdersrepresenting at least 20% of the paid-up share capital are present orrepresented at the General Meeting or EGM. If this requirement is not met, aquorum is met by those represented at the adjourned meeting, regardless of thepaid-up share represented. The simple majority required for all decisions ofthe General Meeting or an EGM is an absolute majority of votes represented atthe meeting, i.e., over 50%.

A two-thirds quorumand a two-thirds voting majority of the Bank’s shareholders may be required forresolutions concerning certain matters, as discussed above, in Item 10.B(4),and as set forth in Article 15(2) of the Bank’s Articles, included inExhibit 1 to this Annual Report. The increased quorum requirement formeetings concerning such resolutions amounts to the number of shareholdersrepresenting two-thirds of the paid-up share capital of the Bank being presentor represented at the first meeting, which drops to one-half and one-third ofthe share capital represented at the second and third adjourned meetings,respectively. The voting majority for such meetings is two-thirds of the votesrepresented at that meeting.

6.                 There are nodiscriminatory limitations on the rights to own the Bank’s shares or exercisevoting rights with respect thereto.

7.                 There are noprovisions in the Bank’s Articles that could delay, defer, or prevent a changein control of the Bank.

8.                 There is nospecific provision in the Bank’s Articles that governs the ownership thresholdabove which shareholder ownership must be disclosed. However, under Greek law,shareholders seeking to acquire participations in the Bank’s shares, abovecertain thresholds, may be required to notify the Bank, the central bank, theHellenic Capital Markets Commission and the ATHEX of their holdings andpercentage of voting rights.

9.                 No significantdifferences.

10.          Theconditions imposed by the Bank’s Articles with respect to changes in the Bank’sshare capital are discussed above, in Item 10.B(4), and are not more stringentthan those required by Greek law.

**C.   MaterialContracts**

***NBG andits subsidiaries are party to various contracts in the ordinary course ofbusiness. For the year ended December 31, 2006, there have been nomaterial contracts entered into outside the ordinary course of business apartfrom the following.***

As described inNote 4 to the Consolidated financial Statements, on April 3, 2006, theBank entered into an agreement with Fiba Holding A.S. (‘‘Fiba Holding’’), Fina HoldingA.S. (‘‘Fina Holding’’), Girisim Factoring A.S. (‘‘Girisim Factoring’’) andFiba Factoring Hizmetleri A.S. (‘‘Fiba Factoring’’) (together, the ‘‘FibaSellers’’)to acquire 46% of the ordinaryshares of Finansbank, together with 100% of Finansbank’s founder shares. Theagreed aggregate purchase price was approximately US$2,774 million in cash,subject to an adjustment in respect of the book value of the assets andliabilities of Finansbank as at the date on which closing would occur.

Closing of thetransaction occurred once certain conditions precedent had been fully satisfiedor waived in accordance with the agreement. These included (i) the approval ofthe central bank of Turkey (“BRSA”), (ii) the approval of the TCB, (iii) theapproval of the Bank of Greece, (iv) the completion of the sale of theinternational operations to Fiba Holding and obtaining of all necessaryrelevant regulatory approvals for that sale and (v) certain other clearancesrelated to the restructuring of the Finansbank 

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group, which were to take place on or prior to closing (as describedfurther below). Furthermore, the Bank was not obliged to conclude thetransaction in the event of a material adverse change, which was defined toinclude changes after the date of the agreement which were, or were reasonablylikely to, result in an impairment or reduction in the Finansbank group’sconsolidated net asset value and/or the group’s consolidated annual pre-tax netincome of more than 30%, as well as a general disruption in the financial andbanking markets in Turkey or in leading international financial markets orsuspension or material limitation of trading in the shares of Finansbank onstock exchanges or the imposition of currency exchange controls in Turkey orelsewhere or the outbreak or escalation of hostilities and/or act of terrorismor any other calamity or crisis.

In the periodbetween signing and closing, the Bank enjoyed certain access and informationrights in respect of Finansbank. The Fiba Sellers were obliged to causeFinansbank not to take certain actions outside the ordinary course of its businesswithout the consent of the Bank.

Prior to closing,Finansbank sold to Fiba Holding its shares in Finans International Holding N.V.(‘‘Finans International’’) and Finansbank Romania S.A. for US$600 million.Finans International sold to Finansbank its shareholding in Finansbank MaltaLtd., at a price of US$48 million.

Under the terms ofthe agreement, the Fiba Sellers have made certain representations andwarranties to the Bank in relation to themselves and Finansbank. The areaswhich the representations and warranties cover included (i) ownership of theshares in Finansbank, (ii) the financial statements of Finansbank, (iii) absenceof material changes since December 31, 2005, (iv) tangible property, (v)intellectual property, (vi) information technology, (vii) taxes, (viii)litigation and claims, (ix) compliance with laws, (x) employees, (xi)material contracts, (xii) third party assurances and related party arrangementsand (xiii) registration of charges. The representations and warrantieswere expressed to be true as at the date of signing and (subject to certainexceptions) the date of closing.

On the completionof the Acquisition, the Bank was obliged to make a mandatory tender offer forthat part of the shares in Finansbank and Finans Leasing, which it has notacquired pursuant to the agreement. The Fiba Sellers have agreed not to tenderany shares which they may then hold in Finansbank or Finans Leasing in responseto such offer. However, had the Bank not acquired sufficient shares in thetender offer to hold at least 50% plus one share of the ordinary shares inFinansbank, the Fiba Sellers should have tendered sufficient shares to bringthe Bank’s holding up to this level.

The Fiba Sellers have entered into a non-compete covenant with the Bankfor three years from the closing date which will, subject to certainexceptions, restrict the provision of banking and financial services in Turkeyby the Fiba Sellers and their affiliates.

The Bank and FibaHolding, Girisim Factoring and Fiba Factoring (the ‘‘Fiba Shareholders’’) also enteredinto a shareholders’ agreement, which sets out the terms and conditions fortheir cooperation as shareholders in Finansbank. The agreement restricts sharetransfers by the Fiba Shareholders from the closing date of the Acquisition fora four-year period, following which period the Bank and, where applicable, itsaffiliates (the ‘‘Bank Shareholders’’) and the Fiba Shareholders will benefitfrom a right of first offer for sales of the other’s shares in Finansbank ownedas of the date of any such sale (the ‘‘Relevant Shares’’). The Bank alsobenefited from a call option for a period of one month following theconsummation of the Tender Offer, enabling the Bank to acquire from the FibaShareholders sufficient shares such that the Bank holds 50% plus one ordinaryshare in Finansbank. In addition, the Bank will hold a call option to purchasefrom Fiba Holding and, in certain circumstances, the other Fiba Shareholders,and the Fiba Shareholders will hold a put option to sell to the Bank, RelevantShares in certain circumstances including at least 3% of the currentoutstanding ordinary share capital of Finansbank at a price and pursuant totransfer terms determined by reference to the provisions of the shareholders’agreement, for the period following the second anniversary of the closing andfor two years thereafter at a 

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multiple of between two and a half and three and a half times the bookvalue of the Finansbank Acquired Businesses at that time, depending upon thesatisfaction of performance-based criteria.

The shareholders’agreement also governs how the Bank Shareholders and the Fiba Shareholders votetheir shares. Pursuant to the agreement, the parties have agreed to ensure thata minimum of two Directors nominated by Fiba Holding (out of a minimum of sevendirectors) are appointed to the Board of Directors of Finansbank for so long asthe Fiba Shareholders hold Relevant Shares representing at least 5% of theordinary shares of Finansbank. The Fiba Shareholders have agreed to vote theirshares in accordance with the terms of the shareholders’ agreement.

**D.   Exchange Controls**

All forms of capitalmovement in and out of Greece have been liberalized pursuant to PresidentialDecrees 96/1993 and 104/1994 (implementing Directives 1988/361/EEC and1992/122/EEC) and corresponding acts of the Governor of the Bank of Greece.Foreign investors may purchase securities listed on the ATHEX, as well asHellenic Republic bonds and treasury bills. Repatriation of capital anddividends and any other income on securities is fully liberalized subject tocompliance with certain reporting procedures and requirements.

**Custody of Depositary Receipts**

Depositary receipts may beplaced in the custody of a bank, a securities company or a brokerage company,operating legally in Greece, as custodian on behalf of a shareholder. Banks andsecurities companies must issue a receipt to each shareholder for anysecurities in their custody.

**E.   Taxation**

The following is a summaryof material U.S. federal income tax consequences of the purchase, ownership anddisposition of shares or ADRs by a U.S. Holder. For the purposes of thissummary, a “U.S. Holder” is a beneficial owner of shares or ADRs that is, forU.S. federal income tax purposes, (i) an individual citizen of or residentin the United States, (ii) a corporation or other entity treated as a corporationfor U.S. federal income tax purposes, created or organized under the laws ofthe United States or any state thereof or the District of Columbia, (iii) anestate, the income of which is subject to U.S. federal income taxationregardless of its source, or (iv) a trust, if (x) a court within theUnited States is able to exercise primary supervision over its administrationand (y) one or more U.S. persons have the authority to control all of thesubstantial decisions of such trust. If a partnership holds shares or ADRs, theconsequences to a partner will generally depend upon the status of the partnerand the activities of the partnership. A partner of a partnership holdingshares or ADRs should consult its tax advisor regarding the associated tax consequences.The summary does not purport to be a comprehensive description of all of thetax considerations that may be relevant to a decision to purchase shares orADRs. In particular, this summary deals only with U.S. Holders that will holdshares or ADRs as capital assets and does not address the tax treatment ofspecial classes of U.S. Holders, such as financial institutions, tax-exemptentities, insurance companies, retirement plans, persons holding shares or ADRsas part of a “straddle” or as part of a “synthetic security” or a hedging orconversion transaction or other integrated transaction, real estate investmenttrusts, regulated investment companies, partnerships, pass-throughentities or persons who hold through partnerships or other pass-throughentities, U.S. expatriates, persons subject to the alternative minimum tax,dealers or traders in securities, currencies or notional principal contracts,persons that own (or are deemed to own for U.S. federal income tax purposes)10% or more of the voting stock of the Bank, holders who hold shares or ADRs inconnection with a trade, profession or vocation carried on in Greece (whetherthrough a branch, agency or otherwise) and holders whose “functional currency”is not the U.S. dollar. Further, this discussion does not address any taxconsequences applicable to holders of equity interests in a holder of shares orADRs. This summary is based upon current U.S. federal income tax law, includingthe U.S. Internal Revenue Code of 1986, as amended (the “Code”), itslegislative history, 

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existing,temporary and proposed regulations thereunder, published rulings and courtdecisions, all of which are subject to change (possibly with retroactiveeffect); the Convention Between the United States of America and the Kingdom ofGreece (now the Hellenic Republic) for the Avoidance of Double Taxation and thePrevention of Fiscal Evasion with Respect to Taxes on Income, with effect from December 30,1953; and in part upon representations of the depositary. This summary assumesthat each obligation provided for in or otherwise contemplated by the AmericanDepositary Receipts and any related agreement will be performed in accordancewith their respective terms.

Prospective purchasersshould consult their own tax advisors as to the consequences under U.S.federal, estate, gift, state, local and applicable foreign tax laws of theacquisition, ownership and disposition of shares and ADRs.

Holders of ADRs will betreated for U.S. federal income tax purposes as owners of the shares underlyingthe ADRs. Accordingly, except as noted, the U.S. federal income taxconsequences discussed below apply equally to holders of ADRs and shares.

***Dividends***

Under current Greek taxlaw no Greek withholding taxes will be imposed on the payment of dividends toU.S. Holders of shares or ADRs. The gross amount of any distributions paid bythe Bank to a U.S. Holder that are actually or constructively received by theU.S. Holder will generally be subject to U.S. federal income tax as foreignsource dividend income to the extent paid out of current or accumulatedearnings and profits of the Bank, as determined for U.S. federal income taxpurposes. Such dividends will not be eligible for the dividends receiveddeduction allowed to corporations. Subject to the discussion below under “—*Passive Foreign Investment Company Status,”*to the extent that an amount received by a U.S. Holder exceeds the allocableshare of the Bank’s current and accumulated earnings and profits, such excesswill be applied first to reduce such U.S. Holder’s tax basis in his shares orADRs and then, to the extent such distribution exceeds such U.S. Holder’s taxbasis, it will be treated as capital gain.

The Bank does not maintainits calculations of its earnings and profits under U.S. federal income taxprinciples. Therefore, a U.S. Holder should expect that a distribution willgenerally be treated as a dividend. The amount of any distribution of propertyother than cash will be the fair market value of that property on the date ofthe distribution.

Certain dividends receivedby individual U.S. Holders before January 1, 2011, will be subject to amaximum income tax rate of 15%. This reduced income tax rate is only applicableto dividends paid by “qualified corporations” (which term excludes passiveforeign investment companies, as defined below) and only with respect to sharesor ADRs held for a minimum holding period (generally, 61 days during the121-day period beginning 60 days before the ex-dividend date). TheBank expects to be considered a qualified corporation for this purpose. U.S.Holders should consult their own advisors regarding the availability of thereduced income tax rate on dividends under their particular circumstances.

The gross amount ofdividends paid in euro will be included in the income of such U.S. Holder in aU.S. dollar amount calculated by reference to the spot exchange rate in effecton the day the dividends are received by the U.S. Holder (or, in the case ofthe ADRs, by The Bank of New York, in its capacity as depositary) regardless ofwhether the payment is in fact converted into dollars. A U.S. Holder will havea basis in any euro distributed equal to their U.S. dollar value on the datethey are received by the U.S. Holder (or, in the case of the ADRs, by The Bank ofNew York in its capacity as depositary). Any gain or loss recognized upon asubsequent disposition of euro will generally be ordinary income or loss. Ifeuro are converted into U.S. dollars on the date of the receipt, the U.S.Holder should, therefore, not be required to recognize any foreign currencygain or loss in respect of the receipt of euro as dividends. Dividends will betreated as foreign source income for U.S. foreign tax credit limitationpurposes. The limitation on foreign taxes eligible for the U.S. foreign taxcredit is calculated separately with respect to specific classes of income. Fortax years beginning on or before December 31, 2006, income received withrespect to shares 

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or ADRsgenerally will constitute “passive income” or, in the case of certain holders,“financial services income” for U.S. foreign tax credit limitation purposes,and for tax years beginning after December 31, 2006, will be treated as“passive category income” or “general category income.” The amount of the qualifieddividend income paid by the Bank to a U.S. Holder that is subject to thereduced dividend income tax rate that is taken into account for purposes ofcalculating the U.S. Holder’s U.S. foreign tax credit limitation must bereduced by the “rate differential portion” of such dividend. Therules relating to foreign tax credits and the timing thereof are complex.U.S. Holders should consult their own tax advisors regarding the availabilityof foreign tax credits under their particular circumstances.

***Sale or Exchange ofShares or ADRs***

Subject to the discussionbelow under “—*Passive Foreign InvestmentCompany Status,”* gain or loss realized by a U.S. Holder on the saleor other disposition of shares or ADRs will be subject to U.S. federal incometaxation as capital gain or loss in an amount equal to the difference betweenthe U.S. Holder’s adjusted tax basis in the shares or ADRs and the amountrealized on the disposition. Such gain or loss generally will be treated aslong-term capital gain or loss if the shares or ADRs have been held for morethan one year. Capital gains of individuals derived from capital assets heldfor more than one year are eligible for reduced rates of taxation. Thedeductibility of capital losses is subject to significant limitations. Any gainor loss realized will generally be treated as derived from U.S. sources. UnderGreek tax law, a transfer tax is imposed on transfer of ATHEX-listed securitiesat the rate of 0.15% of the purchase price. The Bank believes that this taxdoes not apply to sales of ADRs traded on the New York Stock Exchange.

The surrender of ADRs inexchange for shares (or vice versa) will not be a taxable event for U.S.federal income tax purposes and U.S. Holders will not recognize any gain orloss upon such a surrender.

If a U.S. Holder receivesany foreign currency on the sale of shares, such Holder may recognize ordinaryincome or loss as a result of currency fluctuations between the date of thesale of shares or ADRs and the date the sale proceeds are converted into U.S. dollars.

***U.S. InformationReporting and Backup Withholding***

Non-corporate U.S. Holdersmay be subject to the information reporting requirements of the Code, as wellas to backup withholding on the payment of dividends on, and the proceedsreceived from the disposition of, shares or ADRs. Backup withholding may applyif a U.S. Holder (i) fails to furnish its taxpayer identification number(“TIN”), which, in the case of an individual, is his or her social securitynumber; (ii) fails to provide certification of exempt status;(iii) is notified by the IRS that he or she has failed properly to reportpayments of interest and dividends; (iv) under certain circumstances,fails to certify, under penalty of perjury, that he or she has furnished acorrect TIN or the Bank has been notified by the IRS that such U.S. Holder issubject to backup withholding for failure to furnish a correct TIN; or(v) otherwise fails to comply with the applicable requirements of thebackup withholding rules.

U.S. Holders shouldconsult their tax advisors regarding their qualification for exemption frombackup withholding and the procedure for obtaining such an exemption, ifapplicable. The amount withheld from a payment to a U.S. Holder under thebackup withholding rules generally will be allowed as a credit againstsuch holder’s United States federal income tax liability and may entitle suchholder to a refund, provided that the required information is furnished to theIRS.

***Passive ForeignInvestment Company Status***

The foregoing discussionof dividends and capital gains assumes that the Bank is not a passive foreigninvestment company (a “PFIC”), for U.S. federal income tax purposes. Based upon(i) certain U.S. Treasury Regulations and (ii) the regulatory statusof the Bank under local laws, its banking activities performed in the ordinarycourse of business (including lending, accepting deposits and depositing moneyin other banks), the proportion of its income derived from activities that are“bona fide” banking activities 

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for U.S.federal income tax purposes and its securities activities performed in theordinary course of business (including selling debt instruments to customers ina dealer capacity), the Bank believes that it was not a PFIC for 2005 (thelatest period for which the determination can be made) and, based further onits present regulatory status under local laws, the present nature of itsactivities, and the present composition of its assets and sources of income,the Bank does not expect to be a PFIC for the current year or for any futureyears. However, because PFIC status is a factual determination made annuallyand because there are uncertainties in the application of the relevant rules,there can be no assurances that the Bank will not be considered to be a PFICfor any particular year.

If for any year in which aU.S. Holder held shares or ADRs, the Bank were to qualify as a PFIC, the U.S.Holder would be subject to special rules with respect to (i) any gainrealized on the sale or other disposition (including a pledge) of the shares orADRs and (ii) any “excess distribution” by the Bank to the U.S. Holder(generally, any distributions to the U.S. Holder in respect of the shares orADRs during a single taxable year to the extent the distributions exceed 125%of the average annual distributions received by the U.S. Holder in respect ofthe shares or ADRs during the three preceding taxable years or, if shorter, theU.S. Holder’s holding period for the shares or ADRs). Under these rules,(i) the gain or excess distribution would be allocated ratably over theU.S. Holder’s holding period for the shares or ADRs, (ii) the amountallocated to the taxable year in which the gain or excess distribution wasrealized would be taxable as ordinary income, (iii) the amount allocatedto each prior year, with certain exceptions, would be subject to tax at thehighest tax rate in effect for that year and (iv) the interest chargegenerally applicable to underpayments of tax would be imposed in respect of thetax attributable to each such year.

U.S. Holders can avoid theinterest charge by making a mark to market election with respect to the ADRsand shares, provided that the shares are “marketable” within the meaning ofU.S. Treasury Regulations. The shares will not be considered “marketable” for purposesof this election unless the exchange or market on which the shares areregularly traded is a qualified exchange or other market. Under U.S. TreasuryRegulations, a foreign stock exchange, such as the ATHEX, may constitute aqualified exchange if it meets certain trading, listing, financial disclosureand other requirements set forth in the regulations. The mark to marketelection will remain in effect unless the IRS consents to revocation, or untilthe shares cease to be marketable. A U.S. Holder that makes a mark to marketelection generally will, subject to certain limitations, be required to takeinto account the difference, if any, between the fair market value and theadjusted tax basis of its ADRs or shares, at the end of a taxable year, as ordinaryincome (or, subject to certain limitations, ordinary loss) in calculating itsincome for such year. In the case of a mark to market election, gains from anactual sale or other disposition of the ADRs or shares will be treated asordinary income, and any losses incurred on a sale or other disposition of theADRs or shares will be treated as ordinary loss to the extent of any net markto market gains for prior years.

Special rules applywith respect to the calculation of the amount of the foreign tax credit withrespect to excess distributions by a PFIC. If the shares or ADRs constituteequity interests in a PFIC, a U.S. Holder will be required to make an annualreturn on Internal Revenue Service Form 8621 regarding distributionsreceived with respect to shares or ADRs and any gain realized on thedisposition (including a pledge) of shares or ADRs.

Prospective investorsshould consult their own tax advisors as to the potential application of thePFIC rules as well as the impact of any proposed legislation that couldaffect them.

**The information set out above is a summary only andU.S. and other taxation may change from time to time. Prospective investorsshould consult their own advisors as to the consequences of the purchase,ownership and disposition of shares and ADRs including, in particular, theeffects of the tax laws of any other jurisdiction.**

**F.   Dividends and Paying Agents**

Not applicable.

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**G.   Statements by Experts**

Not applicable.

**H.   Documents on Display**

NBG has filed with theU.S. Securities and Exchange Commission a registration statement on Form F-1(which, together with all amendments, exhibits and schedules thereto, isreferred to as the “Registration Statement”) under the Securities Act, withrespect to its ordinary shares offered in the United States. NBG is subject tothe reporting requirements of the U.S. Securities Exchange Act of 1934, asamended (known as the “Exchange Act”), applicable to foreign private issuers,and in accordance therewith, is required to file reports, including annualreports on Form 20-F, and other information with the Commission. TheRegistration Statement, including the exhibits and schedules thereto, its annualreports on Form 20-F, and reports and other information filed by NBGwith the Commission may be obtained, upon written request, from The Bank of NewYork, as the depositary referred to under *“Descriptionof American Depositary Receipts”,* at its Corporate Trust Officelocated at 101 Barclay Street, New York, New York 10286. Such reports and otherinformation can be inspected without charge and copied at prescribed rates atthe public reference facility maintained by the Commission in Room 1024,450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices ofthe Commission located at 233 Broadway, New York, New York 10279 and theNorthwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,Illinois 60661-2511. Copies of such material and any part thereof willalso be available by mail from the Public Reference Section of the U.S.Securities and Exchange Commission, at 450 Fifth Street, N.W., Washington, D.C.20549, at prescribed rates. Also, certain reports and other information concerningNBG will be available for inspection at the offices of the New York StockExchange, 20 Broad Street, New York, New York 10005.

NBG will furnish The Bankof New York, as depositary, with annual reports which will include adescription of its business and annual audited consolidated financialstatements prepared in accordance with U.S. GAAP. The Bank of New York hasagreed that, upon receipt of such reports, it will promptly mail such reportsto all record holders of ADRs. NBG will also furnish to The Bank of New Yorksummaries in English or an English version of all notices of shareholders’meetings and other reports and communications that are made generally availableto shareholders of NBG. The Bank of New York has agreed that it will, to theextent permitted by law, arrange for the mailing of such documents to recordholders of ADRs.

NBG, as a foreign privateissuer, is exempt from the rules under the Exchange Act prescribing thefurnishing and content of proxy statements to shareholders and NBG officers,directors and principal shareholders will be exempt from the “short-swingprofits” reporting and liability provisions contained in Section 16 of theExchange Act and the rules promulgated thereunder.

**I.   Subsidiary Information**

Not applicable.

**J.   Relationship with the Hellenic Republic**

**Shareholding**

The Hellenic Republic nolonger owns any portion of the issued share capital of the Bank; certainpension funds (most of whose boards of directors are appointed by the HellenicRepublic) own approximately 17.9% of the issued shares.

The remaining shares areheld by institutional and retail investors in the Hellenic Republic andinstitutional investors internationally. See Item 3.D, *“Risk Factors—State-related entities may have animportant influence on the Bank”.*

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**Hellenic Republic as Shareholder**

Not applicable.

**Hellenic Republic as Customer**

The Hellenic Republic,including state-related entities, is a large customer of the Bank interms of loans and Deposits. At December 31, 2006, approximately 3.3% ofthe Bank’s outstanding gross loans were to the Hellenic Republic and state-relatedentities, and approximately 3.9% of the Bank’s deposits were from the HellenicRepublic and state-related entities. The commercial relationship betweenthe Bank, the Hellenic Republic and other state-owned enterprises isconducted on a normal “arm’s length” basis. The Group’s senior managementbelieves that the commercially-oriented strategy currently beingimplemented will continue for the foreseeable future.

**ITEM11**            QUANTITATIVE ANDQUALITATIVE DISCLOSURES ABOUT MARKET RISK

***Interest Rate Risk***

We are subject to varioustypes of interest rate risk, which arise in the activities outlined below.Management characterizes these types as fixed interest rate risk, repricing (orgap) risk, and credit spread risk.

*Principal activities*

We are the principalmarket maker in Greek Government bonds and are active in Euro-denominatedinterest rate swaps. We routinely enter into asset swaps of foreign currencydenominated debt issued by Greece for the purpose of servicing institutionalclients. We are active in trading and carry a small inventory of internationalinvestment grade corporate debt securities. The Bank is also active in theinterbank deposit market. Our relatively large inventory facilitates ourmarket-making activity and the distribution of Greek Government bonds to retailand institutional investors in Greece and abroad.

We also enter into futurescontracts on medium- and long-term German government bonds in order to providean economic hedge of fixed interest rate exposure arising from our position infixed-rate Greek Government bonds. As a result of this economic hedgingactivity, fixed rate exposure is converted into a credit-spread exposure overthe yield of medium-and long-term German government bonds, which ischaracterized by moderate movement resulting in lower volatility. As asecondary means of hedging the trading portfolio of Greek Government bonds, theBank also uses the swap market to convert part of the fixed rate exposure to afloating rate exposure in order to reduce earnings volatility in periods ofvolatile interest rates.

*Interest rate exposure management*

The principal source ofinterest rate risk exposure arises from Greek Government bonds tradingactivity. We enter into futures contracts on medium-and long-term Germangovernment bonds in order to hedge our fixed interest rate exposure arisingfrom our position in fixed-rate Greek government bonds. As a result of thishedging activity, our fixed rate exposure is converted into a credit-spread exposureover the yield of medium-and long-term German government bonds. As a secondarymeans of hedging our trading portfolio of Greek Government bonds, we also usethe swap market to convert part of the fixed rate exposure to a floating rateexposure in order to reduce earnings volatility in periods of volatile interestrates. The derivatives business is subject primarily to interest rate, creditrisk and counterparty risk. The money market business is geared towards lendingthe excess liquidity of the Bank for short maturities to the interbank market.

The fixed interest raterisk due to the bond as well as the swaps portfolio, together with their hedgedinstruments, is monitored by converting the notional amount positions intoconstant maturity positions 

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(i.e.,ten-year equivalent positions). Furthermore, a breakdown of the fixed interestrisk into maturing buckets is performed and a Value at Risk (“VAR”) report isproduced daily taking into account the trading and AFS positions of theTreasuries of the Bank.

*Repricing risk*

The floating rateportfolio of securities is matched primarily against the Bank’s deposit base.The portfolio of floating Greek government bonds reprices annually and isfunded by the Bank’s retail deposit base with an average duration of one month.The difference of the volatility in short-term euro interest rates between onemonth and one year has been minimal.

*Spread risk*

Spread and basis risk arises from the hedging of Greekgovernment bonds with futures contracts on euro-denominated German governmentbonds, as well as with interest rate and cross currency swaps. Since thedrachma joined the eurozone, the hedging of Greek government bonds with futurecontracts on German government bonds, results in a spread which exhibits a verylow volatility. With respect to the hedging of Greek government bonds withinterest rate and cross currency swaps, the fixed rate risk is converted intofloating rate risk, as the floating feature of the related swaps is indexed tothe European Interbank Offered Rate, commonly known as EURIBOR. Again thisasset swap spread of the Greek sovereign debt is subject to very low volatilitysince the entry of the Greek drachma into the Eurozone.

The Group also carries aninventory of foreign currency fixed and floating rate Eurobonds issued by theHellenic Republic, which behave in the same manner as the asset swap positionsmentioned above.

*Assets andLiabilities by Currency Denominations*

Please see Item 5.B, *“Liquidity and Capital Resources—Assets and Liabilities by CurrencyDenominations”*.

***Liquidity risk***

Please see Item 5.B, “*Liquidityand Capital Resources—Liquidity Exposure*”.

***Foreign exchange risk***

The Bank trades in all major currencies holding mainlyshort-term positions, which arise from and are used for servicing ourinstitutional, corporate, domestic and international clientele.

The Bank’s strategy is to hold minimal open foreignexchange risk but at a level sufficient to service our client base. In thiscontext, the non-euro denominated Eurobond positions are funded by customer andinterbank deposits in the respective currencies. The Bank’s open foreignexchange position is limited to the capital contributed to the operationsoutside Greece (branches and subsidiaries) with the associated foreign exchangerisk. In addition, because non-euro denominated expenses are largely offset bynon-euro denominated revenues, the foreign exchange risk is low.

The Bank files standardforeign exchange position reports on a regular basis, which enables the CentralBank to monitor our foreign exchange risk. VAR limits are set according to theguidelines of the Group’s Risk Management Council and monitored by the InternalAudit Division.

***Emerging marketsrisk***

We are present in Turkey,Bulgaria, Albania, FYROM, Romania, Serbia and Egypt, all of which areconsidered emerging markets.

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Our primary focus is toservice our Greek corporate clients expanding their activities in thesecountries and provide them with a full range of services. In these markets, wehave a local funding base (consisting of retail, corporate and interbankdeposits) and invest in short-term domestic sovereign debt. We also placeexcess liquidity with local branches of international banks or thecreditworthiest domestic financial institutions. Our strategy is to minimizeopen foreign exchange positions in these countries and to hold a largelymatched interest rate exposure profile. Foreign exchange and interest ratepositions arising from our presence in emerging markets are centrally monitoredon a daily basis by our Treasury and Risk Management Divisions and measuredagainst the corresponding limits and are reported to the local supervisoryauthorities, as required.

**Sensitivity analysis**

We made certainassumptions in calculating fair values for presentation in the U.S. GAAPFinancial Statements. These assumptions are stated in Note 36 to the U.S.GAAP Financial Statements and include the notion that assets and liabilitiesthat reprice or mature within a relatively short period of time have a fairvalue that approximates their carrying amount. However, for the purposes of thesensitivity analysis below, we included assets and liabilities that mature orreprice within a relatively short period of time and calculated the effect onthe fair value of all positions. The effect that financial instruments, whichreprice frequently or have short periods to maturity, had on the revised fairvalues was immaterial.

***Interest ratesensitivity analysis***

We have performed asensitivity analysis that estimated the impact that a change in interest rateswould have on the fair value of financial instruments held as atDecember 31, 2006. The analysis below was performed based on the followingassumptions:

*Balance sheet items (except Derivative financialinstruments)*

·       Allbalance sheet items have been revalued assuming both a 0.5% and a 1% for 2005and a 0.5% and a 1% for 2006 (i.e., 50 and 100 basis points) increase ininterest rates and both a 0.5% and a 1% for 2005 and a 0.5% and a 1% for 2006(i.e., 50 and 100 basis points) decrease in interest rates across the maturityladder (i.e. “parallel shift of the yield curve”). For 2005 and 2006 in thenegative shifts (i.e. -100, -50 basis points), the JPY rates werenot changed because the biggest part of each corresponding curve was less than 100basis points. For 2006, TRY balance sheet items have been revalued assumingboth a 1.0% and a 1.5% (i.e., 100 and 150 basis points) increase and both a1.0% and 1.5% for 2006 (i.e., 100 and 150 basis points) decrease in interestrates across the maturity ladder.

·       Theinterest rate basis used for short-term instruments maturing or repricingwithin one year varied depending upon the currency in which the instrument isdenominated. For example, for instruments denominated in euro, EURIBOR wasused; for instruments denominated in currencies that are not fixed to the euro,the London Interbank Offered Rate, commonly referred to as “LIBOR” was used.

·       Thebond yield curves were used as the basis for valuing instruments withmaturities or repricing intervals of over one year. The yield curves wereadjusted uniformly to the changes in interest rates. Future loan cashflows werediscounted using the interest rates implied by the bond yield curves, increasedby 1.5% (150 basis points) which represents a uniform credit spread thatmanagement believes to be representative of the average spread applicable tothe relevant loan accounts.

·       All other variables, suchas foreign currency exchange rates, were held constant.

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*Derivativefinancial instruments*

·       Allderivative financial instruments have been revalued assuming both a 0.5% and a1.0% for 2005 and a 0.5% and a 1.0% for 2006 (i.e., 50 and 100 basis points)increase and both a 0.5% and a 1.0% for 2005 and a 0.5% and a 1.0% for 2006(i.e. 50 and 100 basis points) decrease in interest rates across the maturityladder, (i.e., “parallel shift of the yield curve”.), except for TRY financialinstruments, which were revalued assuming both a 1.0% and a 1.5% for 2006(i.e., 100 and 150 basis points) increase and both a 1.0% and a 1.5% for 2006(i.e., 100 and 150 basis points) decrease in interest rates across the maturityladder. For 2005, in the negative shifts (i.e. -100, -50 basispoints), the JPY rates were not changed because the biggest part of eachcorresponding curve was less than 100 basis points. For 2006 in the negativeshifts (i.e. -100, -50 basis points), the JPY rates were notchanged because the biggest part of each corresponding curve was less than 100basis points.

·       Theinterest rate basis used for short-term instruments maturing or repricingwithin one year varied depending upon the currency in which the instrument isdenominated. For example, for derivative instruments denominated in euro,EURIBOR was used; for derivative instruments denominated in currencies that arenot fixed to the euro, LIBOR was used.

·       Theswap yield curves were used as the basis for valuing derivative instrumentsexcept from bond futures which were valued based on the bond yield curves. Theyield curves were adjusted parallel to the changes in interest rates.

·       All other variables, suchas foreign currency exchange rates, were held constant. Please see Item 11 “*Foreign Currency Exchange Sensitivity Analysis*”.

|                                                    | ** ** | **December 31, 2006**  | ** ** | **Market Value Change** | ** ** | **Market Value Change** | ** ** |
|----------------------------------------------------|------------|----------------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| ** **                                         | ** ** | **Carrying  Amount**             | ** ** | **Fair value**               | ** ** | **+100bps**                       | ** ** | **-100bps** | ** ** | **+50bps** | ** ** | **-50bps** | ** ** |
| ** **                                         | ** ** | **(EUR in thousands)** | ** ** |
| **Assets**                                         |       |                             |       |                              |       |                              |       |   |   |   |   |   |   |
| Deposits with central bank                         |       | 2,110,191                        |       | 2,110,191                         |       | (4,598                            | )          | 4,659 |   | (5,071 | ) | 5,199 |   |
| Securities purchased under agreements to resell    |       | 2,398,097                        |       | 2,398,097                         |       | (3,458                            | )          | 3,471 |   | (1,731 | ) | 1,734 |   |
| Interest bearing deposits with banks               |       | 2,272,043                        |       | 2,270,151                         |       | (17,768                           | )          | 18,826 |   | (9,816 | ) | 10,107 |   |
| Money market investments                           |       | 367,653                          |       | 367,653                           |       | (485                              | )          | 492 |   | (243 | ) | 245 |   |
| Debt and equity trading assets                     |       | 12,682,153                       |       | 12,682,153                        |       | (103,801                          | )          | 28,394 |   | (50,343 | ) | 29,742 |   |
| Derivative assets                                  |       | 325,013                          |       | 325,013                           |       | 135,751                           |       | (94,985 | ) | 69,228 |   | (58,335 | ) |
| Available-for-sale securities at fair value        |       | 4,155,066                        |       | 4,155,066                         |       | (51,303                           | )          | 46,658 |   | (31,654 | ) | 29,101 |   |
| Held to maturity                                   |       | —                           |       | —                            |       | —                            |       | — |   | — |   | — |   |
| Net Loans                                          |       | 42,532,086                       |       | 43,555,342                        |       | (255,002                          | )          | 279,262 |   | (200,235 | ) | 212,499 |   |
| **Total interest rate sensitive assets**           | ** ** | **66,842,302**                   | ** ** | **67,863,666**                    | ** ** | **(300,664**                      | **)**      | **286,777** | ** ** | **(229,865** | **)** | **230,292** | ** ** |
| **Liabilities**                                    |       |                             |       |                              |       |                              |       |   |   |   |   |   |   |
| Deposits                                           |       | 55,885,061                       |       | 55,819,163                        |       | 108,215                           |       | (109,353 | ) | 81,214 |   | (85,410 | ) |
| Central bank borrowings                            |       | 1,024                            |       | 1,024                             |       | —                            |       | — |   | — |   | — |   |
| Securities sold under agreements to repurchase     |       | 3,037,503                        |       | 3,037,503                         |       | 4,188                             |       | (4,211 | ) | 2,133 |   | (2,139 | ) |
| Other borrowed funds                               |       | 295,243                          |       | 302,089                           |       | 14,739                            |       | (15,219 | ) | 21,936 |   | (23,016 | ) |
| Derivative liabilities                             |       | 423,685                          |       | 423,685                           |       | (47,082                           | )          | 72,683 |   | (27,290 | ) | 30,723 |   |
| Long term debt                                     |       | 4,445,565                        |       | 4,412,288                         |       | 77,527                            |       | (89,645 | ) | 66,340 |   | (70,019 | ) |
| **Total interest rate sensitive liabilities**      | ** ** | **64,088,081**                   | ** ** | **63,995,752**                    | ** ** | **157,587**                       | ** ** | **(145,745** | **)** | **144,333** | ** ** | **(149,861** | **)** |
| **Total  interest rate balance sheet sensitivity** | ** ** | ** **                       | ** ** | ** **                        | ** ** | **(143,077**                      | **)**      | **141,032** | ** ** | **(85,532** | **)** | **80,431** | ** ** |

 

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| ** **                                   | ** ** | **December 31, 2006**  | ** ** | **Market Value Change** | ** ** | **Market Value Change** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| ** **                                   | ** ** | **Notional  Value**              | ** ** | **Fair value**               | ** ** | **+100bps**                       | ** ** | **-100bps** | ** ** | ** +50bps ** | ** ** | **-50bps** | ** ** |
| ** **                                   | ** ** | **(EUR in thousands)** | ** ** |
| **Derivatives**                              |       |                             |       |                              |       |                              |       |   |   |   |   |   |   |   |   |   |   |
| Interest rate swaps                          |       | 20,809,831                       |       |                              | (83,535    | )                                 |       | (161,185 | ) | 235,694 |   |   | (90,559 | ) |   | 102,212 |   |
| Cross currency interest rate swaps           |       | 1,620,339                        |       |                              | 40,393     |                              |       | 19,847 |   | (4,009 | ) |   | 14,741 |   |   | (6,691 | ) |
| Foreign exchange swaps                       |       | 5,231,321                        |       |                              | (74,714    | )                                 |       | 80 |   | (360 | ) |   | 70 |   |   | (210 | ) |
| Financial futures                            |       | 6,911,016                        |       |                              | 23,647     |                              |       | 213,307 |   | (229,810 | ) |   | 108,620 |   |   | (112,743 | ) |
| Outright foreign exchange forwards           |       | 1,576,966                        |       |                              | 5,599      |                              |       | (257 | ) | 810 |   |   | (178 | ) |   | 191 |   |
| Options                                      |       | 4,143,857                        |       |                              | (10,069    | )                                 |       | 16,877 |   | (24,627 | ) |   | 9,244 |   |   | (10,371 | ) |
| Forward rate agreements                      |       | 24,593                           |       |                              | 7          |                              |       | — |   | — |   |   | — |   |   | — |   |
| Total interest  rate derivatives sensitivity |       |                             |       |                              |       |                              |       | 88,669 |   | (22,302 | ) |   | 41,938 |   |   | (27,612 | ) |

 

| ** **                                              | ** ** | **December 31, 2005**  | ** ** | **Market Value Change** | ** ** | **Market Value Change** | ** ** |
|---------------------------------------------------------|------------|----------------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| ** **                                              | ** ** | **Carrying  Amount**             | ** ** | **Fair value**               | ** ** | **+100bps**                       | ** ** | **-100bps** | ** ** | **+50bps** | ** ** | **-50bps** | ** ** |
| ** **                                              | ** ** | **(EUR in thousands)** | ** ** |
| **Assets**                                              |       |                             |       |                              |       |                              |       |   |   |   |   |   |   |
| Deposits with  central bank                             |       | 1,184,383                        |       | 1,184,383                         |       | (1,683                            | )          | 1,666 |   | (842 | ) | 838 |   |
| Securities purchased  under agreements to resell   |       | 2,495,733                        |       | 2,495,733                         |       | (6,924                            | )          | 6,960 |   | (3,467 | ) | 3,476 |   |
| Interest bearing  deposits with banks                   |       | 1,322,015                        |       | 1,322,015                         |       | (11,551                           | )          | 12,013 |   | (5,832 | ) | 5,948 |   |
| Money market  investments                               |       | 179,073                          |       | 179,073                           |       | (56                               | )          | 56 |   | (28 | ) | 28 |   |
| Debt and equity  trading assets                         |       | 13,663,419                       |       | 13,663,419                        |       | (178,474                          | )          | 105,018 |   | (82,082 | ) | 63,919 |   |
| Derivative assets                                       |       | 284,469                          |       | 284,469                           |       | (335,293                          | )          | 471,794 |   | (186,969 | ) | 210,924 |   |
| Available-for-sale  securities at fair value            |       | 2,607,009                        |       | 2,607,009                         |       | (59,714                           | )          | 46,985 |   | (30,508 | ) | 23,000 |   |
| Held to maturity                                        |       | 20,867                           |       | 20,867                            |       | —                            |       | — |   | — |   | — |   |
| Loans                                                   |       | 29,581,628                       |       | 30,242,207                        |       | (123,282                          | )          | 131,304 |   | (62,579 | ) | 64,581 |   |
| **Total  interest rate sensitive   assets**             | ** ** | **51,338,596**                   | ** ** | **51,999,175**                    | ** ** | **(716,977**                      | **)**      | **775,796** | ** ** | **(372,307** | **)** | **372,714** | ** ** |
| **Liabilities**                                         |       |                             |       |                              |       |                              |       |   |   |   |   |   |   |
| Deposits                                                |       | 45,251,084                       |       | 45,252,049                        |       | 85,979                            |       | (81,454 | ) | 42,084 |   | (41,179 | ) |
| Central bank  borrowings                                |       | 353                              |       | 353                               |       | —                            |       | — |   | — |   | — |   |
| Securities sold  under agreements to repurchase         |       | 2,726,817                        |       | 2,726,817                         |       | 2,348                             |       | (2,354 | ) | 1,174 |   | (1,176 | ) |
| Other borrowed  funds                                   |       | 195,690                          |       | 195,690                           |       | 4,064                             |       | (4,208 | ) | 2,049 |   | (2,087 | ) |
| Derivative  liabilities                                 |       | 297,867                          |       | 297,867                           |       | 512,246                           |       | (584,945 | ) | 266,010 |   | (280,256 | ) |
| Long term debt                                          |       | 2,151,942                        |       | 2,061,553                         |       | 72,479                            |       | (82,783 | ) | 37,213 |   | (39,719 | ) |
| **Total  interest rate sensitive liabilities**          | ** ** | **50,623,753**                   | ** ** | **50,534,329**                    | ** ** | **677,116**                       | ** ** | **(755,744** | **)** | **348,530** | ** ** | **(364,417** | **)** |
| **Total interest rate balance  sheet sensitivity** | ** ** | ** **                       | ** ** | ** **                        | ** ** | **(39,861**                       | **)**      | **20,052** |   | **(23,777** | **)** | **8,297** |   |

 

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| ** **                                   | ** ** | **December 31, 2005**  | ** ** | **Market Value Change** | ** ** | **Market Value Change** | ** ** |
|----------------------------------------------|------------|----------------------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| ** **                                   | ** ** | **Notional  Value**              | ** ** | **Fair value**               | ** ** | **+100bps**                       | ** ** | **-100bps** | ** ** | **+50bps** | ** ** | **-50bps** | ** ** |
| ** **                                   | ** ** | **(EUR in thousands)** | ** ** |
| **Derivatives**                              |       |                             |       |                              |       |                              |       |   |   |   |   |   |   |   |   |
| Interest rate  swaps                         |       | 24,695,592                       |       |                              | (28,387    | )                                 |       | (202,722 | ) | 266,019 |   | (113,359 | ) | 117,352 |   |
| Cross currency  interest rate swaps          |       | 330,321                          |       |                              | (38,845    | )                                 |       | 15,400 |   | 822 |   | 7,908 |   | 407 |   |
| Foreign exchange  swaps                      |       | 5,057,523                        |       |                              | 25,289     |                              |       | (15 | ) | (505 | ) | (7 | ) | (254 | ) |
| Financial futures                            |       | 12,038,961                       |       |                              | 20,341     |                              |       | 352,943 |   | (376,754 | ) | 179,313 |   | (185,262 | ) |
| Outright foreign  exchange forwards          |       | 489,750                          |       |                              | 6,017      |                              |       | (88 | ) | 848 |   | (45 | ) | 414 |   |
| Options                                      |       | 1,512,906                        |       |                              | 2,187      |                              |       | 11,434 |   | (3,580 | ) | 5,232 |   | (1,989 | ) |
| Total interest rate  derivatives sensitivity |       |                             |       |                              |       |                              |       | 176,952 |   | (113,150 | ) | 79,042 |   | (69,332 | ) |

 

The absolute market value change of our debt andequity trading assets in a 100 basis points parallel shift of the yield curvehas decreased from €178.5 million (upwardshift) and €105.0million (downward shift) in 2005 to €103.8 million (upwardshift) and €28.4million (downward shift) in 2006 reflecting lower levels of interest rate riskas well as the decrease of our trading portfolio.

The absolute market value change of ouravailable-for-sale securities in a 100 basis points parallel shift of the yieldcurve remained stable from €59.7 million (upwardshift) and €47million (downward shift) in 2005 to €51.3 million (upwardshift) and €46.7million (downward shift) in 2006, respectively, despite the increase of ouravailable-for-sale portfolio, due to the lower levels of interest rate risk.

The market value change of our loan portfolio in a 100basis points parallel shift of the yield curve has increased from €123.3million (upward shift) and €131.3 million (downward shift) in 2005 to €255million (upward shift) and €279.3 million (downward shift) in 2006,reflecting the increase of our loan portfolio, as well as the increase of fixedrate loans (mainly corporate bond loans) as a percentage of total loansespecially after the Finansbank acquisition.

On the liabilities side, the market value change ofour deposits in a 100 basis points parallel shift of the yield curve increasedfrom €86million (upward shift) and €81.5 million (downward shift) in 2005 to €108.2million (upward shift) and €109.4 million, reflecting the increase in thevolume of our deposits.

The absolute market valuechange of our derivatives portfolio in a 100 basis points parallel shift of theyield curve decreased from €176.9 million (upwardshift) and €113.2million (downward shift) in 2005 to €88.7 million (upwardshift) and €22.3million (downward shift) in 2006. This is mainly attributable to the reducedposition in bond Futures for 2006.

***Foreign currency exchange sensitivity analysis***

We deal in several currencies hence, a sensitivityanalysis has been performed to show the effects that a simultaneous change ofall currencies against the euro would have on our financial position.

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The foreigncurrency exchange sensitivity analysis below was performed based on thefollowing assumptions:

*Balance sheet items*

·       For the fiscal year ended December 31,2005 and 2006 all balance sheet items have been revalued assuming a 10%increase and a 10% decrease in the value of all currencies other than the euroand those currencies that are denominations of the euro against the euro.

·       All other variables, suchas interest rates, were held constant.

| ** **                                            | ** ** | **December 31, 2006**  | ** ** | **Market Value Change** | ** ** |
|-------------------------------------------------------|------------|----------------------------------|------------|-----------------------------------|------------|
| ** **                                            | ** ** | **Carrying  amount**             | ** ** | **Fair value**               | ** ** | **+10%** | ** ** | **-10%** | ** ** |
| ** **                                            | ** ** | **(EUR in thousands)** | ** ** |
| **Assets**                                            | ** ** | ** **                       | ** ** | ** **                        | ** ** | ** ** |   | ** ** | ** ** |
| Cash and due from  banks                              |       | 1,863,974                        |       | 1,863,974                         |       | 86,250 |   | (70,568 | ) |
| Deposits with  central bank                           |       | 2,110,191                        |       | 2,110,191                         |       | 51,721 |   | (42,318 | ) |
| Securities  purchased under agreements to resell |       | 2,398,097                        |       | 2,398,097                         |       | 1,354 |   | (1,108 | ) |
| Interest bearing  deposits with banks                 |       | 2,272,043                        |       | 2,270,151                         |       | 195,590 |   | (160,028 | ) |
| Money market  investments                             |       | 367,653                          |       | 367,653                           |       | 22,111 |   | (18,091 | ) |
| Debt and equity  trading assets                       |       | 12,682,153                       |       | 12,682,153                        |       | 36,482 |   | (29,849 | ) |
| Derivative assets                                     |       | 325,013                          |       | 325,013                           |       | 203,086 |   | (192,557 | ) |
| Available-for-sale  securities at fair value          |       | 4,155,066                        |       | 4,155,066                         |       | 176,784 |   | (144,642 | ) |
| Net loans                                             |       | 42,532,086                       |       | 43,555,342                        |       | 1,030,828 |   | (843,404 | ) |
| Total foreign exchange  sensitive assets              |       | 68,706,276                       |       | 69,727,640                        |       | 1,804,206 |   | (1,502,565 | ) |
| **Liabilities**                                       | ** ** | ** **                       | ** ** | ** **                        | ** ** | ** ** |   | ** ** | ** ** |
| Deposits                                              |       | 55,885,061                       |       | 55,819,163                        |       | (1,507,609 | ) | 1,233,498 |   |
| Central bank  borrowings                              |       | 1,024                            |       | 1,024                             |       | (111 | ) | 91 |   |
| Securities sold under agreements  to repurchase  |       | 3,037,503                        |       | 3,037,503                         |       | (8,401 | ) | 6,873 |   |
| Derivative  liabilities                               |       | 423,685                          |       | 423,685                           |       | 527,250 |   | (478,223 | ) |
| Other borrowed  funds                                 |       | 295,243                          |       | 302,089                           |       | (32,582 | ) | 26,658 |   |
| Long-term  debt                                       |       | 4,445,565                        |       | 4,412,288                         |       | (277,193 | ) | 226,794 |   |
| Insurance  reserves                                   |       | 1,733,566                        |       | 1,733,566                         |       | (6,014 | ) | 4,920 |   |
| Total foreign  exchange sensitive liabilities         |       | 65,821,647                       |       | 65,729,318                        |       | (1,304,660 | ) | 1,020,611 |   |
| Total foreign  exchange balance sheet sensitivity     |       |                             |       |                              |       | 499,546 |   | (481,954 | ) |

 

| ** **                                      | ** ** | **December 31, 2006** | ** ** | **Market Value Change** | ** ** |
|-------------------------------------------------|------------|----------------------------|------------|-------------------------|------------|
| ** **                                      | ** ** | **Notional  Value**        | ** ** | **Fair value**     | ** ** | **+10%** | ** ** | **-10%** | ** ** |
| ** **                                      | ** ** | **(EUR in thousands)**     | ** ** |
| **Derivatives**                                 | ** ** | ** **                 | ** ** | ** **              | ** ** | ** ** |   | ** ** | ** ** |
| Interest rate  swaps                            |       | 20,809,831                 |       | (83,535                 | )          | (2,892 | ) | 2,629 |   |
| Cross currency  interest rate swaps             |       | 1,620,339                  |       | 40,393                  |       | 113,995 |   | (115,546 | ) |
| Foreign exchange  swaps                         |       | 5,231,321                  |       | (74,714                 | )          | 437,101 |   | (395,475 | ) |
| Financial futures                               |       | 6,911,016                  |       | 23,647                  |       | 182,478 |   | (165,892 | ) |
| Outright foreign  exchange forwards             |       | 1,576,966                  |       | 5,599                   |       | 1,184 |   | (1,073 | ) |
| Options                                         |       | 4,143,857                  |       | (10,069                 | )          | (1,530 | ) | 4,577 |   |
| Forward rate agreements                         |       | 24,593                     |       | 7                       |       | — |   | — |   |
| Total foreign exchange  derivatives sensitivity |       |                       |       |                    |       | 730,336 |   | (670,780 | ) |

 

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| ** **                                                                  | ** ** | **December 31, 2005** | ** ** | **Market Value Change** | ** ** |
|-----------------------------------------------------------------------------|------------|---------------------------------|------------|-----------------------------------|------------|
| ** **                                                                  | ** ** | **Carrying  amount**            | ** ** | **Fair value**               | ** ** | **+10%** | ** ** | **-10%** | ** ** |
| ** **                                                                  | ** ** | **(EUR in thousands)**          | ** ** |
| **Assets**                                                                  | ** ** | ** **                      | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash and due from  banks                                                    |       | 1,510,972                       |       | 1,510,972                         |       | 38,146 |   | (31,211 | ) |
| Deposits with  central bank                                                 |       | 1,184,383                       |       | 1,184,383                         |       | 12,968 |   | (10,610 | ) |
| Federal funds  sold and securities purchased under agreements to resell     |       | 2,495,733                       |       | 2,495,733                         |       | 228 |   | (187 | ) |
| Interest bearing  deposits with banks                                       |       | 1,322,015                       |       | 1,322,015                         |       | 116,044 |   | (94,945 | ) |
| Money market  investments                                                   |       | 179,073                         |       | 179,073                           |       | 12,353 |   | (10,107 | ) |
| Debt and equity  trading assets                                             |       | 13,663,419                      |       | 13,663,419                        |       | 19,262 |   | (15,760 | ) |
| Derivative assets                                                           |       | 284,469                         |       | 284,469                           |       | 7,042 |   | (5,762 | ) |
| Available-for-sale,  at fair value                                          |       | 2,627,876                       |       | 2,627,876                         |       | 61,780 |   | (50,548 | ) |
| Net loans                                                                   |       | 29,581,628                      |       | 30,242,207                        |       | 366,510 |   | (299,872 | ) |
| Customers’  liability on acceptances                                   |       | 205                             |       | 205                               |       | 23 |   | (19 | ) |
| Total foreign  exchange sensitive assets                                    |       | 52,849,773                      |       | 53,510,352                        |       | 634,356 |   | (519,021 | ) |
| **Liabilities**                                                             | ** ** | ** **                      | ** ** | ** **                        | ** ** | ** ** | ** ** | ** ** | ** ** |
| Deposits                                                                    |       | 45,251,084                      |       | 45, 252,049                       |       | (998,136 | ) | 816,656 |   |
| Central bank  borrowings                                                    |       | 353                             |       | 353                               |       | (39 | ) | 32 |   |
| Federal funds  purchased and securities sold under agreements to repurchase |       | 2,726,817                       |       | 2,726,817                         |       | (4,882 | ) | 3,995 |   |
| Other borrowed  funds                                                       |       | 195,690                         |       | 195,690                           |       | (63,876 | ) | 52,262 |   |
| Derivative  liabilities                                                     |       | 297,867                         |       | 297,867                           |       | (13,091 | ) | 10,711 |   |
| Long-term  debt                                                             |       | 2,151,942                       |       | 2,061,553                         |       | (472 | ) | 386 |   |
| Insurance  reserves                                                         |       | 1,537,128                       |       | 1,537,128                         |       | (4,129 | ) | 3,378 |   |
| Total foreign  exchange sensitive liabilities                               |       | 52,160,881                      |       | 52,071,457                        |       | (1,084,625 | ) | 887,420 |   |
| Total foreign exchange  balance sheet sensitivity                           |       |                            |       |                              |       | (450,269 | ) | 368,399 |   |

 

| ** **                                      | ** ** | **December 31, 2005** | ** ** | **Market Value Change** | ** ** |
|-------------------------------------------------|------------|---------------------------------|------------|-----------------------------------|------------|
| ** **                                      | ** ** | **Notional  Value**             | ** ** | **Fair value**               | ** ** | **+10%** | ** ** | **-10%** | ** ** |
| ** **                                      | ** ** | **(EUR in thousands)**          | ** ** |
| **Derivatives**                                 | ** ** | ** **                      | ** ** |                              | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| Interest rate  swaps                            |       | 24,695,592                      |       |                              | (28,387    | ) |   | (3,022 | ) | 2,747 |   |
| Cross currency  interest rate swaps             |       | 330,321                         |       |                              | (38,845    | ) |   | (19,082 | ) | 17,347 |   |
| Foreign exchange  swaps                         |       | 5,057,523                       |       |                              | 25,289     |   |   | 366,889 |   | (333,536 | ) |
| Financial futures                               |       | 12,038,961                      |       |                              | 20,341     |   |   | 54,556 |   | (49,596 | ) |
| Outright foreign  exchange forwards             |       | 489,750                         |       |                              | 6,017      |   |   | (4,532 | ) | 4,120 |   |
| Options                                         |       | 1,512,906                       |       |                              | 2,187      |   |   | 13,265 |   | (3,468 | ) |
| Total foreign exchange  derivatives sensitivity |       |                            |       |                              |       |   |   | 408,074 |   | (362,386 | ) |

 

**ITEM 12**            DESCRIPTIONOF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

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**PART II**

**ITEM 13**            DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

**ITEM 14**            MATERIALMODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A.    On April 26,2001, the Bank’s shareholders voted at a Repeat General Meeting of Shareholdersto approve resolutions to express the nominal value of the Bank’s shares andthe Bank’s share capital in euro as well as drachma, to repurchase from DEKAand cancel 6,461,096 shares of the Bank and to increase the nominal value ofthe Bank’s shares from GRD 1,450 or €4.26 to GRD 1,533.75 or €4.50.These resolutions received the requisite ratification of the Greek Ministry ofDevelopment on May 23, 2001. On the same day, the Bank’s Board ofDirectors certified the increase of the share capital and the Bank’s Articlesof Association were amended. The Bank’s share began trading with its newnominal value on the ASE on May 28, 2001.

On May 9, 2002, the Bank’s shareholders voted ata Repeat General Meeting of Shareholders to approve resolutions to express thenominal value of the Bank’s shares and the Bank’s share capital ineuro only.

On November 20, 2002, the Bank’s share capitalwas increased by €17,057,403 resulting fromthe contribution of €8,086,472.32in connection with the merger by absorption of ETEBA, the Bank’s investmentbanking subsidiary in Greece, and from the capitalization of €8,970,930.68of the share premium reserve of the Bank so that the nominal value of the Bank’sshares following the ETEBA merger would remain €4.50.

On May 9, 2003, the annual shareholders’ meetingapproved the increase in the Bank’s share capital by €104,341,945.50through capitalization of reserves, and the issuance of 23,187,099 new bonusshares to be distributed to the Bank’s shareholders in proportion of one newshare for every ten shares held as of the record date, May 30, 2003.Following the issuance of the bonus shares, the Bank’s share capital is €1,147,761,382.50,represented by 255,058,085 fully-paid shares, nominal value €4.50per share.

On May 18, 2004, the Bank’s shareholders at theAnnual General Meeting approved the increase in the Bank’s share capital by €344,328,417through capitalization of reserves and the issuance of 76,517,426 new bonusshares to be distributed to the Bank’s shareholders in a proportion of threenew share for every ten shares held as of the record date, June 10, 2004.Following the issuance of the bonus shares, on June 18, 2004, the Bank’sshare capital is €1,492,089,799.50,represented by 331,575,511 fully-paid shares, with nominal value €4.50per share.

By resolutionadopted by the Second Repeat General Meeting of Shareholders on November 3,2005, the share capital was increased:

(a)          by €101,274,438.72through the absorption, by National Bank of Greece, of the Société Anonyme “NationalInvestment Company S.A.”, in compliance with the provisions of Article 16of Law 2515/1997, in conjunction with the provisions of Articles 1-5 ofLaw 2166/1993 and Articles 68,69-77 of Codified Law 2190/1920.

(b)         by €22,311,177.78resulting from an equivalent capitalization of a part of the Bank’s sharepremium account reserve, which was decided so that the nominal value of thetotal number of the Bank’s shares increases to €4.80, subsequent to themerger by absorption of “National Investment Company S.A.” by National Bank ofGreece.

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By resolutionadopted by the Second Repeat General Meeting of Shareholders on February 3,2006, the share capital was increased:

(a)          by €20,027,755through the absorption, by National Bank of Greece, of the *SociétéAnonyme* “National Real Estate S.A.”, in compliance with theprovisions of Article 16 of Law 2515/1997, in conjunction with theprovisions of Articles 1-5 of Law 2166/1993 and Articles 68, 69-77 of CodifiedLaw 2190/1920.

(b)         by €60,643,889resulting from an equivalent capitalization of a part of the Bank’s sharepremium account reserve, which was decided so that the nominal value of thetotal number of the Bank’s shares increases to €5, subsequent to themerger by absorption of “National Real Estate S.A.” by National Bank of Greece.Thus, the Bank’s share capital on March 31, 2006 increased to €1,696,347,060and was divided into 339,269,412 shares, of a nominal value of €5each.

On June 1, 2006, the Bank’s shareholders at theAnnual General Meeting approved the increase in the share capital of the Bankby €678,538,820,with payment in cash with pre-emptive rights in favor of existing shareholders,at a ratio of 4 new to 10 old shares. The share capital increase was completedon July 7, 2006. A total of 135,707,764 new common registered shares wereissued, of a nominal value of €5 and offer price of €22.11,chiefly for the purpose of the implementation of Finansbank’s acquisition.

On 29 November 2006, the Board of Directorsapproved the issue of 2.992.620 share options under a stock options programapproved by a General Meeting of Shareholders on 22 June 2005 for theexecutive members of the Board of Directors (BoD), management and staff of theGroup. For additional details on the stock option plan see Note 39 to the U.S.GAAP Financial Statements included in this Annual Report. On 21 December 2006,following the completion of the first exercise period of 15% of the shareoptions that were vested immediately with the approval of the Board, a total of310,043 shares were issued, of a nominal value of €5and exercise price of €23.80.

Thus the Bank’sshare capital as of December 31, 2006 amounted to €2,376,436,095,divided into 475,287,219 shares of a nominal value of €5each.

B.     Not applicable.

C.     Notapplicable.

D.    Notapplicable.

E.     Not applicable.

**ITEM 15**            CONTROLSAND PROCEDURES

**(a) DisclosureControls and Procedures**

As of December 31,2006, we performed an evaluation, under the supervision and with theparticipation of our management, including our Chairman and Chief ExecutiveOfficer, Deputy CEO, and Chief Financial Officer and Chief Operations Officerof the effectiveness of our disclosure controls and procedures. There areinherent limitations to the effectiveness of any system of disclosure controlsand procedures including the possibility of human error and the circumventionor overriding of the controls and procedures. Accordingly, even effectivedisclosure controls and procedures can only provide reasonable assurance ofachieving their control objectives. Based upon that evaluation, the ChiefExecutive Officer, Deputy CEO, and Chief Financial Officer and Chief OperationsOfficer have concluded that our disclosure controls and procedures areeffective in providing reasonable assurance that material financial andnon-financial information required to be disclosed in this annual report isrecorded, processed, summarized and reported in a timely manner and that it isaccumulated and communicated to our 

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management,including our Chairman and Chief Executive Officer, Deputy CEO, Chief FinancialOfficer and Chief Operating Officer, as appropriate, to allow timely decisionsregarding required disclosure.

*Disclosure andTransparency Committee*

In June 2003, the Bank’s Management established theDisclosure and Transparency Committee. The purpose of the committee is tomonitor the accuracy and adequacy of the information included in publicannouncements, and generally, in any kind of publications made by the Bank,especially information submitted to the SEC.

The following are members of the Disclosure andTransparency Committee:

Anthimos Thomopoulos(Chairman)Petros Oikonomou Alexandros Tourkolias Agis Leopoulos Alexandros Georgitsis Petros Christodoulou George Paschas Michael OratisPaul Mylonas Ioannis Kyriakopoulos

**(b) Management’s Annual Report on InternalControl over Financial Reporting**

The Management ofthe National Bank of Greece SA is responsible for establishing and maintainingadequate internal control over financial reporting for National Bank of GreeceSA and its subsidiaries (“the Group”).

The Group’sinternal control over financial reporting is a process designed by theManagement of National Bank of Greece SA to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with accounting principlesgenerally accepted in the United States of America.

The Group’s internal control over financial reportingincludes those policies and procedures that:

(i)    pertain to the maintenance of records that,in reasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the Group;

(ii)   provide reasonable assurance that transactionsare recorded as necessary to permit preparation of financial statements inaccordance with accounting principles generally accepted in the United Statesof America, and that receipts and expenditures of the Group are being made onlyin accordance with authorizations of management and directors of the Group; and

(iii) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition, use, or dispositionof the Group’s assets that could have a material effect on the financialstatements.

Because of itsinherent limitations, internal control over financial reporting may not preventor detect misstatements. Also, projections of any evaluation of effectivenessto future periods are subject to the risk that controls may become inadequatebecause of changes in conditions, or that the degree of compliance with thepolicies or procedures may deteriorate.

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Management assessed theeffectiveness of the Group’s internal control over financial reporting as ofDecember 31, 2006, based on criteria established in *Internal Control—Integrated Framework* by the Committee ofSponsoring Organizations of the Treadway Commission in InternalControl—Integrated Framework (COSO). Management excluded from its assessmentthe internal controls over financial reporting of Finansbank, which wasacquired in August 2006. As at and for the year ended December 31, 2007,Finansbank represented 12.4% and 14.1% of the Group’s net and total assetsrespectively, 12.4% of the Group’s total interest and non-interest income, and9.7% of the Group’s net income. Based on that assessment, Management concludedthat, as of December 31, 2006, the Group’s internal control over financialreporting is effective.

Management’s assessment of the effectiveness of theGroup’s internal control over financial reporting as of December 31, 2006, hasbeen audited by Deloitte, an independent registered public accounting firm.

During the year endedDecember 31, 2006, there have been no changes in our internal control overfinancial reporting, that have materially affected, or are reasonably likely tomaterially affect our internal control over financial reporting.

Dated July2, 2007
| /s/ Efstratios-Georgios (Takis) A.  Arapoglou |     |
|-----------------------------------------------|----------|
| Efstratios-Georgios (Takis) A. Arapoglou      | * * |
| *Chairman  and Chief Executive Officer*       | * * |

 
| /s/ Ioannis G. Pechlivanidis                        |     |
|-----------------------------------------------------|----------|
| Ioannis G. Pechlivanidis                            |     |
| *Vice Chairman and Deputy Chief  Executive Officer* | * * |

 
| /s/ Anthimos Thomopoulos                                |     |
|---------------------------------------------------------|----------|
| Anthimos Thomopoulos                                    |     |
| *Chief Financial Officer and  Chief Operations Officer* | * * |

 

**(c) Report of Independent Registered PublicAccounting Firm**

To the Board of Directorsand Shareholders ofNational Bank of Greece S.A. and subsidiariesAthens, Greece

We have audited management’s assessment, included inthe accompanying Management’s Report on Internal Control Over FinancialReporting, that National Bank of Greece S.A. and subsidiaries (the “Group”)maintained effective internal control over financial reporting as of December31, 2006, based on criteria established in Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the TreadwayCommission. As described in Management’s Annual Report on Internal Control overFinancial Reporting, management excluded from its assessment the internalcontrol over financial reporting at Finansbank Anonim Şirketi(“Finansbank”), which was acquired on August 18, 2006 and whose financialstatements constitute 12.4% and 14.1% of net and total assets, respectively,12.4% of “Total interest and non-interest income”, and 9.7% of net income ofthe consolidated financial statement amounts as of and for the year endedDecember 31, 2006.

Accordingly, our audit did not include the internalcontrol over financial reporting at Finansbank. The Group’s management isresponsible for maintaining effective internal control over financial reportingand 

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for its assessment of the effectiveness of internalcontrol over financial reporting. Our responsibility is to express an opinionon management’s assessment and an opinion on the effectiveness of the Group’sinternal control over financial reporting based on our audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting wasmaintained in all material respects. Our audit included obtaining anunderstanding of internal control over financial reporting, evaluatingmanagement’s assessment, testing and evaluating the design and operatingeffectiveness of internal control, and performing such other procedures as weconsidered necessary in the circumstances. We believe that our audit provides areasonable basis for our opinions.

A company’s internal control over financial reportingis a process designed by, or under the supervision of, the company’s principalexecutive and principal financial officers, or persons performing similarfunctions, and effected by the company’s board of directors, management, andother personnel to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. A company’sinternal control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, in reasonabledetail, accurately and fairly reflect the transactions and dispositions of theassets of the company; (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.

Because of the inherent limitations of internalcontrol over financial reporting, including the possibility of collusion orimproper management override of controls, material misstatements due to erroror fraud may not be prevented or detected on a timely basis. Also, projectionsof any evaluation of the effectiveness of the internal control over financialreporting to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate. 

In our opinion, management’s assessment that the Groupmaintained effective internal control over financial reporting as of December31, 2006, is fairly stated, in all material respects, based on the criteriaestablished in Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission. Also in our opinion, theGroup maintained, in all material respects, effective internal control overfinancial reporting as of December 31, 2006, based on the criteria establishedin Internal Control—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission.

We have also audited, inaccordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated balance sheets of Group as of December 31,2006 and 2005, and the related consolidated statements of income, stockholders’equity, and cash flows for each of the three years in the period ended December31, 2006. We did not audit the consolidated financial statements of FinansbankAnonim Şirketi (a consolidated subsidiaryacquired by the Group on August 18, 2006) and its subsidiaries, whichstatements reflect total assets and total interest and non interest incomeconstituting 14.1% and 12.4%, respectively, of the related consolidated totalsfor the year ended December, 31 2006. Our report dated July 2, 2007 expressedan unqualified opinion on those financial statements based on our audit and thereport of other auditors and included explanatory paragraphs regarding to therestatement of the Group’s cash flow statements for the years ended December,31 2005 and 2004 and that our audit also 

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comprehended thetranslation of EUR amounts into U.S. dollars amounts in accordance with Note 2of such consolidated financial statements.

Deloitte, Hadjipavlou,Sofianos & Cambanis S.A.Athens, GreeceJuly 2, 2007

**ITEM 16A**         AUDITCOMMITTEE FINANCIAL EXPERT

On May 18, 2004, the Bank’s Board of Directorsappointed Mr. Stefanos Pantzopoulos, an independent non-executive memberof the Board, as the Audit Committee Financial Expert. Mr. Pantzopoulos isindependent, as that term is defined in the New York Stock Exchange’s manualfor listed companies. Mr. Pantzopoulos holds a degree in economics, was inpublic accounting service in Greece and abroad for more than 35 years andhas served as Chairman and Managing Partner of the Greek practice of ArthurAndersen from 1977 to 1998. During that time, Mr. Pantzopoulos was activelyinvolved in the supervision of the audit (in accordance with U.S. GAAP) of theaccounts of a large number of subsidiary companies, affiliated companies andbranches in Greece of U.S.-based companies. In addition, Mr. Pantzopouloshas served as member of the Supervisory Board of the Greek Certified PublicAccountants’ Association from 1992 to 2000. Mr. Pantzopoulos has alsoserved as member of the Board of Directors of the Hellenic-American Chamber ofCommerce for a number of years. Mr. Pantzopoulos was reappointed by theBank’s Board of Directors as the Audit Committee’s Financial Expert on May25, 2007.

**ITEM 16B**        CODEOF ETHICS

The Bank’s Board of Directors approved a Code ofEthics for Financial Professionals on February 12, 2004, which covers allGroup companies. The Code of Ethics covers the activities of the ExecutiveMembers of the Board of each Group entity, the CEO and CFO of each GroupCompany as well as all persons responsible for the preparation of financialstatements and those dealing with investor relations. The Code of Ethics, amongother matters, includes provisions for compliance with applicable rules andregulations, demonstrating personal integrity, engaging in honest and ethicalconduct, and ensuring that public communications by the Bank are complete,accurate, timely and understandable. A copy of the Code of Ethics for FinancialProfessionals has been posted on the Bank’s website:  www.nbg.gr.

Further, our Board ofDirectors approved a Group Code of Ethics (the “Code of Ethics”) on November 26,2006. All Group companies are obliged to either adopt the Code of Ethics, inthe first six months following its adoption by the Bank, or adjust any existingethics code to agree to the Code of Ethics. The Code of Ethics was sent to eachGroup employee in early 2007. It appropriately covers issues relating toemployee integrity, professionalism and conflict of interests, ethicalbehavior, business conduct with third parties and compliance with rules andregulations. A copy of the Code of Ethics is available on the Bank’s website:www.nbg.gr.

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**ITEM 16C**        PRINCIPALACCOUNTANT FEES AND SERVICES

Deloitte HadjipavlouSofianos & Cambanis S.A. has served as our principal independentpublic accountant for each of the past three years ended December 31, 2004, 2005 and 2006. KPMG was our other significant independent auditor in ourTurkish and certain other foreign operations. The following table presents theaggregate fees for professional audit services and other services rendered by (1) theGroup’s principal accounting firm Deloitte Hadjipavlou Sofianos &Cambanis S.A., the other member firms of Deloitte Hadjipavlou Sofianos &Cambanis S.A., and their respective affiliates (collectively, “Deloitte”) and(2) the Group’s other auditor, KPMG, in 2006 and 2005.

| ** **                     | ** ** | **Year ended  December 31,**    | ** ** |
|--------------------------------|------------|-------------------------------------------|------------|
| **Fees by category** | ** ** | ** **                                | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                     | ** ** | **(amounts in  EUR thousands)** | ** ** |
| Audit fees                     |       | 2,662.9                                   |       | 7,894.4 |   |
| Audit-related  fees            |       | 124.0                                     |       | 295.6 |   |
| Tax fees                       |       | 178.3                                     |       | 48.4 |   |
| All other fees                 |       | 113.0                                     |       | 15.6 |   |
| Total                          |       | 3,078.2                                   |       | 8,254.0 |   |
|                                |            |                                           |            |  |  |  |  |

 

***Audit Fees***

Fees billed for audit services for the year ended December 31,2005 consisted primarily of the audit of the Group’s consolidated U.S. GAAPfinancial statements and the audit of statutory and subsidiary financialstatements. Fees billed for audit services for the year ended December 31,2006 consisted primarily, in addition to the aforementioned services for theprevious year, of services provided for compliance with the Sarbanes-Oxley Actrequirements.

Of fees billed for auditservices for the year ended December 31, 2006, €665.8 thousandwere billed by KPMG.

***Audit-Related Fees***

Fees billed for auditrelated services for the year ended December 31, 2005 and 2006 consistedprimarily of other audit and attest services and system and application controlreviews.

***Tax Fees***

Fees billed for taxservices for the years ended December 31, 2005 and 2006 consistedprimarily of tax compliance, advisory, and planning services and preparation oftax returns.

***All other Fees***

In the year ended December 31, 2005, other feesmainly referred to services provided by our independent public accountants tothe Group’s subsidiaries UBB and Astir Palace Vouliagmenis S.A. Servicesprovided to UBB included permitted human resources services related to UBB’sfunction improvement project, while services provided to Astir PalaceVouliagmenis S.A. related to advice on reorganization. In 2006 other feesmainly related to services provided to UBB for compliance with the requirementsof the central bank.

The Audit Committee has implemented a policy as of May 6,2003 to approve, on a case-by-case basis, all audit-related services, taxservices, and other services in accordance with the rules and regulationsconcerning auditor independence promulgated by the SEC to implement theSarbanes-Oxley Act of 2002. Following its decision on January 30, 2006,the Audit Committee has adopted pre-approval guidelines for 

186

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all allowable non-auditservices to be offered by the Group’s statutory auditors for which the fee isnot higher than the equivalent of €20,000, as well as for servicesto NBG Private Equity Ltd regarding the performance of standard agreed uponprocedures to audit the exit calculations of Fund investments. These servicesmay be approved by the Chief Financial Officer and the Audit Committee’sapproval is obtained at the next Audit Committee meeting. All other allowableaudit and non-audit services to be offered by the Group’s statutory auditorsare approved, on a case-by-case basis, in accordance with the rules andregulations concerning auditor independence promulgated by the SEC to implementthe Sarbanes-Oxley Act of 2002.

For 2007, the AuditCommittee has approved the audit of the Group’s consolidated U.S. GAAPfinancial statements. All remaining “Audit fees”, “Audit related fees” and “Taxfees” for 2006 were specifically approved by the Audit Committee.

**ITEM 16D**       EXEMPTIONSFROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

**ITEM 16E**        PURCHASESOF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On May 18, 2004, the ordinary General Meeting ofShareholders approved the Bank’s share buy-back program, on the basis ofarticle 16, paragraph 5 et seq. of Codified Law 2190/1920, whichpermitted the Bank to purchase up to 5% of paid-up capital, during the period June 15,2004 to April 30, 2005, at a price per share ranging from a minimum of €4.50to a maximum of €26.92.

At the general meeting of shareholders held on May 17, 2005,the program was renewed, effective from June 1, 2005, and expiring May 31,2006 at a price per share ranging from a minimum of €4.50to a maximum of €37.00.

At the annual General Meeting of Shareholders on April 27,2006, a share buy-back program in accordance with article 16 par. 5 et seq. ofLaw 2190/1920 was approved, allowing the buy-back of shares up to 10% of theaggregate amount of the shares of the Bank with a minimum purchase price of €5and a maximum of €60per share for the time period between May 5, 2006 and April 27, 2007.The Bank has not purchased any shares under the abovementioned plan until thedate of this annual report.

Pursuantto the buy-back program, in the course of 2005 and 2006, the Bank purchasedshares as follows:

| **Period**     | ** ** | **Total number  of shares** | ** ** | **Average price  paid per share  (in EUR)** | ** ** | **Total number  of shares purchased  as part of publicly  announced program** | ** ** | **Maximum Number  of shares that may  yet be purchased  under the program** | ** ** |
|----------------|------------|---------------------------------------|------------|-----------------------------------------------------------------|------------|------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------------------------------------------------------------------|------------|
| 5/1-10/1/05    |       |                                  | 71,850     |                                                            |       |                                                                                                             | 24.71      |                                                                                                                |       |   | 71,850 |   |   |   | 15,049,616 |   |   |
| 2/2-10/2/05    |       |                                  | 78,750     |                                                            |       |                                                                                                             | 25.18      |                                                                                                                |       |   | 78,750 |   |   |   | 14,970,866 |   |   |
| 21/3-30/3/05   |       |                                  | 26,820     |                                                            |       |                                                                                                             | 26.46      |                                                                                                                |       |   | 26,820 |   |   |   | 14,944,046 |   |   |
| 27/4/05        |       |                                  | 10,505     |                                                            |       |                                                                                                             | 26.28      |                                                                                                                |       |   | 10,505 |   |   |   | 14,933,541 |   |   |
| 14/6/05        |       |                                  | 34,015     |                                                            |       |                                                                                                             | 28.24      |                                                                                                                |       |   | 34,015 |   |   |   | 14,899,526 |   |   |
| 7/7/05         |       |                                  | 32,060     |                                                            |       |                                                                                                             | 29.11      |                                                                                                                |       |   | 32,060 |   |   |   | 14,867,466 |   |   |
| 12/8/05        |       |                                  | 40,000     |                                                            |       |                                                                                                             | 30.77      |                                                                                                                |       |   | 40,000 |   |   |   | 14,827,466 |   |   |
| 21/9/05        |       |                                  | 41,000     |                                                            |       |                                                                                                             | 29.90      |                                                                                                                |       |   | 41,000 |   |   |   | 14,786,466 |   |   |
| 19/10/05       |       |                                  | 35,000     |                                                            |       |                                                                                                             | 30.99      |                                                                                                                |       |   | 35,000 |   |   |   | 16,543,776 |   |   |
| 1/1-9/4/06     |       |                                  | 35,000     |                                                            |       |                                                                                                             | 30.99      |                                                                                                                |       |   | 35,000 |   |   |   | 33,624,904 |   |   |
| 14/6-18/12/06  |       |                                  | —     |                                                            |       |                                                                                                             | —     |                                                                                                                |       |   | — |   |   |   | 47,462,718 |   |   |
| 19/12-31/12/06 |       |                                  | 100,000    |                                                            |       |                                                                                                             | 33.18      |                                                                                                                |       |   | 100,000 |   |   |   | 47,362,718 |   |   |

 

187

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In addition, on October 4, 2005, the Bank sold1,792,310 shares for an average price of €32.90.Thus, the October 19, 2005 purchase of 35,000 shares did not surpass themaximum number of shares that the Bank is permitted to buy under the program.

At the annual General Meeting of Shareholders on May 25,2007 a share buy-back program in accordance with article 16 par. 5 et seq. ofLaw 2190/1920 was approved, allowing the buy-back of shares up to 10% of theaggregate amount of the shares of the Bank with a minimum purchase price of €5and a maximum of €60per share for the time period between June 1, 2007 and May 24, 2008.The Bank intends to purchase up to 20,000,000 own shares with a minimumpurchase price of €5and a maximum of €60per share, for the time between June 11, 2007 and September 30, 2007.

All purchases were made in market transactionseffected on the ATHEX. No purchases were made other than in accordance with ourbuy-back program.

188

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**PART III**

**ITEM 17**            FINANCIALSTATEMENTS

Please see Item 18.

**ITEM 18**            FINANCIALSTATEMENTS

See our consolidatedfinancial statements and the notes thereto beginning on page F-1,which we incorporate herein by reference.

**ITEM19**            EXHIBITS
| Exhibit  Number | ** ** | **Description of Exhibits**                                                                                                                                                                                                                                     | ** ** | ** ** |
|-----------------|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|
| 1               |       | An English translation  of the Articles of Association of the Bank, as amended with effect from  July 2006.*                                                                                                                                               |
|            |       |                                                                                                                                                                                                                                                            |
| 4.1             |       | Share Purchase  Agreement, dated April 3, 2006, as amended and restated, by and between  National Bank of Greece S.A. and Fiba Holding A.S., Fina Holding A.S.,  Girisim Factoring A.S. and Fiba Factoring Hizmetleri A.S.                                      |
|            |       |                                                                                                                                                                                                                                                            |
| 4.2             |       | Shareholders’ Agreement,  dated August 18, 2006, by and between National Bank of Greece S.A. and Fiba  Holding A.S., Girisim Factoring A.S. and Fiba Factoring Hizmetleri A.S.                                                                             |
|            |       |                                                                                                                                                                                                                                                            |
| 8               |       | Subsidiaries of the  Bank.                                                                                                                                                                                                                                      |
|            |       |                                                                                                                                                                                                                                                            |
| 12.1            |       | Certification of the  Chairman and Chief Executive Officer, the Vice Chairman and Deputy Chief  Executive Officer and the Chief Financial Officer and Chief Operations  Officer pursuant to Rule 13(a)-14(a) of the Securities  Exchange Act of 1934. |
|            |       |                                                                                                                                                                                                                                                            |
| 13.1            |       | Certification of Chairman and Chief Executive  Officer, Vice Chairman and Deputy Chief Executive Officer and CFO and COO  pursuant to 18 U.S.C. Section 1350 as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.              |

----

*                     Incorporatedby reference to the Bank’s Annual Report on Form 20-F for the year endedDecember 31, 2005, filed on July 14, 2006.

189

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**SIGNATURES**

Theregistrant hereby certifies that it meets all of the requirements for thisfiling on Form 20-F and that it has duly caused and authorized theundersigned to sign this Annual Report on its behalf.

|     | NATIONAL BANK OF GREECE S.A.  (Registrant) |
|----------|--------------------------------------------|
| * * | By:                                        | /*s*/**TAKIS ARAPOGLOU |
| * * | * *                                   | Name: Takis  Arapoglou  Title:*Chairman  and Chief Executive Officer* |

 

Date: July 2, 2007

190

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| ** ** | **National Bank of Greece S.A.  and Subsidiaries**                                                                                                                                                               | ** ** |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| * *   | *Consolidated  Financial Statements as of December 31, 2005 and 2006 and for the Years  Ended December 31, 2004, 2005 and 2006 and Report of Independent  Registered Certified Public Accounting Firm* | * *   |

 

F-1

----

**National Bank ofGreece S.A. and Subsidiaries**

**INDEXTO FINANCIAL STATEMENTS**
| REPORT OF INDEPENDENT REGISTERED  PUBLIC ACCOUNTING FIRM                                                                   | F-3    |
|----------------------------------------------------------------------------------------------------------------------------|--------|
| CONSOLIDATED FINANCIAL  STATEMENTS                                                                                         |   |
| Consolidated Balance Sheets as of December 31,  2005 and 2006                                                         | F-5    |
| Consolidated Statements of Income and Comprehensive  Income for the years ended December 31, 2004, 2005 and 2006      | F-7    |
| Consolidated Statements of Changes in Shareholders’  Equity for the years ended December 31, 2004, 2005 and 2006 | F-9    |
| Consolidated Statements of Cash Flows for the years  ended December 31, 2004, 2005 and 2006                           | F-10   |
| Notes to Consolidated Financial Statements                                                                                 | F-12   |

 

F-2

----

**Report ofIndependent Registered Public Accounting Firm**

To the Shareholders of theNational Bank of Greece S.A. and subsidiariesAthens, Greece

We have audited the accompanying consolidated balancesheets of National Bank of Greece S.A. and subsidiaries (the “Group”) as ofDecember 31, 2006 and 2005, and the related consolidated statements ofincome, stockholders’ equity, and cash flows for each of the three years in theperiod ended December 31, 2006. These financial statements are theresponsibility of the Group’s management. Our responsibility is to express anopinion on these financial statements based on our audits.

We did not audit the consolidated financial statementsof Finansbank Anonim Şirketi (a consolidated subsidiaryacquired by the Group on August 18, 2006) and its subsidiaries,which statements reflect total assets and total interest and non interestincome constituting 14.1% and 12.4%, respectively, of the related consolidatedtotals for the year ended December 31, 2006. Those statements were audited byother auditors whose report has been furnished to us, and our opinion, insofaras it relates to the amounts included for Finansbank Anonim Şirketi and its subsidiaries isbased solely on the report of the other auditors.

We conducted our audits in accordance with thestandards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation.We believe that our audits and the report of the other auditors provide areasonable basis for our opinion.

In our opinion, based on our audits and the report ofthe other auditors, such consolidated financial statements present fairly, inall material respects, the financial position of National Bank of Greece S.A.and subsidiaries as of December 31, 2006 and 2005, and the results oftheir operations and their cash flows for each of the three years in the periodended December 31, 2006, in conformity with accounting principlesgenerally accepted in the United States of America.

As discussed in Note 44, the Group’s cash flowstatements for the years ended December 31, 2005 and 2004 have beenrestated.

Our audits also comprehended the translation of theEUR amounts into U.S. dollar amounts and, in our opinion, such translation hasbeen made in conformity with the basis stated in Note 2. Such US dollar amountsare presented solely for the convenience of the readers in the United States.

We have also audited, in accordance with the standardsof the Public Company Accounting Oversight Board (United States), theeffectiveness of the Group’sinternal control over financial reporting as of December 31, 2006, basedon the criteria established in Internal Control—Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission. Ourreport dated June 29, 2007 expressed an unqualified opinion onmanagement’s assessment of the effectiveness of the Group’s internal control over financial reporting andan unqualified opinion on the effectiveness of the Group’s internal control over financial reporting.

*Deloitte Hadjipavlou Sofianos & CambanisS.A.* Athens GreeceJuly 2, 2007

 

F-3

----

**Report ofIndependent Registered Public Accounting Firm**

To the Shareholders of the Finansbank Anonim Şirketi andsubsidiariesIstanbul, Turkey

We have audited the accompanying consolidated balancesheets of Finansbank Anonim Şirketi and its subsidiaries(collectively “the Group”) as of December 31, 2006 and the close of business onAugust 17, 2006 and the related consolidated statements of income andcomprehensive income, changes in shareholders’ equity and cash flows forthe period from August 18, 2006 to December 31, 2006. These consolidatedfinancial statements are the responsibility of the Group’s management.  Our responsibility is to express an opinionon these consolidated financial statements based on our audits.

We conducted our auditsin accordance with auditing standardsof the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statementpresentation.  We believe that our auditsprovide a reasonable basis for our opinion.

In our opinion, the consolidated financial statementsreferred to above present fairly, in all material respects, the financialposition of Finansbank Anonim Şirketi and its subsidiaries as ofDecember 31, 2006 and the close of business on August 17, 2006, and theresults of their operations and their cash flows for the period from August 18,2006 to December 31, 2006 in conformity with U.S. generally accepted accountingprinciples.

The accompanying consolidated financial statements asof December 31, 2006 and for the period August 18,****2006to December 31, 2006 have been translated into United States dollars solely forthe convenience of the reader. We have audited the translation and, in ouropinion, the consolidated financial statements expressed in YTL have beentranslated into dollars on the basis set forth in Note 2 of the notes to theconsolidated financial statements.

KPMG Akis BagimsizDenetim ve SMMM A.S.

June 22, 2007Istanbul

F-4

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS**

| ** **                                                                                                                         | ** ** | ** ** | ** ** | **As of December 31,** | ** ** |
|------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|---------------------------------------|------------|
| ** **                                                                                                                         | ** ** | **Note**   | ** ** | **2005**                              | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                                                                         | ** ** | ** ** | ** ** | **(EUR in  thousands)**          | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                                                                         | ** ** | ** ** | ** ** | ** **                            | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| **ASSETS**                                                                                                                         |       |       |       |                                  |       |   |   |   |   |   |   |
| Cash and due from  banks                                                                                                           |       |       | 5          |                                  |       | 1,510,972 |   | 1,863,974 |   | 2,489,947 |   |
| Deposits with  central bank                                                                                                        |       |       | 6          |                                  |       | 1,184,383 |   | 2,110,191 |   | 2,818,850 |   |
| Securities  purchased under agreements to resell                                                                                   |       |       | 7          |                                  |       | 2,495,733 |   | 2,398,097 |   | 3,203,442 |   |
| Interest bearing  deposits with banks                                                                                              |       |       | 8          |                                  |       | 1,322,015 |   | 2,272,043 |   | 3,035,056 |   |
| Money market  investments                                                                                                          |       |       | 9          |                                  |       | 179,073 |   | 367,653 |   | 491,121 |   |
| Trading assets  (includes EUR 1,585,916 thousand and EUR 2,909,822 thousand in 2005 and 2006  respectively, pledged as collateral) |       |       | 10         |                                  |       | 8,558,662 |   | 7,374,207 |   | 9,850,664 |   |
| Financial  instruments marked to market through the profit and loss                                                                |       |       | 11         |                                  |       | 5,104,757 |   | 5,307,946 |   | 7,090,497 |   |
| Derivative assets                                                                                                                  |       |       | 12         |                                  |       | 284,469 |   | 325,013 |   | 434,161 |   |
| Securities:                                                                                                                        |       |       |       |                                  |       |   |   |   |   |   |   |
| Available-for-sale, at fair value                                                                                                  |       |       | 13         |                                  |       | 2,607,009 |   | 4,155,066 |   | 5,550,449 |   |
| Held to maturity, at amortised cost (fair value of  EUR 20,867 thousand at December 31, 2005)                            |       |       | 13         |                                  |       | 20,867 |   |   |   |   |   |
| Equity method  investments                                                                                                         |       |       | 14         |                                  |       | 230,117 |   | 234,570 |   | 313,345 |   |
| Loans                                                                                                                              |       |       | 15         |                                  |       | 30,674,173 |   | 43,756,843 |   | 58,451,567 |   |
| Less: Allowance  for loan losses                                                                                                   |       |       |       |                                  |       | (1,092,545 | ) | (1,224,757 | ) | (1,636,063 | ) |
| Net loans                                                                                                                          |       |       |       |                                  |       | 29,581,628 |   | 42,532,086 |   | 56,815,504 |   |
| Goodwill                                                                                                                           |       |       | 16         |                                  |       | 304,900 |   | 2,349,677 |   | 3,138,762 |   |
| Software and  other intangibles                                                                                                    |       |       | 16         |                                  |       | 42,486 |   | 209,819 |   | 280,282 |   |
| Premises and  equipment, net                                                                                                       |       |       | 17         |                                  |       | 745,180 |   | 950,562 |   | 1,269,786 |   |
| Customers’  liability on acceptances                                                                                          |       |       |       |                                  |       | 205 |   | — |   | — |   |
| Accrued interest  receivable                                                                                                       |       |       |       |                                  |       | 534,594 |   | 700,660 |   | 935,960 |   |
| Other assets                                                                                                                       |       |       | 18         |                                  |       | 2,545,932 |   | 2,562,174 |   | 3,422,621 |   |
| Assets classified  as held for sale                                                                                                |       |       | 19         |                                  |       | 2,754,517 |   | — |   | — |   |
| **TOTAL  ASSETS**                                                                                                                  | ** ** |       |       |                                  | ** ** | **60,007,499** | ** ** | **75,713,738** | ** ** | **101,140,447** | ** ** |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-5

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Continued)**

 

| ** **                                                                                                                                                                  | ** ** | ** ** | ** ** | **As of December 31,** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|---------------------------------------|------------|
| ** **                                                                                                                                                                  | ** ** | **Note**   | ** ** | **2005**                              | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                                                                                                                  | ** ** | ** ** | ** ** | **(EUR in  thousands)**          | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                                                                                                                  | ** ** | ** ** | ** ** | ** **                            | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| **LIABILITIES  AND SHAREHOLDERS’ EQUITY**                                                                                                                              |       |       |       |                                  |       |   |   |   |   |   |   |
| Interest bearing  deposits                                                                                                                                                  |       |       | 21         |                                  |       | 40,378,697 |   | 49,618,808 |   | 66,282,137 |   |
| Non-interest  bearing deposits                                                                                                                                              |       |       | 21         |                                  |       | 4,872,387 |   | 6,266,253 |   | 8,370,629 |   |
| Total deposits                                                                                                                                                              |       |       |       |                                  |       | 45,251,084 |   | 55,885,061 |   | 74,652,766 |   |
| Central bank  borrowings                                                                                                                                                    |       |       | 22         |                                  |       | 353 |   | 1,024 |   | 1,368 |   |
| Securities sold  under agreements to repurchase                                                                                                                             |       |       | 23         |                                  |       | 2,726,817 |   | 3,037,503 |   | 4,057,578 |   |
| Derivative  liabilities                                                                                                                                                     |       |       | 12         |                                  |       | 297,867 |   | 423,685 |   | 565,970 |   |
| Other borrowed  funds                                                                                                                                                       |       |       | 24         |                                  |       | 195,690 |   | 295,243 |   | 394,394 |   |
| Acceptances  outstanding                                                                                                                                                    |       |       |       |                                  |       | 205 |   | — |   | — |   |
| Accounts payable,  accrued expenses and other  liabilities                                                                                                                  |       |       | 25         |                                  |       | 3,128,656 |   | 3,464,889 |   | 4,628,492 |   |
| Insurance  reserves                                                                                                                                                         |       |       | 26         |                                  |       | 1,537,128 |   | 1,733,566 |   | 2,315,746 |   |
| Long-term debt                                                                                                                                                              |       |       | 27         |                                  |       | 2,151,942 |   | 4,445,565 |   | 5,938,505 |   |
| Liabilities classified  as held for sale                                                                                                                                    |       |       | 19         |                                  |       | 2,255,132 |   | — |   | — |   |
| **Total liabilities**                                                                                                                                                       |       |       |       |                                  | ** ** | **57,544,874** | ** ** | **69,286,536** | ** ** | **92,554,819** | ** ** |
| Minority interests                                                                                                                                                          |       |       |       |                                  |       | 89,177 |   | 788,645 |   | 1,053,493 |   |
| SHAREHOLDERS’ EQUITY:                                                                                                                                                  |       |       |       |                                  |       |   |   |   |   |   |   |
| Common stock, par  value EUR 4.80 in 2005 and EUR 5,00 in 2006 (shares authorised, issued  and outstanding: 336,599,045 and 475,287,219 at 2005 and 2006 respectively) |       |       |       |                                  |       | 1,615,675 |   | 2,376,436 |   | 3,174,507 |   |
| Additional  paid-in capital                                                                                                                                                 |       |       | 33         |                                  |       | 139,892 |   | 2,413,066 |   | 3,223,438 |   |
| Accumulated  surplus                                                                                                                                                        |       |       |       |                                  |       | 616,663 |   | 924,616 |   | 1,235,127 |   |
| Accumulated other  comprehensive (loss)/income                                                                                                                              |       |       | 40         |                                  |       | 2,322 |   | (48,735 | ) | (65,102 | ) |
| Treasury stock,  at cost (40,133 and 882,560  shares at 2005 and 2006 respectively)                                                                                         |       |       |       |                                  |       | (1,104 | ) | (26,826 | ) | (35,835 | ) |
| **Total shareholders’ equity**                                                                                                                                         |       |       |       |                                  | ** ** | **2,373,448** | ** ** | **5,638,557** | ** ** | **7,532,135** | ** ** |
| **TOTAL  LIABILITIES AND SHAREHOLDERS’ EQUITY**                                                                                                                        |       |       |       |                                  | ** ** | **60,007,499** | ** ** | **75,713,738** | ** ** | **101,140,447** | ** ** |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-6

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME**

| ** **                                                                  | ** ** | ** ** | ** ** | **Year ended December 31,** | ** ** |
|-----------------------------------------------------------------------------|------------|------------|------------|--------------------------------------------|------------|
| ** **                                                                  | ** ** | **Note**   | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | **(EUR in  thousands)**               | ** ** | **(EUR in  thousands)** | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                  | ** ** | ** ** | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| **Interest Income:**                                                        | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Loans                                                                       |       |       |       | ** **                                 |       |   | 1,315,110 |   |   |   | 1,591,972 |   |   |   | 2,373,241 |   |   |   | 3,170,239 |   |   |
| Securities available-for-sale                                               |       |       |       | ** **                                 |       |   | 76,074 |   |   |   | 92,843 |   |   |   | 185,003 |   |   |   | 247,132 |   |   |
| Securities held-to-maturity                                                 |       |       |       | ** **                                 |       |   | — |   |   |   | 1,953 |   |   |   | — |   |   |   | — |   |   |
| Trading assets                                                              |       |       |       | ** **                                 |       |   | 404,999 |   |   |   | 374,868 |   |   |   | 480,902 |   |   |   | 642,402 |   |   |
| Securities purchased under agreements to resell                             |       |       |       | ** **                                 |       |   | 116,153 |   |   |   | 108,673 |   |   |   | 111,378 |   |   |   | 148,782 |   |   |
| Interest-bearing deposits with banks                                        |       |       |       | ** **                                 |       |   | 137,221 |   |   |   | 199,607 |   |   |   | 285,920 |   |   |   | 381,940 |   |   |
| Other                                                                       |       |       |       | ** **                                 |       |   | 25,059 |   |   |   | 20,472 |   |   |   | 66,330 |   |   |   | 88,605 |   |   |
| **Total interest income**                                                   | ** ** |       | ** ** | ** **                                 |       |   | **2,074,616** | ** ** |   |   | **2,390,388** | ** ** |   |   | **3,502,774** | ** ** |   |   | **4,679,100** | ** ** |   |
| **Interest  Expense:**                                                      | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Deposits                                                                    |       |       |       | ** **                                 |       |   | 454,460 |   |   |   | 598,705 |   |   |   | 1,105,197 |   |   |   | 1,476,352 |   |   |
| Federal funds purchased and Securities sold under  agreements to repurchase |       |       | 23         | ** **                                 |       |   | 153,962 |   |   |   | 141,889 |   |   |   | 126,903 |   |   |   | 169,520 |   |   |
| Other borrowed funds                                                        |       |       | 24         | ** **                                 |       |   | 3,349 |   |   |   | 4,595 |   |   |   | 18,992 |   |   |   | 25,370 |   |   |
| Long-term debt                                                              |       |       | 27         | ** **                                 |       |   | 44,706 |   |   |   | 87,240 |   |   |   | 144,445 |   |   |   | 192,954 |   |   |
| Other                                                                       |       |       |       | ** **                                 |       |   | 5,430 |   |   |   | 4,692 |   |   |   | 6,882 |   |   |   | 9,193 |   |   |
| **Total interest expense:**                                                 | ** ** |       | ** ** | ** **                                 |       |   | **661,907** | ** ** |   |   | **837,121** | ** ** |   |   | **1,402,419** | ** ** |   |   | **1,873,389** | ** ** |   |
| Net interest income before provision for loan losses                        |       |       |       | ** **                                 |       |   | 1,412,709 |   |   |   | 1,553,267 | ** ** |   |   | **2,100,355** | ** ** |   |   | **2,805,711** | ** ** |   |
| Provision for loan losses                                                   |       |       | 15         | ** **                                 |       |   | (201,234 | ) |   |   | (225,013 | ) |   |   | (261,603 | ) |   |   | (349,456 | ) |   |
| Net interest income after provision for loan losses                         | ** ** |       | ** ** | ** **                                 |       |   | **1,211,475** | ** ** |   |   | **1,328,254** | ** ** |   |   | **1,838,752** | ** ** |   |   | **2,456,255** | ** ** |   |
| **Non-Interest  Income:**                                                   | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Credit card fees                                                            |       |       |       | ** **                                 |       |   | 75,220 |   |   |   | 79,675 |   |   |   | 126,981 |   |   |   | 169,625 |   |   |
| Service charges on deposit accounts                                         |       |       |       | ** **                                 |       |   | 43,293 |   |   |   | 38,218 |   |   |   | 40,941 |   |   |   | 54,690 |   |   |
| Other fees and commissions                                                  |       |       |       | ** **                                 |       |   | 336,438 |   |   |   | 369,730 |   |   |   | 457,269 |   |   |   | 610,832 |   |   |
| Net trading profit                                                          |       |       |       | ** **                                 |       |   | 5,451 |   |   |   | 5,933 |   |   |   | 6,369 |   |   |   | 8,508 |   |   |
| Net realized gains on sales of available-for-sale  securities               |       |       | 13         | ** **                                 |       |   | 16,305 |   |   |   | 119,523 |   |   |   | 116,872 |   |   |   | 156,121 |   |   |
| Equity in earnings of investees                                             |       |       | 14         | ** **                                 |       |   | 3,822 |   |   |   | 36,823 |   |   |   | 26,890 |   |   |   | 35,920 |   |   |
| Other                                                                       |       |       | 29         | ** **                                 |       |   | 807,745 |   |   |   | 816,871 |   |   |   | 981,961 |   |   |   | 1,311,730 |   |   |
| **Total non-interest income**                                               | ** ** |       | ** ** | ** **                                 |       |   | **1,288,274** | ** ** |   |   | **1,466,773** | ** ** |   |   | **1,757,283** | ** ** |   |   | **2,347,426** | ** ** |   |
| **Non-interest  Expense:**                                                  | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Salaries                                                                    |       |       |       | ** **                                 |       |   | 572,169 |   |   |   | 615,803 |   |   |   | 770,644 |   |   |   | 1,029,447 |   |   |
| Employee benefits                                                           |       |       |       | ** **                                 |       |   | 249,326 |   |   |   | 260,898 |   |   |   | 228,227 |   |   |   | 304,872 |   |   |
| Voluntary early retirement schemes                                          |       |       |       | ** **                                 |       |   | 135,376 |   |   |   | 16,667 |   |   |   | 38,603 |   |   |   | 51,567 |   |   |
| Occupancy expenses                                                          |       |       |       | ** **                                 |       |   | 54,476 |   |   |   | 49,484 |   |   |   | 61,966 |   |   |   | 82,776 |   |   |
| Equipment expenses                                                          |       |       |       | ** **                                 |       |   | 16,562 |   |   |   | 19,327 |   |   |   | 37,475 |   |   |   | 50,060 |   |   |
| Depreciation of premises and equipment                                      |       |       |       | ** **                                 |       |   | 73,403 |   |   |   | 60,209 |   |   |   | 74,276 |   |   |   | 99,220 |   |   |
| Amortization of intangible assets                                           |       |       |       | ** **                                 |       |   | 31,774 |   |   |   | 23,898 |   |   |   | 24,404 |   |   |   | 32,600 |   |   |
| Impairment of equity method investments                                     |       |       |       | ** **                                 |       |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Impairment of goodwill                                                      |       |       |       | ** **                                 |       |   | — |   |   |   | 16,162 |   |   |   | 52,860 |   |   |   | 70,612 |   |   |
| Other than temporary impairment of available-for-sale  securities           |       |       |       | ** **                                 |       |   | 7,980 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Deposit insurance premium                                                   |       |       |       | ** **                                 |       |   | 14,600 |   |   |   | 15,976 |   |   |   | 17,854 |   |   |   | 23,850 |   |   |
| Minority interests, net of tax                                              |       |       |       | ** **                                 |       |   | (13,629 | ) |   |   | 40,625 |   |   |   | 96,150 |   |   |   | 128,440 |   |   |
| Other                                                                       |       |       | 30         | ** **                                 |       |   | 1,184,959 |   |   |   | 916,281 |   |   |   | 1,179,000 |   |   |   | 1,574,940 |   |   |
| **Total non-interest expense**                                              | ** ** |       | ** ** | ** **                                 |       |   | **2,326,996** | ** ** |   |   | **2,035,330** | ** ** |   |   | **2,581,459** | ** ** |   |   | **3,448,384** | ** ** |   |
| **Income from continuing operations before income  tax expense**            | ** ** |       | ** ** | ** **                                 |       |   | **172,753** | ** ** |   |   | **759,697** | ** ** |   |   | **1,014,576** | ** ** |   |   | **1,355,297** | ** ** |   |
| Income tax (expense) / benefit                                              |       |       | 31         | ** **                                 |       |   | 6,035 |   |   |   | (232,786 | ) |   |   | (214,699 | ) |   |   | (286,801 | ) |   |
| **Income from continuing operations**                                       | ** ** |       | ** ** | ** **                                 |       |   | **178,788** | ** ** |   |   | **526,911** | ** ** |   |   | **799,877** | ** ** |   |   | **1,068,496** | ** ** |   |
| **Discontinued operations**                                                 |       |       |       | ** **                                 |       |   | 51,878 |   |   |   | 46,773 |   |   |   | 69,326 |   |   |   | 92,608 |   |   |
| Income tax (expense)                                                        |       |       |       | ** **                                 |       |   | (20,396 | ) |   |   | (18,490 | ) |   |   | (11,139 | ) |   |   | (14,880 | ) |   |
| **Income from discontinued operations**                                     | ** ** |       | ** ** | ** **                                 |       |   | **31,482** | ** ** |   |   | **28,283** | ** ** |   |   | **58,187** | ** ** |   |   | **77,728** | ** ** |   |
| **NET  INCOME (carried forward)**                                           | ** ** |       | ** ** | ** **                                 |       |   | **210,270** | ** ** |   |   | **555,194** | ** ** |   |   | **858,064** | ** ** |   |   | **1,146,224** | ** ** |   |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-7

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Continued)**

 

| ** **                                                                                                                                                                                                                       | ** ** | ** ** | ** ** | **Year ended December 31,** | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|--------------------------------------------|------------|
| ** **                                                                                                                                                                                                                       | ** ** | **Note**   | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                                                                                                                                                                       | ** ** | ** ** | ** ** | **(EUR in  thousands)**               | ** ** | **(EUR in  thousands)** | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                                                                                                                                                                       | ** ** | ** ** | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| NET INCOME (brought forward)                                                                                                                                                                                                     | ** ** |       | ** ** | ** **                                 |       |   | **210,270** | ** ** |   |   | **555,194** | ** ** |   |   | **858,064** | ** ** |   |   | **1,146,224** | ** ** |   |
| Other  comprehensive income, net of tax:                                                                                                                                                                                         | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Foreign currency translation adjustments                                                                                                                                                                                         |       |       | 40         | ** **                                 |       |   | (9,202 | ) |   |   | 24,520 |   |   |   | (24,097 | ) |   |   | (32,189 | ) |   |
| Net  unrealized holding (losses) / gains on available-for-sale securities:                                                                                                                                                       | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Net unrealized holding gains / (losses) during the  period (net of tax expense/ (benefit) of: EUR 15,784 thousand in 2004, EUR  12,604 thousand in 2005 and EUR 9,320 thousand in 2006)                                          |       |       |       | ** **                                 |       |   | 51,488 |   |   |   | 53,226 |   |   |   | 58,221 |   |   |   | 77,773 |   |   |
| Less: reclassification adjustment for net (gains) /  losses included in net ncome (net of tax expense / (benefit) of: EUR  (5,741) thousand in 2004, EUR (38,015) thousand in 2005 and EUR (18,433)  thousand in 2006) |       |       |       | ** **                                 |       |   | (10,771 | ) |   |   | (81,005 | ) |   |   | (46,433 | ) |   |   | (62,026 | ) |   |
| Reclassification adjustment for impairment of  available-for-sale securities net of tax of EUR 2,599 thousand in 2004  nil in 2005 and 2006                                                                                 |       |       |       | ** **                                 |       |   | 5,381 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Additional minimum pension liability (net of tax  (benefit) of EUR (2,200) thousand in 2004), EUR (144) thousand in  2005 and EUR (76) thousand in 2006                                                           |       |       | 38         | ** **                                 |       |   | (18,796 | ) |   |   | (9,611 | ) |   |   | 18,589 |   |   |   | 24,832 |   |   |
| Subtotal                                                                                                                                                                                                                         |       |       |       | ** **                                 |       |   | 27,302 |   |   |   | (37,390 | ) |   |   | 30,377 |   |   |   | 40,579 |   |   |
| **COMPREHENSIVE INCOME**                                                                                                                                                                                                         | ** ** |       | ** ** | ** **                                 |       |   | **228,370** | ** ** |   |   | **542,324** | ** ** |   |   | **864,344** | ** ** |   |   | **1,154,614** | ** ** |   |
| EARNINGS  PER SHARE                                                                                                                                                                                                              | ** ** |       | ** ** | ** **                                 |       |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |   | ** ** | ** ** |   |
| Basic and diluted                                                                                                                                                                                                                |       |       | 34         | ** **                                 |       |   | 0.62 |   |   |   | 1.61 |   |   |   | 2.06 |   |   |   | 2.75 |   |   |
| Basic and diluted—excluding discontinued operations                                                                                                                                                                         |       |       |       | ** **                                 |       |   | 0.53 |   |   |   | 1.52 |   |   |   | 1.92 |   |   |   | 2.56 |   |   |
| CASH DIVIDENDS  DECLARED PER SHARE                                                                                                                                                                                               |       |       |       | ** **                                 |       |   | 0.65 |   |   |   | 0.60 |   |   |   | 1.00 |   |   |   | 1.34 |   |   |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-8

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY**

| ** **                                                                                                                          | ** ** | ** ** | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|------------|------------|--------------------------------------------|------------|
| ** **                                                                                                                          | ** ** | **Note**   | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                                                                          | ** ** | ** ** | ** ** | **(EUR in  thousands)**               | ** ** | **(EUR in  thousands)** | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                                                                          | ** ** | ** ** | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| **Common Stock:**                                                                                                                   |       |       |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at  beginning of year (255,058,085, 331,575,511 and 336,599,045 shares at 2004,  2005 and 2006 respectively)                |       |       |       |                                       |       |   | 1,147,761 |   |   |   | 1,492,090 |   |   |   | 1,615,675 |   |   |   | 2,158,262 |   |   |
| Issuance of  5,023,534 shares in 2005 to acquire 100% interest in National Investment  Company                                      |       |       |       |                                       |       |   | — |   |   |   | 22,606 |   |   |   | — |   |   |   | — |   |   |
| Capitalization of  additional paid-in capital (76,517,426 shares in 2004)                                                           |       |       |       |                                       |       |   | 344,329 |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Capitalisation of  additional paid-in capital to raise par value of shares from EUR 4.50 to  EUR 4.80                          |       |       |       |                                       |       |   | — |   |   |   | 100,979 |   |   |   | — |   |   |   | — |   |   |
| Issuance of  2,670,367 shares in 2006 to acquire 100% interest in National Real Estate                                              |       |       |       |                                       |       |   | — |   |   |   | — |   |   |   | 12,818 |   |   |   | 17,123 |   |   |
| Capitalisation of  additional paid-in capital to raise par value of shares from EUR 4.80 to  EUR 5.00                          | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |   | 67,854 |   |   |   | 90,641 |   |   |
| Issuance of  135,707,764 shares in 2006 through a rights issue                                                                      | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |   | 678,539 |   |   |   | 906,411 |   |   |
| Share options  exercised in 2006 (310,043 shares)                                                                                   | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |   | 1,550 |   |   |   | 2,070 |   |   |
| Balance at end of  year (331,575,511, 336,599,045 and 475,287,219 shares at 2004, 2005 and 2006  respectively)                      | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **1,492,090** | ** ** | ** ** | ** ** | **1,615,675** | ** ** | ** ** | ** ** | **2,376,436** | ** ** | ** ** | ** ** | **3,174,507** | ** ** | ** ** |
| **Additional Paid-in Capital:**                                                                                                     | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Balance at  beginning of year                                                                                                       |       |       |       |                                       |       |   | 379,450 |   |   |   | 19,975 |   |   |   | 139,892 |   |   |   | 186,871 |   |   |
| Issuance of shares  to acquire the minority interest in National Investment Company (Ethnex)                                   |       |       | 33         |                                       |       |   | — |   |   |   | 139,835 |   |   |   | — |   |   |   | — |   |   |
| Issuance of shares  to acquire the minority interest in National Real Estate Company (Ethnak)                                  |       |       | 33         |                                       |       |   | — |   |   |   | — |   |   |   | 69,430 |   |   |   | 92,746 |   |   |
| Capitalization of  additional paid-in capital                                                                                       |       |       |       |                                       |       |   | (344,329 | ) |   |   | (100,979 | ) |   |   | (67,854 | ) |   |   | (90,641 | ) |   |
| Issuance of  135,707,764 shares in 2006 through a rights issue of EUR 2,321,960 net of  after tax issuance expenses of EUR (64,063) |       |       |       |                                       |       |   | — |   |   |   | — |   |   |   | 2,257,897 |   |   |   | 3,016,159 |   |   |
| Share options  exercised (310,043 above par of EUR 18.8 each)                                                                       |       |       |       |                                       |       |   | — |   |   |   | — |   |   |   | 5,829 |   |   |   | 7,787 |   |   |
| Share based  payments                                                                                                               |       |       |       |                                       |       |   | — |   |   |   | — |   |   |   | 6,383 |   |   |   | 8,527 |   |   |
| Gain/(Loss) on  sales of treasury stock (net of tax)                                                                                |       |       |       |                                       |       |   | (20,360 | ) |   |   | 76,350 |   |   |   | 813 |   |   |   | 1,086 |   |   |
| Treasury stock  dividends paid to subsidiaries                                                                                      |       |       |       |                                       |       |   | 5,214 |   |   |   | 4,711 |   |   |   | 676 |   |   |   | 903 |   |   |
| Balance at end of  year                                                                                                             | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **19,975** | ** ** | ** ** | ** ** | **139,892** | ** ** | ** ** | ** ** | **2,413,066** | ** ** | ** ** | ** ** | **3,223,438** | ** ** | ** ** |
| **Accumulated Surplus:**                                                                                                            |       |       |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at  beginning of year                                                                                                       |       |       |       |                                       |       |   | 214,942 |   |   |   | 259,429 |   |   |   | 616,663 |   |   |   | 823,755 |   |   |
| Net income                                                                                                                          |       |       |       |                                       |       |   | 210,270 |   |   |   | 555,194 |   |   |   | 858,064 |   |   |   | 1,146,225 |   |   |
| Dividends                                                                                                                           |       |       |       |                                       |       |   | (165,783 | ) |   |   | (197,960 | ) |   |   | (550,111 | ) |   |   | (734,853 | ) |   |
| Balance at end of  year                                                                                                             | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **259,429** | ** ** | ** ** | ** ** | **616,663** | ** ** | ** ** | ** ** | **924,616** | ** ** | ** ** | ** ** | **1,235,127** | ** ** | ** ** |
| **Accumulated Other Comprehensive (Loss)/ Gain**—**net of tax :**                                                              |       |       |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at  beginning of year                                                                                                       |       |       |       |                                       |       |   | (2,908 | ) |   |   | 15,192 |   |   |   | 2,322 |   |   |   | 3,102 |   |   |
| Net change in fair  value of securities available-for-sale                                                                          |       |       |       |                                       |       |   | 46,098 |   |   |   | (27,779 | ) |   |   | 11,788 |   |   |   | 15,747 |   |   |
| Foreign currency  translation adjustments                                                                                           |       |       |       |                                       |       |   | (9,202 | ) |   |   | 24,520 |   |   |   | (24,097 | ) |   |   | (32,189 | ) |   |
| Pension liability                                                                                                                   |       |       |       |                                       |       |   | (18,796 | ) |   |   | (9,611 | ) |   |   | (38,748 | ) |   |   | (51,762 | ) |   |
| Balance at end of  year                                                                                                             | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **15,192** | ** ** | ** ** | ** ** | **2,322** | ** ** | ** ** | ** ** | **(48,735** | **)** | ** ** | ** ** | **(65,102** | **)** | ** ** |
| **Treasury Stock, at Cost:**                                                                                                        |       |       |       |                                       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance at  beginning of year (10,693,858, 9,401,899 and 40,133 shares at 2004, 2005 and  2006 respectively)                        |       |       |       |                                       |       |   | (348,790 | ) |   |   | (210,128 | ) |   |   | (1,104 | ) |   |   | (1,475 | ) |   |
| Sale of treasury  stock (6,143,698, 10,251,461 and 2,077,220 shares during 2004, 2005 and 2006  respectively)                       |       |       |       |                                       |       |   | 183,137 |   |   |   | 235,591 |   |   |   | 71,621 |   |   |   | 95,673 |   |   |
| Purchase of  treasury stock (4,851,739, 889,695 and 1,947,299 shares during 2004, 2005 and  2006 respectively)                      |       |       |       |                                       |       |   | (44,475 | ) |   |   | (26,567 | ) |   |   | (68,725 | ) |   |   | (91,805 | ) |   |
| 318,521 allotted  shares from the issuance of 135,707,764 shares in 2006 through a rights issue  of EUR 2,321,960                   |       |       |       |                                       | ** ** | ** ** | — |   | ** ** | ** ** | **—** |   |   |   | (7,042 | ) |   |   | (9,407 | ) |   |
| Conversion of  National Real Estate shares due to merger with the Bank (653,827 shares)                                        | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |   | (21,576 | ) |   |   | (28,821 | ) |   |
| Balance at end of  year (9,401,899, 40,133 and 882,560 shares at 2004, 2005 and 2006  respectively)                                 | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **(210,128** | **)** | ** ** | ** ** | **(1,104** | **)** | ** ** | ** ** | **(26,826** | **)** | ** ** | ** ** | **(35,835** | **)** | ** ** |
| **Total  shareholders’ equity**                                                                                                | ** ** | ** ** | ** ** |                                       | ** ** | ** ** | **1,576,558** | ** ** | ** ** | ** ** | **2,373,448** | ** ** | ** ** | ** ** | **5,638,557** | ** ** | ** ** | ** ** | **7,532,135** | ** ** | ** ** |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-9

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS**

| ** **                                                                                         | ** ** | **Year ended December 31,** | ** **     |
|----------------------------------------------------------------------------------------------------|------------|--------------------------------------------|----------------|
| ** **                                                                                         | ** ** | **2004**                                   | ** **     | **2005** | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                                         | ** ** | **(EUR in  thousands)**               | ** **     | **(EUR in  thousands)** | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                                         | ** ** | **Restated**                               | ** **     | **Restated** | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| **Cash flows from Operating Activities:**                                                          | ** ** |                                       | ** **     |   |   |   | ** ** |   |   |   | ** ** |   |   | ** ** | ** ** |
| Net Income before discontinued operations                                                          | ** ** |                                       | **178,787**    |   |   |   | **526,911** |   |   |   | **799,877** |   |   | **1,068,497** | ** ** |
| Adjustments  to reconcile net income to net cash provided by (used in)  operating activities: |       |                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Provision for loan losses                                                                          |       |                                       | 201,233        |   |   |   | 225,013 |   |   |   | 261,603 |   |   | 349,455 |   |
| Net gain / (loss) on sale of premises and equipment                                                |       |                                       | (31,052        | ) |   |   | (35,035 | ) |   |   | (74,686 | ) |   | (99,768 | ) |
| Net realized (loss) / gain on sales of  available-for-sale securities                              |       |                                       | (16,305        | ) |   |   | (119,523 | ) |   |   | (116,872 | ) |   | (156,121 | ) |
| Net realized (loss) / gain on sales of subsidiaries                                                |       |                                       | —         |   |   |   | 3,883 |   |   |   | (3,318 | ) |   | (4,432 | ) |
| Equity in earnings or (losses) of equity method  investees                                         |       |                                       | (3,822         | ) |   |   | (36,823 | ) |   |   | (26,890 | ) |   | (35,920 | ) |
| Depreciation                                                                                       |       |                                       | 73,404         |   |   |   | 60,209 |   |   |   | 74,276 |   |   | 99,220 |   |
| Amortization of intangibles                                                                        |       |                                       | 31,773         |   |   |   | 23,899 |   |   |   | 24,404 |   |   | 32,600 |   |
| Impairment of tangibles                                                                            |       |                                       |           |   |   |   |   |   |   |   | 379 |   |   | 506 |   |
| Impairment of goodwill                                                                             |       |                                       | —         |   |   |   | 16,162 |   |   |   | 52,860 |   |   | 70,612 |   |
| Share based payments                                                                               |       |                                       | —         |   |   |   | — |   |   |   | 6,383 |   |   | 8,527 |   |
| Pension liability in OCI                                                                           |       |                                       | (18,796        | ) |   |   | (9,611 | ) |   |   | (44,469 | ) |   | (59,403 | ) |
| Provision for deferred income taxes                                                                |       |                                       | (208,307       | ) |   |   | 64,600 |   |   |   | (97,813 | ) |   | (130,661 | ) |
| Profit on the disposal of equity investments                                                       |       |                                       | (195           | ) |   |   | (193 | ) |   |   | (926 | ) |   | (1,237 | ) |
| **Changes in assets and liabilities**                                                              |       |                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Trading assets and derivative instruments                                                          |       |                                       | 3,217,482      |   |   |   | (3,202,390 | ) |   |   | 1,198,927 |   |   | 1,601,559 |   |
| Accrued interest receivable                                                                        |       |                                       | 63,754         |   |   |   | 41,314 |   |   |   | (43,615 | ) |   | (58,262 | ) |
| Other assets                                                                                       |       |                                       | (231,407       | ) |   |   | (121,069 | ) |   |   | (6,858 | ) |   | (9,160 | ) |
| Accounts payable and accrued expenses                                                              |       |                                       | (279,391       | ) |   |   | 750,390 |   |   |   | (182,191 | ) |   | (243,375 | ) |
| Insurance reserves                                                                                 |       |                                       | 272,749        |   |   |   | 23,953 |   |   |   | 196,438 |   |   | 262,408 |   |
| **Cash flows provided by / (used in) operating  activities from continuing operations**            | ** ** |                                       | **3,249,907**  |   |   |   | **(1,788,310** | ) |   |   | **2,017,509** |   |   | **2,695,045** | ** ** |
| **Cash flows provided by / (used in) operating  activities from discontinued operations**          | ** ** |                                       | **39,687**     |   |   |   | **48,878** |   |   |   | **(2,297** | ) |   | **(3,068** | **)** |
| **Cash Flows from Investing Activities**                                                           |       |                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Activities  in available-for-sale securities:                                                      |       |                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Purchases                                                                                          |       |                                       | (507,217       | ) |   |   | (4,687,219 | ) |   |   | (8,212,968 | ) |   | (10,971,104 | ) |
| Sales proceeds                                                                                     |       |                                       | 870,072        |   |   |   | 3,535,933 |   |   |   | 8,036,256 |   |   | 10,735,046 |   |
| Maturities, prepayments and calls                                                                  |       |                                       | 1,610,460      |   |   |   | 931,210 |   |   |   | 130,341 |   |   | 174,113 |   |
| Activities  in held-to-maturity securities:                                                        |       |                                       |           |   |   |   |   |   |   |   |   |   |   | — |   |
| Maturities, prepayments and calls                                                                  |       |                                       | —         |   |   |   | 20,867 |   |   |   | 20,867 |   |   | 27,875 |   |
| Purchases                                                                                          |       |                                       | —         |   |   |   | (41,734 | ) |   |   | — |   |   | — |   |
| Acquisition of subsidiary companies                                                                |       |                                       | (50,581        | ) |   |   | (8,400 | ) |   |   | (2,464,832 | ) |   | (3,292,589 | ) |
| Sale of subsidiaries                                                                               |       |                                       |           |   |   |   |   |   |   |   | 314,850 |   |   | 420,585 |   |
| Purchases of premises and equipment                                                                |       |                                       | (216,217       | ) |   |   | (117,669 | ) |   |   | (153,079 | ) |   | (204,487 | ) |
| Proceeds from sales of premises and equipment                                                      |       |                                       | 52,357         |   |   |   | 104,154 |   |   |   | 148,743 |   |   | 198,695 |   |
| Net proceeds from disposals, acquisitions and  dividends received from equity investments          |       |                                       | 3,304          |   |   |   | 5,733 |   |   |   | 18,192 |   |   | 24,301 |   |
| Acquisition of and increase of controlling interest  in subsidiary companies                       |       |                                       | —         |   |   |   | (25,646 | ) |   |   | (3,580 | ) |   | (4,782 | ) |
| Net cash acquired with the subsidiary companies                                                    |       |                                       | —         |   |   |   | 4 |   |   |   |   |   |   |   |   |
| Net  cash provided by (used in):                                                                   |       |                                       |           |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligatory deposits with central bank                                                              |       |                                       | 139,656        |   |   |   | (793,615 | ) |   |   | (354,129 | ) |   | (473,055 | ) |
| Loan origination and principal collections                                                         |       |                                       | (4,340,876     | ) |   |   | (4,980,924 | ) |   |   | (7,215,039 | ) |   | (9,638,043 | ) |
| Federal funds sold and securities purchased under  agreements to resell                            |       |                                       | (315,188       | ) |   |   | 1,277,725 |   |   |   | 112,750 |   |   | 150,614 |   |
| Interest bearing deposits in banks                                                                 |       |                                       | 209,113        |   |   |   | 3,520,482 |   |   |   | 1,767,392 |   |   | 2,360,930 |   |
| Deposits in money market accounts                                                                  |       |                                       | (57,068        | ) |   |   | (29,050 | ) |   |   | (122,137 | ) |   | (163,154 | ) |
| Other                                                                                              |       |                                       | —         |   |   |   | — |   |   |   | (385 | ) |   | (514 | ) |
| **Cash flows provided by / (used in) investing  activities from continuing operations**            | ** ** |                                       | **(2,602,185** | ) |   |   | **(1,288,149** | ) |   |   | **(7,976,758** | ) |   | **(10,655,569** | **)** |
| **Cash  flows provided by / (used in) investing activities from discontinued  operations**         | ** ** |                                       | **23,015**     |   |   |   | **(72,821** | ) |   |   | **824** |   |   | **1,101** | ** ** |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-10

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)**

 

| ** **                                                                                | ** ** | **Year ended December 31,** | ** **   |
|-------------------------------------------------------------------------------------------|------------|--------------------------------------------|--------------|
| ** **                                                                                | ** ** | **2004**                                   | ** **   | **2005** | ** ** | **2006** | ** ** | **2006** | ** ** |
| ** **                                                                                | ** ** | **(EUR in  thousands)**               | ** **   | **(EUR in  thousands)** | ** ** | **(EUR in  thousands)** | ** ** | **(USD in  thousands)** | ** ** |
| ** **                                                                                | ** ** | **Restated**                               | ** **   | **Restated** | ** ** | ** ** | ** ** | **(Note 2)** | ** ** |
| **Cash flows from Financing Activities:**                                                 |       |                                       |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Proceeds from issuance of long-term debt                                                  |       |                                       | 482,149      |   |   |   | 513,220 |   |   |   | 2,224,462 |   |   |   | 2,971,497 |   |   |
| Principal repayments and retirements of long-term  debt                                   |       |                                       | (10,301      | ) |   |   | (9,526 | ) |   |   | (1,185,287 | ) |   |   | (1,583,338 | ) |   |
| Proceeds from issuance of common stock                                                    |       |                                       |         |   |   |   |   |   |   |   | 3,000,836 |   |   |   | 4,008,597 |   |   |
| Treasury stock purchased                                                                  |       |                                       | (43,594      | ) |   |   | (26,567 | ) |   |   | (68,725 | ) |   |   | (91,805 | ) |   |
| Proceeds from sales of treasury stock                                                     |       |                                       | 161,896      |   |   |   | 331,022 |   |   |   | 72,793 |   |   |   | 97,239 |   |   |
| Other, net                                                                                |       |                                       | (740         | ) |   |   | 36,344 |   |   |   | (92,288 | ) |   |   | (123,281 | ) |   |
| Dividends paid                                                                            |       |                                       | (165,783     | ) |   |   | (193,248 | ) |   |   | (338,558 | ) |   |   | (452,255 | ) |   |
| Net cash provided by (used in):                                                           |       |                                       |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Deposits                                                                                  |       |                                       | (1,741,542   | ) |   |   | 6,571,965 |   |   |   | 3,901,899 |   |   |   | 5,212,262 |   |   |
| Central bank borrowings                                                                   |       |                                       | (5,393       | ) |   |   | (1,058 | ) |   |   | (331 | ) |   |   | (442 | ) |   |
| Federal funds purchased and securities sold under  agreements to repurchase               |       |                                       | 679,554      |   |   |   | (3,402,190 | ) |   |   | 170,981 |   |   |   | 228,401 |   |   |
| Other borrowings                                                                          |       |                                       | 20,363       |   |   |   | 131,056 |   |   |   | (1,429,909 | ) |   |   | (1,910,111 | ) |   |
| **Cash flows provided by / (used in) financing  activities from continuing operations**   | ** ** | ** **                                 | **(623,391** | **)** | ** ** | ** ** | **3,951,018** | ** ** | ** ** | ** ** | **6,255,873** |   | ** ** | ** ** | **8,356,764** |   |   |
| **Cash flows provided by / (used in) financing  activities from discontinued operations** | ** ** | ** **                                 | **(166,921** | **)** | ** ** | ** ** | **(4,608** | **)** | ** ** | ** ** | **—** |   | ** ** | ** ** | **—** |   |   |
| Effect of exchange rate change on cash and due from  banks                                |       |                                       | (6,624       | ) |   |   | 13,470 |   |   |   | 5,937 |   |   |   | 7,931 |   |   |
| Net (decrease)/increase in cash and due from banks                                        |       |                                       | (86,512      | ) |   |   | 859,478 |   |   |   | 301,088 |   |   |   | 402,204 |   |   |
| Cash and due from banks at beginning of year                                              | ** ** | ** **                                 | **789,920**  | ** ** | ** ** | ** ** | **703,408** |   |   |   | 1,562,886 |   |   |   | 2,087,745 |   |   |
| Cash and due from banks at end of year                                                    | ** ** | ** **                                 | **703,408**  | ** ** | ** ** | ** ** | **1,562,886** |   |   |   | 1,863,974 |   |   |   | 2,489,949 |   |   |
| Cash and due from banks at end of year (discontinued  operations)                         |       |                                       | (43,791      | ) |   |   | (51,914 | ) |   |   | — |   |   |   | — |   |   |
| **Cash and due from banks from continuing  operations at end of year**                    | ** ** | ** **                                 | **659,617**  | ** ** | ** ** | ** ** | **1,510,972** | ** ** | ** ** | ** ** | **1,863,974** |   | ** ** | ** ** | **2,489,949** |   |   |
| **Supplemental Disclosure of Cash Flow  Information:**                                    |       |                                       |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash paid for:                                                                            |       |                                       |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income taxes                                                                              |       |                                       | 209,184      |   |   |   | 154,445 |   |   |   | 294,538 |   |   |   | 393,452 |   |   |
| Interest                                                                                  |       |                                       | 672,822      |   |   |   | 848,385 |   |   |   | 1,274,206 |   |   |   | 1,702,119 |   |   |
| Supplemental schedule of non cash investing and  financing activities                     |       |                                       |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common  stock to effect the capitalization of additional paid-in capital      |       |                                       | 344,329      |   |   |   | 100,979 |   |   |   | 67,854 |   |   |   | 90,641 |   |   |

 

The accompanying notes are an integral part of these consolidated financial statements.

F-11

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1:**   ORGANIZATION

The National Bank ofGreece S.A. (the “Bank”) was incorporated in the Hellenic Republic in 1841. TheNational Bank of Greece S.A. and subsidiaries (the “Group”) is involved indiversified financial services activities including retail and commercialbanking, global investment management, investment banking, insurance,investment activities and securities trading. The Group’s non-financial serviceactivities include hotels, warehouse management and real estate investments. TheGroup operates primarily in Greece, but also has operations in Europe, AsiaMinor and Africa.

**NOTE 2:**   REPORTINGCURRENCY AND TRANSLATION INTO US DOLLARS

Financial statements forthe Group as of December 31, 2006, are expressed in Euro (EUR). Thetranslation of EUR amounts into US dollar amounts is presented solely for theconvenience of the reader and should not be construed as representations thatthe amounts stated in EUR have been or could have been or could be now or atany time in the future converted into US dollars at this or any other rate ofexchange. The exchange rate used for the purpose of this disclosure is the noonbuying rate in New York City for cable transfers in foreign currencies, ascertified for customs by the Federal Reserve Bank of New York on June 11,2007 which was EUR 0.7486 to US $ 1.00 (EUR 0.7593 to US $ 1.00 on December 31,2006).

**NOTE 3:**   SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significantaccounting policies followed by the Group in preparing these financialstatements.

***Principles ofConsolidation******—***Theconsolidated financial statements of the Group include the accounts of the Bankand its direct and indirect subsidiaries. The Bank’s subsidiaries are entitiesin which it holds, directly or indirectly, more than 50% of the voting rightsor where it exercise control, for entities in which the equity holders havesubstantive voting interests. Effective December 31, 2003, the Group alsoconsolidates variable interest entities (VIEs) where the Group is the primarybeneficiary in accordance with Financial Accounting Standards Board (“FASB”)Interpretation (FIN) No. 46 “ Consolidation of Variable Interest Entitiesan interpretation of ARB No 51” (“FIN 46), as revised. The effects of inter-companytransactions and balances have been eliminated.

***Basis ofPresentation***—The accounting records of the Group havebeen maintained in accordance with the provisions of the Greek Company Law, theGreek Banking Chart of Accounts, the Greek Books and Records Code and the Bankof Greece regulations (collectively, “Greek GAAP”), except for foreignsubsidiaries which maintain their accounting records in accordance with thelegislation and regulations of the country in which they operate. Necessaryadjustments have been made, for financial reporting purposes, in order toconform with accounting principles generally accepted in the United States ofAmerica (“U.S. GAAP”).

***Foreign CurrencyTranslation******—***Assets,liabilities and operations of foreign branches and subsidiaries are recordedbased on the functional currency of each entity. The functional currency is thelocal currency for the majority of the foreign operations. The assets,liabilities and equity are translated, for consolidation purposes, from theother local currencies to the reporting currency, EUR, at current exchangerates. The resulting gains or losses are reported as a component of othercomprehensive income and losses within shareholder’s equity. Transactionsexecuted in other than local currencies are first translated into the local 

F-12

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

reporting currency. Anyrelated currency exchange adjustments are included in income prior to anytranslation.

***Statement of CashFlows***—For purposes of the consolidated statementsof cash flows, cash and cash equivalents are defined as those amounts includedin the balance sheet caption “cash and due from banks”.

***Securities:Trading, AFS, HTM***—Debt securities are classifiedbased on management’s intention on the date of purchase. Debt securities whichmanagement has the positive intent and ability to hold to maturity areclassified as held-to-maturity and are reported at amortized cost. Securitiesthat are bought and held principally for the purpose of resale in the near termare classified as trading instruments and are stated at fair value withunrealized gains and losses included in net trading profit or loss. All otherdebt securities are classified as available for sale and carried at fair valuewith net unrealized gains and losses included in accumulated othercomprehensive income on a net of tax basis. Interest and dividends onsecurities, including amortization of premiums and accretion of discounts areincluded in interest income.

Individual held-to-maturity and available-for-salesecurities with declines to their fair values below their cost that are otherthan temporary are written down to their fair value on an individual securitybasis. The related write-downs are included in earnings as realized losses. Gainsand losses on the sale of available-for-sale securities are recorded on thetrade date and are calculated using the average cost method.

***Securities: TradingInstruments******—***Financialinstruments utilized in trading activities are stated at fair value. Fair valueis generally based on quoted market prices. If quoted market prices are notavailable, fair values are estimated based on dealer quotes, pricing models,discounted cash flow analysis or quoted prices for instruments with similarcharacteristics. Realized and unrealized gains and losses are recognized in nettrading profit or loss.

***Securities: Equitymethod investments***—Equity investments in which the Groupexercises significant influence but does not control, are initially recorded atcost and the carrying amount of the investments is adjusted to recognize theGroup’s share of the earnings or losses of investees after the date ofacquisition. The amount of the adjustment, after elimination of anyintercompany gains and losses and impairment of goodwill, if any, is includedin the determination of the Group’s net income. Dividends received by the Groupfrom its equity method investments reduce the carrying amount of thoseinvestments.

***Loans******—***Loans areincluded at their outstanding unpaid principal balances adjusted forcharge-offs, the allowance for loan losses, and any deferred fees or costs onoriginated loans or unamortized premiums or discounts on purchased loans. Interestincome is accrued on the unpaid principal balance. Discounts and premiums areamortized to income using the interest rate method.

Loan origination fees, net of certain directorigination costs, are deferred and recognized as an adjustment to yield of therelated loans. There are no loans that have been originated which are intendedfor sale in the secondary market.

***Non-accruing loans***—Theaccrual of interest on commercial loans is discontinued at the time the loan is180 days delinquent unless the credit is well secured and in process ofcollection. Residential real estate loans are typically placed on non-accrualat the time the loan is 180 days delinquent. Credit card loans, other unsecuredpersonal credit lines and certain consumer finance loans are typically placedon non-accrual basis no later than the date upon which they become 100days delinquent. In all cases, loans 

F-13

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

must be placed onnon-accrual, or written-off at an earlier date, if collection of principal orinterest is considered doubtful. All interest accrued but not collected forloans that are placed on non-accrual or written-off is reversed againstinterest income.

The interest on these loans is accounted for on thecash-basis or cost-recovery method, until qualifying for return to accrual. Loansare returned to accrual status when all the principal and interest amountscontractually due are reasonably assured of repayment within a reasonable timeframe and when the borrower has demonstrated payment performance of cash orequivalents for a minimum of six months.

***Allowance for loanlosses***—The allowance for loan losses is management’sestimate of probable incurred loan losses in the lending portfolios. Additionsto the allowance for loan losses are made by charges to the provision for loanlosses. Credit exposures deemed to be uncollectible are charged against theallowance for loan losses. Recoveries of amounts previously charged asuncollectible are credited to the allowance for loan losses.

The Group performs periodic and systematic detailedreviews of its lending portfolios to identify inherent risks and to assess tothe overall collectibility of those portfolios. The allowance on certainhomogeneous loan portfolios, which generally consist of consumer and mortgageloans, is based on aggregated portfolio segment evaluations generally by loantype.

Under Greek regulations, non-performing loans cannotbe written off until legal remedies for recovery, which can be a very lengthyprocess, have been exhausted. Historical loss amounts include both amountsactually written off and amounts that are expected to be written off, but forwhich not all legal remedies for recovery have been fully exhausted.

Loss forecast models are utilized for these segmentswhich consider a variety of factors including, but not limited to, historicalloss experience, anticipated defaults or foreclosures based on portfoliotrends, delinquencies and credit scores, and expected loss factors by loantype. The remaining loan portfolios are reviewed on an individual loan basis.

Loans subject to individual reviews are analyzed andsegregated by risk according to the Group’s internal risk rating scale. Theserisk classifications, in conjunction with an analysis of historical lossexperience, current economic conditions and performance trends within specificportfolio segments, and any other pertinent information (including individualvaluations on non-performing loans in accordance with Statement of FinancialAccounting Standards (“SFAS”) No. 114, “Accounting by Creditors forImpairment of a Loan” (“SFAS 114”)) result in the estimation of specific andcoefficient method allowances for loan losses. If necessary, an allowance forloan losses is established for individual impaired loans. A loan is consideredimpaired when, based on current information and events, it is probable that theGroup will be unable to collect all amounts due, including principal andinterest, according to the contractual terms of the agreement.

Once a loan has been identified as individuallyimpaired, management measures impairment in accordance with SFAS 114.Individually impaired loans are measured based on the present value of paymentsexpected to be received, or for loans that are solely dependent on thecollateral for repayment, the estimated fair value of the collateral. If therecorded investment in impaired loans exceeds the measure of estimated fairvalue, a specific allowance is established as a component of the allowance forloan losses.

F-14

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANTACCOUNTING POLICIES (Continued)

Due to the subjectivity involved in the determinationof the unassigned portion of the allowance for loan losses, the relationship ofthe unassigned component to the total allowance for loan losses may fluctuatefrom period to period. Management evaluates the adequacy of the allowance forloan losses based on the combined total of the assigned and unassignedcomponents.

***Foreclosed assets******—***Foreclosedassets, which are included in other assets, include properties acquired throughforeclosure in full or partial satisfaction of the related loan.

Foreclosed assets are initially recorded at the lowerof fair value, net of estimated selling costs. Subsequent to foreclosure,management periodically performs valuations and the assets are carried at thelower of carrying amount or fair value less costs to sell. Revenue and expensesfrom operations and changes in the valuation allowance are included in otherexpenses.

***Goodwill and OtherIntangibles***—Net asset of companies acquired in purchasetransactions are recorded at fair value at the date of the acquisition, assuch, the historical cost basis of individual assets and liabilities areadjusted to reflect their fair value. Identified intangibles are amortized on anaccelerated or straight-line basis over the period benefited. Goodwill is notamortized, but is reviewed for potential impairment at least on an annual basisor if events or circumstances indicate a potential impairment more frequently,at the reporting unit level. The impairment test is performed in two phases.The first step of the goodwill impairment test, compares the fair value of thereporting unit with its carrying amount, including goodwill. If the fair valueof the reporting unit exceeds its carrying amount, goodwill of the reportingunit is considered not impaired; however, if the carrying amount of thereporting unit exceeds its fair value, an additional procedure must beperformed. That additional procedure compares the implied fair value of the reportingunit’s goodwill, as defined in SFAS 142 “Goodwill and Other Intangible Assets”,with the carrying amount of that goodwill. An impairment loss is recorded tothe extent that the carrying amount of goodwill exceeds its implied fair value.Intangible assets subject to amortization are evaluated for impairment inaccordance with SFAS 144 Accounting for the Impairment or Disposal ofLong-Lived Assets if events and circumstances indicate a possible impairment.There were no events or changes in circumstances in 2006, 2005, and 2004 thatindicated the carrying amounts of our intangibles may not be recoverable.Intangible assets are amortised using an estimated range of anticipated lives,which is 3 to 10 years for software and 6 to 8 years for intangiblesarising on acquisitions such as customer relationships and core deposits. Tradenames have indefinite lives.

***Special PurposeFinancing Entities******—***The Groupdetermines whether these entities should be consolidated by evaluating thedegree to which it maintains control over the financing entity and will receivethe risks and rewards of the assets in the financing entity. In making thisdetermination, the Group considers whether the entity is a qualifying specialpurpose entity (“QSPE”), which is generally not required to be consolidated bythe seller or investors in the entity. For non—QSPE structures or VIEs, theGroup assesses whether it is the primary beneficiary of the entity. Inaccordance with FIN 46R, the primary beneficiary is the party that consolidatesa VIE based on the assessment that it will absorb a majority of the expectedlosses or expected residual returns of the equity, or both. For additionalinformation on other special purpose financing entities, see note 27 to theConsolidated Financial Statements

***Income taxes******—***There aretwo components of income tax expenses: current and deferred. Current income taxexpense approximates cash to be paid or refunded for taxes for the applicableperiod.

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred income tax assets and liabilities aredetermined using the asset and liability (or balance sheet) method based onenacted income taxes. Under this method, the net deferred tax asset orliability is determined based on the tax effects of the differences between thebook and tax bases of the various balance sheet assets and liabilities andgives current recognition to changes in tax rates and laws applicable in therespective jurisdiction.

Recognition of deferred tax assets is based onmanagement’s belief that it is more likely than not that the tax benefitassociated with certain temporary differences, such as tax operating loss carryforward and tax credits, will be realized. A valuation allowance is recordedfor the amount of the deferred tax events for which it is more likely than notthat the realization will not occur.

***Premises andequipment***—Tangible fixed assets, including buildingsare stated at cost less accumulated depreciation, except for land, which isstated at cost. Depreciation is provided on a straight-line or accelerateddepreciation basis over the estimated useful lives of individual assets andclasses of assets. Maintenance, repairs and minor alterations are expensed asincurred.

Long-lived assets that are held or that are to be disposedof are evaluated periodically for impairment when events or changes incircumstances indicate that the carrying amount may not be recoverable.Impairment is evaluated by determining if the difference between the expectedundiscounted future cash flows of a long-lived asset is lower than its carryingvalue. In event of impairment, the Group recognizes a loss for the differencebetween the carrying amount and the estimated fair value of the asset asmeasured using a discounted cash flow analysis. The impairment loss isreflected in non-interest expense.

***Insuranceoperations***—Insurance includes both life and general(property and casualty) insurance underwriting operations. Income and expensesfrom insurance operations are included in other non-interest income andexpenses.

Premium revenues from life insurance policies(long-duration contracts) are recognized as revenue as and when they become duefrom policyholders. Variable costs incurred in the acquisition of such policiesare capitalized and expensed proportionately with the recognition of premiumrevenues. Premium income from property and casualty policies (short-durationcontracts), is recognized over the life of the policy. Income and costs onpolicies, which relate to subsequent periods are deferred and recognized in theperiod to which they relate. Claims relating to property and casualty policiesare recognized as and when these become known based on the informationavailable.

Insurance reserves for expected costs relating to lifeinsurance policies are accrued over the current and expected renewal periods ofthe contracts. The present value of estimated future policy benefits payable,less the present value of estimated future net premia to be collected isestimated using approved actuarial methods that use assumptions about futureinvestment yields, mortality, expenses, options and guarantees, morbidity andtermination rates at the time of inception of insurance contracts. Originalassumptions are adjusted to reflect actual experience and any premiumdeficiency estimated is charged off to income for the period. Revisedassumptions reflect estimates of future monetary inflation, medical inflation,the swap rate of bonds as at the end of each reporting period and recentexperience concerning risk factors mentioned above. An appropriate discountfactor is used.

Insurance reserves for property and casualty insuranceinclude, apart from an unearned premium reserve, a provision for outstandingclaims and a provision for claims incurred but not reported (“IBNR”). Lossestimates rely on observations of loss experience for similar historic eventsthat relate to cumulative 

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

gross paid claim amount,settled claim amount, incurred claim amount and claim number developments. Suchobservations are periodically revised and any premium deficiency is charged toincome for the period. Projections are based on historical developmentpatterns. The development ratios are adjusted in a small number of cases toremove the effect of claim developments, which appear to be of an exceptionalnature. Projections of reinsurance recoveries are also undertaken. Allowance ismade for claim adjustment expenses and an appropriate discount factor is used.

***Derivatives andhedging activities******—***Allderivatives are recognized on the consolidated balance sheet at fair value andrecorded as derivative assets or liabilities. For exchange-traded contracts,fair value is based on quoted market prices. For non- exchange tradedcontracts, fair value is based on dealer quotes, pricing models, discountedcash flow analysis or quoted prices for instruments with similarcharacteristics. The Group designates a derivative as held for trading orhedging purposes when it enters into a derivative contract. Derivativesdesignated as held for trading activities are included in derivative assets orliabilities with changes in fair value reflected in net trading profit or loss.

The Group uses its derivatives designated for hedgingactivities as fair value hedges. The Group primarily manages interest rate andforeign currency exchange rate sensitivity through the use of derivatives. Fairvalue hedges are used to limit the Group’s exposure to changes in the fairvalue of its interest-bearing assets or liabilities that are due to interestrate or foreign exchange volatility. Changes in the fair value of derivativesdesignated for fair value hedging activities that are highly effective ashedges along with the change in the fair value on the hedged item attributableto the hedged risk are reflected in net trading profit or loss. Hedgeineffectiveness and gains and losses on the excluded component of a derivativein assessing hedge effectiveness are recorded in earnings.

The Group occasionally purchases or issues financialinstruments containing embedded derivatives. The embedded derivative isseparated from the host contract and carried at fair value if the economiccharacteristics of the derivative are not clearly and closely related to theeconomic characteristics of the host contract.

The Group formally documents at inception allrelationships between hedging instruments and hedged items, as well as its riskmanagement objectives and strategies for undertaking various hedge transactionsas required by SFAS 133 “Accounting for derivative instruments and HedgingActivities” (“SFAS 133”). Additionally, the Group assesses at the hedge’sinception and quarterly thereafter whether the derivative used in its hedgingtransaction is expected to be or has been highly effective in offsettingchanges in the fair value of the hedged items. The Group discontinues hedgeaccounting when it is determined that a derivative is not expected to be or hasceased to be highly effective as a hedge and reflects the changes in fair valuein earnings.

***Discontinuedoperations***—A discontinued operation is a componentof the Group’s business that represents a separate major line of business orgeographical area of operations that has been disposed of or is classified asheld for sale or is a subsidiary acquired exclusively with a view to resale. Classificationas discontinued operations occurs upon disposal or when the operations meet thecriteria to be classified as held for sale. Discontinued operations arepresented on the face of the income statement.

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARYOF SIGNIFICANT ACCOUNTING POLICIES (Continued)

***Dividend policy***—TheBank, on the basis of its statutory financial statements, Greek GAAP, paysdividends out of:

·       distributableprofits for the year (i.e. profits net of: a) tax, b) losses carried forward,and c) prior years tax audit differences); and

·       retainedearnings, special reserves or ordinary reserves to the extent they exceed theamount required to be maintained by law.

Each year the Bankis required to pay a minimum dividend out of the net profits according to IFRSfor the year, if any, equal to the greater of:

·       6%of the Bank’s share capital; or

·       35%of the net profits for the year less unrealised gains.

Any distribution of the remainder of the distributableprofits must be approved by a “General Meeting of the Shareholders” with theordinary quorum and majority voting requirements. No distribution can beeffected if, on the closing date of the last financial year, the totalshareholders’ equity is, or will become after that distribution, lower than thesum amount of the share capital and the reserves, the distribution of which isprohibited by Greek law or the Bank’s Articles of Association.

In the event that the mandatory minimum dividendpayments equal 35% of the net profits for the year, the Bank’s shareholdershave two options. According to Greek Emergency Law 148/1967, as amended byGreek Law 2753/1999, a majority representing at least 65% of the paid-up sharecapital may vote to pay the lower dividend of 6% of the Bank’s share capital.The remaining undistributed dividend must then be transferred to a specialreserve which must, within four years following the General Meeting, bedistributed in the form of a stock dividend. Furthermore, a majorityrepresenting 70% of the Bank’s paid-up capital may vote to waive thisstock dividend.

Normally, dividends are declared and paid in the yearsubsequent to the reporting period. Up to and including the fiscal year endedDecember 31, 2005, dividends are accounted for once declared. Beginning in2006, the Group changed its policy and now records a liability related to themandatory minimum dividend payment computed as 35% of the net profits for theyear less unrealized gains. The mandatory minimum dividend liability recognizedin 2006 amounts to  €210,877thousand. The effect of the mandatory minimum dividend in prior years isimmaterial.

***Resale andrepurchase agreements***—The Group enters into purchases ofsecurities under agreements to resell (“resale agreements”) and sales ofsecurities under agreements to repurchase (“repurchase agreements”) ofsubstantially identical securities. Resale agreements and repurchase agreementsare generally accounted for as secured lending and secured borrowingtransactions, respectively.

The amounts advanced under resale agreements and theamounts borrowed under repurchase agreements are carried on the balance sheetat the amount advanced or borrowed plus accrued interest. The market value ofthese securities is monitored and the level of collateral is adjustedaccordingly.

***Share-based paymenttransactions***—The Bank approved a Group-wide shareoptions plan for the executive members of the Board of Directors, managementand staff of the Group. The fair value of the employee services received inexchange for the grant of the options is recognised as a compensation cost. Thetotal amount to be expensed over the requisite period is determined byreference to the fair value of 

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

the share options granted.The fair value of the options is determined using an option-pricing model thattakes into account the stock price at the grant date, the exercise price, theexpected life of the option, the expected volatility of the underlying stockand the expected dividends on it, and the risk-free interest rate over theexpected life of the option.

When the options are exercised and new shares areissued, the proceeds received net of any transaction costs are credited topaid-in capital.

***Treasury stock***—The Groupparent company’s common stock, owned by the Group entities, is considered to betreasury stock and is recorded at cost. Gains and losses on disposal oftreasury stock are recorded in equity.

***Earnings per share***—Basicearnings per share is computed by dividing income available to commonstockholders by the weighted average number of common shares outstanding forthe period. Diluted earnings per share reflects the potential dilution thatcould occur if securities or other contracts were exercised and is computedafter giving consideration to the weighted average dilutive effect of thesecommon stock equivalents.

For the purpose of the earnings per sharecalculations, shares owned by entities within the Group are not included in thecalculations of the denominators

***Use of estimates***—Thepreparation of consolidated financial statements in conformity with US GAAPrequires management to make estimates and assumptions that affect the reported amountsof assets and liabilities and disclosures of contingent assets and liabilitiesat the date of the consolidated financial statements and the reported amountsof revenues and expenses during the reporting period. Actual results coulddiffer from those estimates. Significant estimates made by management arediscussed in the notes as applicable.

***Recently issuedaccounting pronouncements***—In February 2007, the FinancialAccounting Standards Board (FASB) issued Statement of Financial AccountingStandards (SFAS) No. 159, “The Fair Value Option for Financial Assets andFinancial Liabilities” (SFAS 159), which allows an entity the irrevocableoption to elect fair value for the initial and subsequent measurement forcertain financial assets and liabilities on a contract-by-contract basis.Subsequent changes in fair value of these financial assets and liabilitieswould be recognized in earnings when they occur. SFAS 159 further establishescertain additional disclosure requirements. SFAS 159 is effective for the Group’sfinancial statements for the year beginning on January 1, 2008, withearlier adoption permitted. Management is currently evaluating the impact andtiming of the adoption of SFAS 159 on the Group’s financial condition andresults of operations.

In September 2006, the FASB issued SFAS No. 158,“Employers’ Accounting for Defined Benefit Pension and Other PostretirementPlans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (SFAS158), which requires the recognition of a plan’s overfunded or under-fundedstatus as an asset or liability with an offsetting adjustment to AccumulatedOther Comprehensive Income (OCI). SFAS 158 further requires the determinationof the fair values of a plan’s assets at a company’s year-end and recognitionof actuarial gains and losses, prior service costs or credits, and transitionassets or obligations as a component of Accumulated OCI. This statement waseffective as of December 31, 2006. The adoption of SFAS 158 reducedAccumulated OCI by approximately EUR 57,337 thousand after tax in 2006.

In September 2006, the FASB issued SFAS No. 157,“Fair Value Measurements” (SFAS 157). SFAS 157 defines fair value,establishes a framework for measuring fair value under GAAP and enhances 

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 3:**   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

disclosures about fairvalue measurements. SFAS 157 defines fair value as the exchange price thatwould be received for an asset or paid to transfer a liability (an exit price)in the principal or most advantageous market for the asset or liability in anorderly transaction between market participants on the measurement date. SFAS157 is effective for the Corporation’s financial statements issued for the yearbeginning on January 1, 2008, with earlier adoption permitted. Managementis currently evaluating the impact of the adoption of SFAS 157 on the Groupsfinancial condition and results of operations.

In September 2006, the Securities and ExchangeCommission (SEC) issued Staff Accounting Bulletin (SAB) No. 108 “Consideringthe Effects of Prior Year Misstatements when Quantifying Misstatements inCurrent Year Financial Statements” (SAB 108). SAB 108 expresses the SEC Staff’sviews regarding the process of quantifying financial statement misstatements. SAB108 states that in evaluating the materiality of financial statementmisstatements, a corporation must quantify the impact of correctingmisstatements, including both the carryover and reversing effects of prior yearmisstatements, on the current year financial statements. SAB 108 is effectivefor the year ended December 31, 2006. The application of SAB 108 did nothave an impact on the Group’s financial condition and results of operations.

In July 2006, the FASB released FASBInterpretation No. 48,  “Accountingfor Uncertainty in Income Taxes, an interpretation of FASB Statement No. 109”(FIN 48). FIN 48 clarifies the accounting and reporting for income taxes whereinterpretation of the tax law may be uncertain. FIN 48 prescribes acomprehensive model for the financial statement recognition, measurement,presentation and disclosure of income tax uncertainties with respect topositions taken or expected to be taken in income tax returns. The Group willadopt FIN 48 on January 1 2007. Management is currently evaluating theimpact of the adoption of FIN 48 on the Groups financial condition and resultsof operations.

In March 2006, the FASB issued SFAS No.156, “Accountingfor Servicing of Financial Assets, an amendment to FASB Statement No. 140”(“SFAS 156”), which permits but does not require, an entity to account for oneor more classes of servicing rights at fair value, with changes in fair valuerecorded in Consolidated Statement of Income. The standard is effective January 1,2007. The adoption of this standard is not expected to have a material impacton the Group’s results of operation or financial position.

In February 2006, theFASB issued SFAS No. 155, “Accounting for Certain Hybrid Instruments, anamendment of FASB Statements No. 133 and 140” (SFAS 155), which permits,but does not require, fair value accounting for any hybrid financial instrumentthat contains an embedded derivative that would otherwise require bifurcationin accordance with SFAS No. 133 “Accounting for Derivative Instruments andHedging Activities, as amended” (SFAS 133). The statement is effective as of January 1,2007, with earlier adoption permitted. The Group elected to early adopt thisstandard as of January 1, 2005.

**NOTE 4:**   MERGERS,ACQUISITIONS AND DISPOSALS

a)               On March 4,2004 the Bank acquired an additional 9.20% of the common stock of “BancaRomaneasca S.A.” thus increasing its holding to 90.9%. The acquisition waseffected through the payment of cash consideration of EUR 2.96 million andgoodwill resulting from the acquisition was EUR 1.32 million.

b)              On July 7, 2004the Bank acquired 10% of the common stock of United Bulgarian Bank to increaseits holdings to 99.91%. The acquisition was effected through the payment of cash

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 4:**   MERGERS, ACQUISITIONSAND DISPOSALS (Continued)

consideration of EUR 27.91million and goodwill resulting from the acquisition was EUR 13.12 million.

c)               On September 30,2004 the Bank acquired 10% of the common stock of National Investment Companyto increase its holding to 46.42%. The acquisition was effected through thepayment of cash consideration of EUR 19.72 million and negative goodwillresulting from the acquisition was EUR 2.02 million, which was recorded in theincome statement.Furthermore, the National Investment Company increased itsshare capital on April 25, 2005 by issuing 39.614.400 new shares. The Bankparticipated in the share capital increase of National Investment Company and,as a result, increased its participation interest by 9,27%. During the firstquarter of 2005, the Bank also acquired 0,83% of the shares of NationalInvestment Company, increasing in total its participation interest to 56,52%prior to merger through absorption. The total consideration paid amounted toEUR 68.4 million.

d)              During the yearended December 31, 2005, the Bank increased its participation interest inthe share capital of a) Banca Romaneasca S.A., b) Ethniki Hellenic GeneralInsurance, c) Astir Palace Vouliagmenis S.A. and d) Ethnoplan S.A., byacquiring an additional 6,28%, 0,65%, 1,31%, and 3,00%, respectively of theshare capital of the aforementioned companies. The consideration amounts paidwere EUR 30.58 million, 100.98 million, 2.83 million and 13 million,respectively.

e)               On August 3,2005 the Bank covered in full the share capital increase of its subsidiary,Astir Alexandroupolis S.A. for the amount of EUR 1.04 million, maintaining its100% stake. Total consideration was satisfied in cash.

f)                 In October 2005,the Bank’s subsidiary, Ethniki Hellenic General Insurance, signed an agreementfor the acquisition of 100% of Alpha Insurance Romania and 95% of AlphaInsurance Brokerage, from the Alpha Bank Group. The acquisition of AlphaInsurance Brokerage concluded in 2005. The net assets acquired amount to EUR0.362 million and the consideration paid was EUR 2.45 million resulting ingoodwill of EUR 2.09 million.

On February 15, 2006, Ethniki Hellenic GeneralInsurance completed the acquisition of 100% of the share capital of AlphaInsurance Romania for a consideration of EUR 2,7 million. The fair valueof net assets acquired amounted to EUR 2 million, resulting in goodwill ofEUR 0,7 million. The company has been renamed to “NBG Asigurari S.A.”and has a cooperation agreement with Alpha Bank Romania to offer its productsfor the following five years

g)               In October 2005,the Group announced the signing of the agreement for the sale of its subsidiaryAtlantic Bank of New York to New York Community Bancorp, Inc. the holdingcompany for New York Community Bank. On April 28, 2006, NBG InternationalHoldings BV (a wholly owned subsidiary established by NBG in September 2005) soldfor USD 400 million in cash, before incurred expenses, its subsidiary,Atlantic Bank of New York, whose consolidated net assets as at the date ofdisposal (April 2006) amounted to USD 247 million.

h)              In November 2005,the Bank announced the signing of the agreement for the sale of its subsidiary,National Bank of Greece (Canada), to Scotiabank. The sale concluded on February 3, 2006.The consideration received amounted to CAD 71.3m in cash (equivalent of EUR 52million).

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 4:**   MERGERS, ACQUISITIONS AND DISPOSALS (Continued)

i)                 In November 2005,the Bank signed an agreement for the acquisition of a majority stake (70%) ofthe share capital of the Romanian leasing company EURIAL Leasing. Theacquisition was concluded on December 29, 2005. The goodwill arisen fromthe acquisition amounted to EUR 6,702 (consideration paid EUR 8,400, net assetsacquired EUR 1,698). The goodwill of Eurial is attributable to the highprofitability of the acquired business and significant growth expected to arisein the Romanian leasing market.

j)                  On December 13,2005 the Bank merged through absorption with the National Investment Companyfollowing the Decisions of the General Meetings of the two companies. Theconsideration to minority shareholders was agreed to be in the form of a fixednumber of the Bank’s shares based on the fair valuation of the net assets ofthe National Investment Company on May 31, 2005. The Bank recordedgoodwill in the amount of EUR 16,162 thousand (consideration paid EUR 163,416,net assets acquired EUR 147,254), which was written off in 2005.

k)              On July 29,2005, the Board of Directors of the Bank and its subsidiary, National RealEstate Company, decided that the two companies will merge through absorption ofNational Real Estate Company by the Bank following the Decisions of the GeneralMeetings of the Shareholders of the two companies. The consideration tominority was agreed to be in the form of a fixed number of the Bank’s shares,based on the fair valuation of the net assets of the National Real EstateInvestment Company on July 31, 2005.

The share exchange ratio proposed to the GeneralMeetings of their Shareholders was 2 shares of the absorbing National Bank for15 shares of the absorbed National Real Estate. Approval by regulatoryauthorities to initiate the merger procedures was obtained in October 2005(Greek Government Gazette issue 11146/21.10.2005). PricewaterhouseCoopers andKPMG were engaged as auditors to certify the book value of National Bank ofGreece’s and National Real Estate’s assets respectively, as at the mergerbalance sheet date (31/7/2005) and to issue a fairness opinion on the shareswap ratio. PricewaterhouseCoopers and KPMG issued their fairness opinion onthe share swap ratio. On February 3, 2006, the second repeat GeneralMeeting of the Bank’s Shareholders approved the above merger under the termsproposed by the Board of Directors, which included the capitalisation of EUR 67,854thousand in order to increase the nominal value of common shares from EUR 4.80to EUR 5.00.

On March 31, 2006, the Ministry of Developmentapproved the aforementioned merger and as of the same date the National RealEstate was permanently deregistrated from the Registrar Of Companies (Ref. OfMerger Approval: K2-4813, Ref. Of Deregistration: K2-744).

On completion of the merger and cancellation ofNational Real Estate shares owned by National Bank of Greece, the Bank’s totalnumber of shares increased by 2,670,367 shares which, added to existing shares(i.e. 336,599,045), raised the total number of the Bank’s shares to 339,269,412and increased the share capital to EUR 1,696,347 thousand.

l)                 In January 2006,following its Board of Directors decision on December 20, 2005, the Bankparticipated in the share capital increase of its subsidiary, Banca Romaneasca,acquiring 109.8 out of 122.5 million new shares for the amount of RON 219.6million (equivalent EUR 60 million). The share capital increase wasconcluded in February 2006. Following this share capital increase, theBank currently controls 194,4 million shares (98,88%).

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 4:**   MERGERS, ACQUISITIONS AND DISPOSALS (Continued)

m)          In January 2006,the Bank concluded the sale of its subsidiary, ASTIR Alexandroupolis. The totalconsideration received was EUR 6,5 million.

n)              On February 22,2006, Group companies, Ethniki Hellenic General Insurance and United BulgarianBank, agreed with American International Group Inc (“AIG”) to jointly establisha Life Insurance Company and a Property and Casualty insurance company inBulgaria. Ethniki Hellenic General Insurance and United Bulgarian Bank willeach hold 30% of the share capital of the two new companies, with the remaining40% to be held by American Life Insurance Company (“ALICO”) and AIG CentralEurope & CIS Insurance Holdings Corporation, which will also exercisethe management of the new companies. The authorized share capital was set forthe Life insurance company to BGN 6 million (equivalent EUR 3,1 million) andfor the Property and Casualty insurance company to BGN 5,4 million (equivalentEUR 2,8 million).

o)              OnApril 3, 2006, the Bank entered into an agreement to acquire 46% of theordinary shares and 100% of Finansbank’s founder shares, a commercial andretail bank in Turkey.

Pursuant to the terms ofthe Acquisition Agreement, the Bank has agreed to acquire from Fiba Holding A.S.(“Fiba Holding”), Fina Holding A.S. (“Fina Holding”), GirisimFactoring A.S. (“Girisim Factoring”) and Fiba FactoringHizmetleri A.S. (“Fiba Factoring”) (together, the “Fiba Sellers”) 46% ofthe ordinary shares of Finansbank, and 100% of Finansbank’s founder shares. Theacquisition concluded on 18 August 2006, by which NBG acquired from FIBA Sellers,46% of Finansbank ordinary shares and 100% of the Founder Shares for aconsideration of USD 2.323 million and USD 451 million respectively.The sellers, FIBA Sellers retain a residual stake of 9,68% in the ordinaryshare capital of Finansbank, which is subject to put and call agreements, asprovided for in the shareholders’ agreement between the Bank and the Sellers,exercisable for a two year period commencing two years after closing of theAcquisition at a multiple of between two and a half and three and a half timesthe book value of the Finansbank’s share, subject to certain performancecriteria. The Bank measured the put and call options at fair value in theamount of €19.1 million at December 31, 2006 andclassified them as derivatives. The sellers also agreed and undertook to attendany general meetings of the Finansbank and to vote such number of shares theythen own as is equal to the difference between 50.01% of the ordinary sharesand the total number ordinary shares then owned by the Bank in accordance withthe instructions and directions of the Bank. Based on that, it was deemed thatthe Bank has obtained a controlling interest on August 18, 2006 and as suchthis acquisition was within the scope of FAS 141 Business Combinations. As aresult of Turkish Capital Markets legislation NBG made a mandatory offer tominority shareholders. From the Mandatory Offer which lasted from 8 January to29 January 2007, the Bank acquired a further 43,44% holding of the sharecapital. After the Mandatory Offer and until June 11, 2007 the bankfurther acquired through stock exchange transactions 0.20% of Finansbank’sshare capital. In April 2007, the Bank sold to International FinanceCorporation (“IFC”) 5% of Finansbank ordinary shares. This stake is subject toput and call arrangements, as provided for in the shareholders’ agreementbetween the Bank and IFC, exercisable for 5 and 7 years, respectively.

Cash andcash equivalents acquired were EUR 101 million.

p)              On September 12,2006, the National Bank of Greece (“NBG”) and the Republic of Serbia enteredinto a definitive agreement for the acquisition of 99,4% of the share capitalof 

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 4:**   MERGERS, ACQUISITIONS AND DISPOSALS (Continued)

Vojvodanska Banka a.d. NoviSad(Vojvodanska) by NBG. NBG paid to the Republic of Serbia on the closing of thetransaction EUR 360 million in cash for the acquisition of 99,4% of Vojvodanska’sshare capital. A further EUR 25 million has also been deposited by NBG in aescrow account until December 2007. The escrow is set against certainexpected recoveries from Vojvodanska’s fully provided non-performing loanportfolio and would be released to NBG on a EUR to EUR basis against anyshortfall in the recoveries.

Cash and cash equivalentsacquired were EUR 13 million.

It is noted that thedetermination of the fair values of the assets acquired and the liabilities andcontingent liabilities assumed is in process, therefore upon completion of thepurchase price allocation, any changes in fair values will adjust the goodwillrecognised appropriately. The provisional amount of goodwill will be finalisedwithin 12 months from the acquisition date.

The assets and liabilities acquired(including the fair value adjustments) at 46% and 99,43% and the goodwillarisen from the transactions (o) and (p) above are as follows:

| ** **                                                     | ** ** | **Finansbank** | ** **    | **Vojvodanska** | ** ** |
|----------------------------------------------------------------|------------|----------------|---------------|-----------------|------------|
| Purchase consideration  (discharged by a derivative)           |       |           | 22,598        |            |       |   | — |   |   |
| Purchase consideration paid  (discharged by cash)              |       |           | 2,211,865     |            |       |   | 362,369 |   |   |
| - For Founder shares                                           |       |           | 356,043       |            |       |   | — |   |   |
| - For Ordinary shares                                          |       |           | 1,855,822     |            |       |   | 362,369 |   |   |
| Less: Cash and cash  equivalents in subsidiary acquired        |       |           | (101,435      | )               |       |   | (13,481 | ) |   |
| **Cash outflow on acquisition**                                | ** ** | ** **     | **2,110,430** |            | ** ** | ** ** | **348,888** |   |   |
| **Total consideration**                                        | ** ** | ** **     | **2,234,463** |            | ** ** | ** ** | **362,369** |   |   |
| Assets and liabilities acquired                                |       |           |          |            |       |   |   |   |   |
| Cash and cash equivalents                                      |       |           | 101,435       |            |       |   | 13,481 |   |   |
| Due from banks                                                 |       |           | 3,071,832     |            |       |   | 133,896 |   |   |
| Trading assets,  derivatives and available-for-sale securities |       |           | 1,379,714     |            |       |   | 51,347 |   |   |
| Net loans                                                      |       |           | 5,680,072     |            |       |   | 223,440 |   |   |
| Software and other  intangibles                                |       |           | 9,168         |            |       |   | 281 |   |   |
| Intangibles recognised:                                        |       |           |          |            |       |   |   |   |   |
| - trade names                                                  |       |           | 161,910       |            |       |   | — |   |   |
| - customer relationships                                       |       |           | 133,104       |            |       |   | — |   |   |
| - core deposits                                                |       |           | 38,739        |            |       |   | — |   |   |
| - software                                                     |       |           | 14,900        |            |       |   | — |   |   |
| Premises and equipment,  net                                   |       |           | 130,191       |            |       |   | 35,259 |   |   |
| Other assets                                                   |       |           | 265,688       |            |       |   | 73,086 |   |   |
| Deposits                                                       |       |           | (6,281,214    | )               |       |   | (449,539 | ) |   |
| Central Bank Borrowings                                        |       |           | —        |            |       |   | (1,002 | ) |   |
| Short term and long term  borrowings                           |       |           | (2,911,102    | )               |       |   | (12,074 | ) |   |
| Other liabilities                                              |       |           | (516,439      | )               |       |   | (27,495 | ) |   |
| **Total net assets**                                           | ** ** | ** **     | **1,277,998** |            | ** ** | ** ** | **40,680** |   |   |
| Group’s share of net  identifiable assets                 |       |           | 587,879       |            |       |   | 40,448 |   |   |
| Goodwill on ordinary  shares                                   |       |           | 1,290,541     |            |       |   | 321,921 |   |   |
| Goodwill on founder  shares                                    |       |           | 356,043       |            |       |   | — |   |   |
| **Goodwill on acquisition**                                    | ** ** | ** **     | **1,646,584** |            | ** ** | ** ** | **321,921** |   |   |

 

F-24

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 4:**   MERGERS, ACQUISITIONS AND DISPOSALS (Continued)

**Unaudited Pro FormaCondensed Financial Information**

Theacquisition of Finansbank took place on August 18, 2006. The followingunaudited pro forma condensed combined financial information presents theresults of operations had the Finansbank acquisition taken place atJanuary 1st,2006 and 2005. Included in the pro forma amounts are Finansbank results for the12 months ended December 31, 2006 and 2005. The minority interest relatedto Finansbank is being eliminated in non-interest expense. The unaudited proforma information presented below is not necessarily indicative of the resultsof operations that would have resulted had the acquisition been completed atthe beginning of the applicable periods presented, nor is it necessarilyindicative of the results of operations in future periods.

| ** **                                            | ** ** | **Year ended December 31,** | ** ** |
|-------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                            | ** ** | **2005**                                   | ** ** | **2006** | ** ** |
| ** **                                            | ** ** | **EUR in thousands**             | ** ** |
| **Proforma NBG Group**                                | ** ** | ** **                                 | ** ** | ** ** | ** ** |
| Net Interest  Income before provision for loan losses |       | 2,047,249                                  |       | 2,392,391 |   |
| Provisions for  loan losses                           |       | (274,226                                   | )          | (408,074 | ) |
| Net Interest  Income after provision for loan losses  |       | 1,773,023                                  |       | 1,984,317 |   |
| Non-interest  income                                  |       | 1,788,493                                  |       | 2,001,409 |   |
| Non-interest  expense                                 |       | (2,577,635                                 | )          | (2,949,821 | ) |
| Income Tax  expense from continuous operations        |       | (340,521                                   | )          | (218,751 | ) |
| Income from  disccontinued operations, net of tax     |       | 28,283                                     |       | 58,187 |   |
| Net income                                            |       | 671,643                                    |       | 875,341 |   |
| Proforma  EPS—basic and diluted (euro)           |       | 1,46                                       |       | 1,65 |   |

----

q)              OnOctober 6, 2006, the share capital of Finansbank Malta Ltd was increasedby 2,250,000 ordinary shares which were fully subscribed, allotted and taken upby Finansbank A.Ş

r)                OnOctober 17, 2006, NBG Greek Fund Ltd sold its investment in AGRIS AE forEUR 2.5 million.

s)                On October 19,2006 NBG and the shareholders of P&K Investment Services SA signed the SPA,whereby NBG will acquire 100% of P&K Investment Services SA. Theconsideration agreed upon amounted to EUR 48.7 million. The acquisition ofP&K Investment Services SA concluded on March 21, 2007 after obtaining allregulatory approvals. The cash amount paid to the shareholders was EUR 43.9million. The remaining part will be released to the sellers three years afterthe acquisition, conditional on the attainment of key targets set out in thepre-agreed business plan.

t)                 From11 through to December 25, 2006, the Bank via a Mandatory Tender Offeracquired 191.2 million shares of Finans Leasing, corresponding to 2.55% ofits share capital and 72.3 million shares of FinansInvestment Trust corresponding to 5.3% of its share capital. The totalconsideration paid amounted to EUR 4.2 million and EUR 0.6 millionrespectively.

F-25

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 5:**   CASHAND DUE FROM BANKS

Cashand due from banks at December 31, comprised:

| ** **                         | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                         | ** ** | **(EUR in thousands)** | ** ** |
| Current accounts  with banks       |       | 296,871                          |       | 142,911       |       |
| Cash and similar  items            |       | 1,004,485                        |       | 797,012       |       |
| Current account  with central bank |       | 201,598                          |       | 885,296       |       |
| Deposits accounts                  |       | 892                              |       | 10,774        |       |
| Other                              |       | 7,126                            |       | 27,981        |       |
| **Total**                          | ** ** | **1,510,972**                    |       | **1,863,974** | ** ** |

 

The Bank is required tomaintain a current account with the Bank of Greece, which is the central bankof Greece (“central bank”), to facilitate interbank transactions with thecentral bank, its member banks and other financial institutions through theTrans-European Automated Real-Time Gross Settlement Express Transfer system(TARGET).

**NOTE 6:**   DEPOSITSWITH CENTRAL BANK

The central bank is theprimary regulator of depository institutions in Greece. The central bankrequires all banks established in Greece to maintain deposits equal to 2% oftotal customer deposits as these are defined by the European Central Bank (“ECB”).These deposits bear interest at the refinancing rate as set by the ECB (3.5% atDecember 31, 2006).

**NOTE 7:**   SECURITIESPURCHASED UNDER AGREEMENTS TO RESELL

Securitiespurchased under agreements to resell at December 31, comprised:

| ** **                                       | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                                       | ** ** | **(EUR in thousands)** | ** ** |
| Securities  purchased under agreements to resell |       | 2,495,733                        |       | 2,398,097     |       |
|                                             | ** ** | **2,495,733**                    | ** ** | **2,398,097** | ** ** |

 

The Group enters into purchases of securities underagreements to resell substantially identical securities. These agreements areclassified as lending arrangements. Agreements with third parties specify theGroup’s rights to request collateral, based on its monitoring of the fair valueof the underlying securities on a daily basis. Securities accepted ascollateral may be sold or repledged. As at December 31, 2005 and 2006, theGroup has not sold or repledged any collateral.

F-26

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 8:   INTERESTBEARING DEPOSITS WITH BANKS**

Interestbearing deposits with banks at December 31, comprised:

| ** **                      | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|---------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                      | ** ** | **(EUR in thousands)** | ** ** |
| Placements in EUR               |       | 653,948                          |       | 511,735       |       |
| Placements in  other currencies |       | 668,067                          |       | 1,760,308     |       |
|                            | ** ** | **1,322,015**                    | ** ** | **2,272,043** | ** ** |
| Maturity  analysis:             |       |                             |       |          |       |
| Up to 3 months                  |       | 1,011,938                        |       | 2,012,337     |       |
| From 3 months to  1 year        |       | 267,621                          |       | 232,916       |       |
| Over 1 year                     |       | 42,456                           |       | 26,790        |       |
|                            | ** ** | **1,322,015**                    | ** ** | **2,272,043** | ** ** |

 

**NOTE 9:   MONEY MARKETINVESTMENTS**

Moneymarket investments at December 31, comprised:

| ** **              | ** ** | **2005**                         | ** ** | **2006**    | ** ** |
|-------------------------|------------|----------------------------------|------------|-------------|------------|
| ** **              | ** ** | **(EUR in thousands)** | ** ** |
| Greek treasury  bills   |       | 68,056                           |       | 168,653     |       |
| Foreign treasury  bills |       | 108,988                          |       | 60,955      |       |
| Other                   |       | 2,029                            |       | 138,045     |       |
| **Total**               | ** ** | **179,073**                      | ** ** | **367,653** | ** ** |

 

**NOTE 10:   TRADINGASSETS**

Fairvalue of debt and equity assets held for trading purposes at December 31,comprised:

| ** **                                                                     | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                                                                     | ** ** | **(EUR in thousands)** | ** ** |
| Greek government  bonds                                                        |       | 7,515,278                        |       | 6,661,754     |       |
| Certificates of  deposit, banker’s acceptances and commercial paper       |       | 63,409                           |       | —        |       |
| Debt securities  issued by other governments and public entities               |       | 458,908                          |       | 110,724       |       |
| Debt securities  issued by foreign financial institutions                      |       | 122,809                          |       | 38,264        |       |
| Debt securities  issued by Greek financial institutions incorporated in Greece |       | 120,862                          |       | 104,056       |       |
| Corporate debt  securities issued by companies incorporated in Greece          |       | 19,438                           |       | 239,756       |       |
| Corporate debt  securities issued by foreign companies                         |       | 23,258                           |       | 106,233       |       |
| Equity securities  issued by companies incorporated in Greece                  |       | 215,002                          |       | 74,546        |       |
| Equity securities  issued by foreign companies                                 |       | 18,519                           |       | 17,364        |       |
| Mutual fund units                                                              |       | 1,179                            |       | 21,510        |       |
| **Total**                                                                      | ** ** | **8,558,662**                    | ** ** | **7,374,207** | ** ** |

 

Net unrealized losses ontrading instruments (debt, equity and derivatives) of EUR 126,610 thousand, EUR59,470 thousand and EUR 265,884 thousand were included in earnings during 2004,2005 and 2006, respectively.

F-27

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 11:   FINANCIAL INSTRUMENTS MARKED TO MARKETTHROUGH THE PROFIT AND LOSS**

Financialinstruments marked to market through the Profit and Loss at December 31,comprised:

| ** **                                                          | ** ** | **2005**                         | ** ** | **2006**  | ** ** |
|---------------------------------------------------------------------|------------|----------------------------------|------------|-----------|------------|
| ** **                                                          | ** ** | **(EUR in thousands)** | ** ** |
| Financial instruments  marked to market through the Profit and Loss |       | 5,104,757                        |       | 5,307,946 |       |

 

“Financial instrumentsmarked to market through the profit and loss” include a loan with an embeddedderivative issued in August 2005 with a cost of €5,125,250,000 that will mature in September 2037. This instrument wasissued by the Bank and would otherwise have to be bifurcated under FAS 133, “Accountingfor Derivative Instruments and Hedging Activities”. The Group elected toaccount for this instrument at fair value through the profit and loss under theprovisions of FAS 155 “Accounting for certain Hybrid Financial Instruments- anamendment of FASB statement 133 and 140” instead of separating the embeddedderivative. The net effect on earnings from this instrument for 2006 and 2005was a gain of EUR 203,189 thousand and a (loss) of EUR (20.493) thousandrespectively. The financial instrument is held by the Bank.

**NOTE 12:   DERIVATIVES**

The Group designates a derivative as held for tradingor hedging purposes when it enters into a derivative contract. The designationmay change based upon management’s reassessment and changing circumstances.Derivatives utilized by the Group include interest rate, cross currencyinterest rate and foreign exchange swaps, financial futures, outright foreignexchange forwards and option contracts.

Interest-rate swaptransactions generally involve the exchange of fixed and floating-rate interestpayment obligations over a prescribed period of time without the exchange ofthe underlying principle amounts. Cross currency interest rate swaps generallyinvolve the exchange of both interest and principal amounts in two differentcurrencies over a prescribed period of time. Foreign exchange swaps involve theexchange through simultaneous spot and forward foreign exchange transactions ofprinciple amounts in two different currencies. Financial future contracts arecontracts in which the buyer agrees to purchase and the seller agrees to makedelivery of a specific financial instrument at a predetermined price or yield.Outright foreign exchange forward contracts are agreements to exchange at aspecified future date, currencies of different countries at a specified rate.An option contract is an agreement that conveys to the purchaser the right, butnot the obligation, to buy or sell a quantity of a financial instrument, index,or currency at a predetermined rate or price during a period or at a time inthe future. Option agreements can be transacted on organized exchanges ordirectly between parties.

**CREDIT RISK ASSOCIATEDWITH DERIVATIVE ACTIVITIES**

Credit risk associated with derivatives is measured asthe net replacement cost should the counterparties with contracts in a gainposition to the Group completely fail to perform under the terms of thosecontracts assuming no recoveries of underlying collateral. In managing creditrisk associated with its derivative activities, the Group deals primarily withcommercial banks, broker-dealers and corporations. In addition, the Groupreduces credit risk by obtaining collateral based on individual assessment ofcounterparties. Required collateral levels vary depending on the credit risk rating and thetype of counterparty. Generally, the Group accepts collateral in the form ofcash and other marketable securities.

F-28

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 12:**   DERIVATIVES (Continued)

A portion of the derivative activity involvesexchange-traded instruments. Exchange-traded instruments conform to standardterms and are subject to policies set by the exchange involved, includingcounterparty approval, margin requirements and security deposit requirements.Management believes the credit risk associated with these types of instrumentsis minimal.

Thefollowing tables present the contract or notional amounts and the credit riskor fair value amounts at December 31, 2005 and 2006 of the Group’sderivative asset and liability positions held for trading and hedging purposes.These derivative positions are primarily executed in the over-the-countermarket. The credit risk amounts presented in the first table do not consider thevalue of any collateral held.

**Derivative Assets**(1)

| ** **                          | ** ** | **December 31, 2005**           | ** **     | **December 31, 2006**  | ** ** |
|-------------------------------------|------------|-------------------------------------------|----------------|----------------------------------|------------|
| ** **                          | ** ** | **Contract /  Notional Amount** | ** **     | **Credit  Risk**                 | ** ** | **Contract /  Notional Amount** | ** ** | **Credit  Risk** | ** ** |
| ** **                          | ** ** | **(EUR in thousands)**          | ** **     | **(EUR in thousands)** | ** ** |
| Cross currency interest rate swaps  |       |                                      | 80,471         |                             |       | 3,821 |   |   | 643,865 |   |   | 113,531 |   |
| Financial futures                   |       |                                      | 6,484,696      |                             |       | 32,137 |   |   | 2,193,310 |   |   | 30,578 |   |
| Foreign exchange  swaps             |       |                                      | 4,062,560      |                             |       | 46,134 |   |   | 1,542,054 |   |   | 24,049 |   |
| Forward rate  agreements            |       |                                      | —         |                             |       | — |   |   | 12,300 |   |   | 14 |   |
| Interest rate  swaps                |       |                                      | 13,572,385     |                             |       | 187,920 |   |   | 10,910,575 |   |   | 128,395 |   |
| Options                             |       |                                      | 897,435        |                             |       | 6,703 |   |   | 2,625,199 |   |   | 14,655 |   |
| Outright foreign  exchange forwards |       |                                      | 313,294        |                             |       | 7,754 |   |   | 828,707 |   |   | 13,791 |   |
| **Total**                           | ** ** | ** **                                | **25,410,841** |                             | ** ** | **284,469** | ** ** | ** ** | **18,756,010** |   | ** ** | **325,013** | ** ** |

 

**Derivative Liabilities**(1)

| ** **                          | ** ** | **December 31, 2005**           | ** **     | **December 31, 2006**  | ** ** |
|-------------------------------------|------------|-------------------------------------------|----------------|----------------------------------|------------|
| ** **                          | ** ** | **Contract /  Notional Amount** | ** **     | **Fair  Value**                  | ** ** | **Contract /  Notional Amount** | ** ** | **Fair  Value** | ** ** |
| ** **                          | ** ** | **(EUR in thousands)**          | ** **     | **(EUR in thousands)** | ** ** |
| Cross currency interest rate swaps  |       |                                      | 249,850        |                             |       | 42,666 |   |   | 976,474 |   |   | 73,138 |   |
| Financial futures                   |       |                                      | 5,554,265      |                             |       | 11,796 |   |   | 4,717,706 |   |   | 6,931 |   |
| Foreign exchange  swaps             |       |                                      | 994,963        |                             |       | 20,845 |   |   | 3,689,267 |   |   | 98,763 |   |
| Forward rate  agreements            |       |                                      | —         |                             |       | — |   |   | 12,293 |   |   | 7 |   |
| Interest rate  swaps                |       |                                      | 11,123,207     |                             |       | 216,307 |   |   | 9,899,256 |   |   | 211,930 |   |
| Options                             |       |                                      | 615,471        |                             |       | 4,516 |   |   | 1,518,658 |   |   | 24,724 |   |
| Outright foreign  exchange forwards |       |                                      | 176,456        |                             |       | 1,737 |   |   | 748,259 |   |   | 8,192 |   |
| **Total**                           | ** ** | ** **                                | **18,714,212** |                             | ** ** | **297,867** | ** ** | ** ** | **21,561,913** |   | ** ** | **423,685** | ** ** |

----

(1)          Includes both long and short derivative positions.

The average fair value ofderivative assets for 2005 and 2006 were EUR 184,872 thousand and EUR 270,655thousand, respectively. The average fair value of derivative liabilities for2005 and 2006 were EUR 296,587 thousand and EUR 365,704 thousand, respectively.

F-29

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 12:**   DERIVATIVES (Continued)

**ASSET LIABILITYMANAGEMENT ACTIVITIES**

Interest rate and foreignexchange contracts are utilised in the Group’s Asset Liability Management (“ALM”)process. The Group maintains an overall interest rate risk management strategythat incorporates the use of interest rate contracts to minimize significantunplanned fluctuations in earningscaused by interest rate volatility. As a result of interest rate fluctuations,hedged fixed-rate assets and liabilities appreciate or depreciate in marketvalue. Gains or losses on the derivative instruments that are linked to thehedged fixed-rate assets and liabilities are expected to substantially offsetthis appreciation or depreciation. The Group uses foreign currency contracts tomanage the foreign exchange risk associated with certain foreign denominatedassets and liabilities.

**FAIR VALUE HEDGES**

The Group uses varioustypes of interest rate and foreign currency exchange rate derivative contractsto protect against changes in the fair value of its fixed rate assets andliabilities due to fluctuations in interest rates and exchange rates. None ofthese derivatives qualifies for hedge accounting, although the management ofthe Group believes that they are effective economic hedges.

**NOTE 13:   AVAILABLE-FOR-SALEAND HELD TO MATURITY SECURITIES**

Theamortized cost of available-for-sale and held-to-maturity securities and theirapproximate fair values at December 31, comprised:

| ** **                                                                 | ** ** | **2005**                         | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                 | ** ** | **Amortized  Cost**              | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  (Losses)** | ** ** | **Fair Value** | ** ** |
| ** **                                                                 | ** ** | **(EUR in thousands)** | ** ** |
| **Available-for-sale securities**                                          |       |                             |       |   |   |   |   |   |   |   |   |   |   |
| Greek government  bonds                                                    |       | 962,800                          |       |   | 22,008 |   |   |   | (11,371 | ) |   | 973,437 |   |
| Mortgage-backed  securities                                                |       | —                           |       |   | — |   |   |   | — |   |   | — |   |
| Collateralized  mortgage obligations                                       |       | —                           |       |   | — |   |   |   | — |   |   | — |   |
| Debt securities  issued by other governments and public entities      |       | 482,246                          |       |   | 22,227 |   |   |   | (14,138 | ) |   | 490,335 |   |
| Corporate debt  securities issued by companies incorporated in Greece      |       | 245,875                          |       |   | 5,166 |   |   |   | (556 | ) |   | 250,485 |   |
| Corporate debt  securities issued by companies incorporated outside Greece |       | 350,941                          |       |   | 5,404 |   |   |   | (13,207 | ) |   | 343,138 |   |
| Equity securities  issued by companies incorporated in Greece         |       | 119,433                          |       |   | 36,476 |   |   |   | (1,842 | ) |   | 154,067 |   |
| Equity securities  issued by companies incorporated outside Greece         |       | 7,591                            |       |   | 2,020 |   |   |   | (2 | ) |   | 9,609 |   |
| Mutual Fund units                                                          |       | 374,159                          |       |   | 12,087 |   |   |   | (308 | ) |   | 385,938 |   |
| **Total  available-for-sale securities**                                   | ** ** | **2,543,045**                    | ** ** | ** ** | **105,388** |   | ** ** | ** ** | **(41,424** | **)** | ** ** | **2,607,009** | ** ** |

 

F-30

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE13:   AVAILABLE-FOR-SALE AND HELD TO MATURITY SECURITIES (Continued)**

| ** **                                                                 | ** ** | **2006**                         | ** ** |
|----------------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                                 | ** ** | **Amortized  Cost**              | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  (Losses)** | ** ** | **Fair Value** | ** ** |
| ** **                                                                 | ** ** | **(EUR in thousands)** | ** ** |
| **Available-for-sale securities**                                          |       |                             |       |   |   |   |   |   |   |   |   |   |   |
| Greek government  bonds                                                    |       | 1,225,985                        |       |   | 535 |   |   |   | (40,613 | ) |   | 1,185,907 |   |
| Debt securities  issued by other governments and public entities      |       | 1,626,818                        |       |   | 24,416 |   |   |   | (33,158 | ) |   | 1,618,076 |   |
| Corporate debt  securities issued by companies incorporated in Greece      |       | 133,106                          |       |   | 144 |   |   |   | (2,314 | ) |   | 130,936 |   |
| Corporate debt  securities issued by companies incorporated outside Greece |       | 411,038                          |       |   | 4,704 |   |   |   | (13,316 | ) |   | 402,426 |   |
| Equity securities  issued by companies incorporated in Greece         |       | 213,953                          |       |   | 44,941 |   |   |   | (4,404 | ) |   | 254,490 |   |
| Equity securities  issued by companies incorporated outside Greece         |       | 33,926                           |       |   | 36,280 |   |   |   | (381 | ) |   | 69,825 |   |
| Mutual Fund units                                                          |       | 470,387                          |       |   | 23,991 |   |   |   | (972 | ) |   | 493,406 |   |
| **Total  available-for-sale securities**                                   | ** ** | **4,115,213**                    | ** ** | ** ** | **135,011** |   | ** ** | ** ** | **(95,158** | **)** | ** ** | **4,155,066** | ** ** |

 

| ** **                                                            | ** ** | **2005**                         | ** ** |
|-----------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                            | ** ** | **Amortized  Cost**              | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  (Losses)** | ** ** | **Fair Value** | ** ** |
| ** **                                                            | ** ** | **(EUR in thousands)** | ** ** |
| **Held-to-maturity-securities**                                       |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate debt  securities issued by companies incorporated in Greece |       |                             | 20,867     |   |   |   | — |   |   |   | — |   |   |   | 20,867 |   |   |
| **Total  held-to-maturity-securities**                                | ** ** | ** **                       | **20,867** |   |   |   | — |   |   |   | — |   | ** ** | ** ** | **20,867** |   |   |

 

| ** **                                                            | ** ** | **2006**                         | ** ** |
|-----------------------------------------------------------------------|------------|----------------------------------|------------|
| ** **                                                            | ** ** | **Amortized  Cost**              | ** ** | **Gross  Unrealized  Gains** | ** ** | **Gross  Unrealized  (Losses)** | ** ** | **Fair Value** | ** ** |
| ** **                                                            | ** ** | **(EUR in thousands)** | ** ** |
| **Held-to-maturity-securities**                                       |       |                             |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate debt  securities issued by companies incorporated in Greece |       |                             | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| **Total  held-to-maturity-securities**                                |       |                             | —     |   |   |   | — |   |   |   | — |   |   |   | — |   |   |

 

| ** **                                                                 | ** ** | **December 31,  2004**      | ** ** | **December 31,  2005** | ** ** | **December 31,  2006** | ** **  |
|----------------------------------------------------------------------------|------------|----------------------------------|------------|-----------------------------|------------|-----------------------------|-------------|
| ** **                                                                 | ** ** | **(EUR in thousands)** | ** ** |
| Gross realized  gains on sales of available for sale portfolio             |       |                             | 24,079     |                        |       |                        | 130,828     |   |   |   | 121,138 |   |   |
| Gross realized  losses on sales of available for sale portfolio            |       |                             | (7,774     | )                           |       |                        | (11,305     | ) |   |   | (4,266 | ) |   |
| **Net realized gains/(losses) on  sales of available for sale securities** | ** ** | ** **                       | **16,305** |                        | ** ** | ** **                  | **119,523** |   | ** ** | ** ** | **116,872** |   |   |

 

F-31

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 13:**   AVAILABLE-FOR-SALE AND HELD TO MATURITY SECURITIES(Continued)

The Group uses the average cost method in determiningthe cost of securities sold.

The following tablepresents the current fair value and the associated unrealized losses ofavailable-for-sale securities as at December 31,2005. The table alsodiscloses whether these securities have had unrealised losses for periods lessthan 12 months or for 12 months or longer.

| ** **                                                                 | ** ** | **Less than 12 months** | ** **  | **Over 12 months** | ** ** | **Total**           | ** **  |
|----------------------------------------------------------------------------|------------|----------------------------------------|-------------|------------------------------|------------|---------------------|-------------|
| ** **                                                                 | ** ** | **Fair Value**                    | ** **  | **Unrealized  Losses**       | ** ** | **Fair Value** | ** **  | **Unrealized  Losses** | ** ** | **Fair Value** | ** ** | **Unrealized  Losses** | ** ** |
| ** **                                                                 | ** ** | **(EUR in thousands)**       | ** **  |
| **Available-for-sale securities**                                          |       |                                   |        |                         |       |                |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Greek government  bonds                                                    |       |                                   | 573,824     |                         |       |                | (10,628     | ) |   |   | 71,597 |   |   |   | (743 | ) |   | 645,421 |   |   | (11,371 | ) |   |
| Debt securities  issued by other governments and public entities           |       |                                   | 294,975     |                         |       |                | (14,138     | ) |   |   | — |   |   |   | — |   |   | 294,975 |   |   | (14,138 | ) |   |
| Corporate debt  securities issued by companies incorporated in Greece      |       |                                   | 26,778      |                         |       |                | (556        | ) |   |   | — |   |   |   | — |   |   | 26,778 |   |   | (556 | ) |   |
| Corporate debt  securities issued by companies incorporated outside Greece |       |                                   | 9,633       |                         |       |                | (20         | ) |   |   | 77,014 |   |   |   | (13,187 | ) |   | 86,647 |   |   | (13,207 | ) |   |
| Equity securities  issued by companies incorporated in Greece              |       |                                   | 2,368       |                         |       |                | (156        | ) |   |   | 30,929 |   |   |   | (1,686 | ) |   | 33,297 |   |   | (1,842 | ) |   |
| Equity securities  issued by companies incorporated outside Greece         |       |                                   | —      |                         |       |                | —      |   |   |   | 277 |   |   |   | (2 | ) |   | 277 |   |   | (2 | ) |   |
| Mutual Fund units                                                          |       |                                   | —      |                         |       |                | —      |   |   |   | 79,999 |   |   |   | (308 | ) |   | 79,999 |   |   | (308 | ) |   |
| **Total  available-for-sale securities**                                   | ** ** | ** **                             | **907,578** |                         | ** ** | ** **          | **(25,498** | **)** | ** ** | ** ** | **259,816** |   | ** ** | ** ** | **(15,926** | **)** | ** ** | **1,167,394** | ** ** | ** ** | **(41,424** | **)** | ** ** |

 

F-32

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 13:**   AVAILABLE-FOR-SALEAND HELD TO MATURITY SECURITIES (Continued)

Thefollowing table presents the current fair value and the associated unrealizedlosses of available-for-sale securities as at December 31, 2006. The tablealso discloses whether these securities have had unrealised losses for periodsless than 12 months or for 12 months or longer.

| ** **                                                                       | ** ** | **Less than 12 months** | ** ** | **Over 12 months** | ** **  | **Total**       | ** ** |
|----------------------------------------------------------------------------------|------------|----------------------------------------|------------|------------------------------|-------------|-----------------|------------|
| ** **                                                                       | ** ** | **Fair  Value**                        | ** ** | **Unrealized  Losses**       | ** **  | **Fair  Value** | ** ** | **Unrealized  Losses** | ** ** | **Fair  Value** | ** ** | **Unrealized  Losses** | ** ** |
| ** **                                                                       | ** ** | **(EUR in thousands)**       | ** ** |
| **Available-for-sale securities**                                                | ** ** | ** **                             | ** ** |                         | ** **  | ** **      |       | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |   |
| Greek government bonds                                                           |       | 433,459                                | ** ** |                         | (6,892      | )               |       | 658,577 |   |   | (33,721 | ) |   | 1,092,036 |   |   | (40,613 | ) |   |
| Debt securities issued  by other governments and public entities            |       | 53,080                                 | ** ** |                         | (1,137      | )               |       | 1,186,404 |   |   | (32,021 | ) |   | 1,239,484 |   |   | (33,158 | ) |   |
| Corporate debt  securities issued by companies incorporated in Greece       |       | 100,749                                | ** ** |                         | (2,314      | )               |       | — |   |   | — |   |   | 100,749 |   |   | (2,314 | ) |   |
| Corporate debt  securities issued by companies incorporated  outside Greece |       | 177,301                                | ** ** |                         | (1,783      | )               |       | 56,379 |   |   | (11,533 | ) |   | 233,680 |   |   | (13,316 | ) |   |
| Equity securities issued  by companies incorporated in Greece                    |       | 41,709                                 | ** ** |                         | (2,188      | )               |       | 4,846 |   |   | (2,216 | ) |   | 46,555 |   |   | (4,404 | ) |   |
| Equity securities issued  by companies incorporated outside Greece               |       | 19,951                                 | ** ** |                         | (381        | )               |       | — |   |   | — |   |   | 19,951 |   |   | (381 | ) |   |
| Mutual Fund units                                                                |       | 48,125                                 | ** ** |                         | (972        | )               |       | — |   |   | — |   |   | 48,125 |   |   | (972 | ) |   |
| **Total available-for-sale securities**                                          | ** ** | **874,374**                            | ** ** |                         | **(15,667** | **)**           |       | **1,906,206** | ** ** |   | **(79,491** | **)** |   | **2,780,580** | ** ** |   | **(95,158** | **)** |   |

 

The unrealized losses associated with debt securitiesare not considered to be other than temporary due to the fact that theseunrealized losses are related to changes in interest rates and do not affectthe expected cash flows of the underlying collateral or issuer. Additionally,the Group has the intent and ability to hold these securities for a period oftime sufficient to recover all gross unrealized losses.

Thescheduled maturities of available-for-sale securities at December 31, 2006were as follows:

| ** **                  | ** ** | **Available-for-Sale Securities** | ** **    |
|-----------------------------|------------|----------------------------------------|---------------|
| ** **                  | ** ** | **Amortized Cost**                | ** **    | **Fair Value** | ** ** |
| ** **                  | ** ** | **(EUR in thousands)**       | ** **    |
| Due in one year  or less    |       |                                   | 271,654       |   |   | 270,183 |   |
| Due from one to  five years |       |                                   | 1,776,930     |   |   | 1,762,261 |   |
| Due from five to  ten years |       |                                   | 888,900       |   |   | 859,284 |   |
| Due after ten  years        |       |                                   | 459,461       |   |   | 445,618 |   |
| Total debt  securities      |       |                                   | 3,396,945     |   |   | 3,337,346 |   |
| Other non debt  securities  |       |                                   | 718,268       |   |   | 817,720 |   |
| **Total**                   | ** ** | ** **                             | **4,115,213** |   | ** ** | **4,155,066** | ** ** |

 

F-33

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 14:**   EQUITYMETHOD INVESTMENTS

The Group has investments that are accounted for usingthe equity method of accounting. The most significant of these investments isAGET Heracles Cement Co. S.A.; a 26.00% owned, publicly traded (on the AthensExchange) Greek company and a leading producer of cement and related products. AtDecember 31, 2006 the quoted market value of the Group’s investment inAGET Heracles Cement Co. S.A. was EUR 300.1 million. On April 19, 2007 theGroup disposed of the investment in AGET at a price of EUR 17.40 per share fora total consideration of EUR 321.6million.

Other equity investmentsinclude Phosphate Fertilizers Industry S.A (24.23%), Larco Metallurgical S.A.(36.43%), Siemens Enterprise Communications S.A. (30.00%) and Planet S.A.(31.18%).

The difference between the cost of acquisition of theinvestments and the Group’s equity in the investees underlying net assetsrepresents purchased goodwill. Equity method investment goodwill is notamortized but all equity investments are reviewed for impairment.

The summarized financialinformation below represents an aggregation of the Group’s non- subsidiaryinvestees.

| ** **                           | ** ** | **December 31,**            | ** ** |
|--------------------------------------|------------|----------------------------------|------------|
| ** **                           | ** ** | **2004**                         | ** ** | **2005** | ** ** |
| ** **                           | ** ** | **AGET  Heracles**               | ** ** | **Other** | ** ** | **Total** | ** ** | **AGET  Heracles** | ** ** | **Other** | ** ** | **Total** | ** ** |
| ** **                           | ** ** | **(EUR in thousands)** | ** ** | **(EUR in thousands)** | ** ** |
| **Recorded  value**                  |       | 155,093                          |       | 45,879 |   | 200,972 |   | 185,271 |   | 44,846 |   | 230,117 |   |
| Revenue                              |       | 524,871                          |       | 520,295 |   | 1,045,166 |   | 609,081 |   | 736,408 |   | 1,345,489 |   |
| Gross profit                         |       | 144,799                          |       | 32,368 |   | 177,167 |   | 137,332 |   | 68,785 |   | 206,117 |   |
| Net earnings                         |       | 63,408                           |       | (54,440 | ) | 8,968 |   | 152,386 |   | 11,764 |   | 164,150 |   |
| Group’s equity in  net earnings |       | 16,580                           |       | (12,758 | ) | 3,822 |   | 37,570 |   | (747 | ) | 36,823 |   |
| Dividends                            |       | 7,463                            |       | 2,728 |   | 10,191 |   | 7,392 |   | 2,523 |   | 9,915 |   |
| % Holding as at  December 31,   |       | 26.00                            | %          |   |   |   |   | 26.00 | % |   |   |   |   |
| **Balance Sheet data**               | ** ** |                             |       | ** ** | ** ** | ** ** | ** ** |   |   | ** ** | ** ** | ** ** | ** ** |
| Current assets                       |       | 267,476                          |       | 360,376 |   | 627,852 |   | 383,682 |   | 2,444,166 |   | 2,827,848 |   |
| Non-current  assets                  |       | 241,059                          |       | 190,548 |   | 431,607 |   | 651,418 |   | 1,322,590 |   | 1,974,008 |   |
| Current  liabilities                 |       | 109,187                          |       | 343,120 |   | 452,307 |   | 161,180 |   | 361,682 |   | 522,862 |   |
| Non-current  liabilities             |       | 68,034                           |       | 98,576 |   | 166,610 |   | 87,316 |   | 3,229,496 |   | 3,316,812 |   |
| Net assets                           |       | 331,314                          |       | 109,228 |   | 440,542 |   | 786,604 |   | 175,578 |   | 962,182 |   |
| Group’s equity in  net assets   |       | 86,138                           |       | 32,202 |   | 118,340 |   | 204,509 |   | 54,568 |   | 259,077 |   |

 

F-34

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 14:**   EQUITY METHOD INVESTMENTS (Continued)

| ** **                           | ** ** | **December 31,**            | ** ** |
|--------------------------------------|------------|----------------------------------|------------|
| ** **                           | ** ** | **2006**                         | ** ** |
| ** **                           | ** ** | **AGET  Heracles**               | ** ** | **Other** | ** ** | **Total** | ** ** |
| ** **                           | ** ** | **(EUR in thousands)** | ** ** |
| **Recorded  value**                  |       | 178,451                          |       | 56,119 |   | 234,570 |   |
| Revenue                              |       | 693,660                          |       | 797,924 |   | 1,491,584 |   |
| Gross profit                         |       | 175,524                          |       | 79,782 |   | 255,306 |   |
| Net earnings                         |       | 61,913                           |       | 36,156 |   | 98,069 |   |
| Group’s equity in  net earnings |       | 16,097                           |       | 10,793 |   | 26,890 |   |
| Dividends                            |       | 17,557                           |       | 3,019 |   | 20,576 |   |
| % Holding as at  December 31,   |       | 26.00                            | %          |   |   |   |   |
| **Balance  Sheet data**              |       |                             |       |   |   |   |   |
| Current assets                       |       | 368,852                          |       | 2,973,642 |   | 3,342,494 |   |
| Non-current assets                   |       | 625,885                          |       | 1,880,042 |   | 2,505,927 |   |
| Current  liabilities                 |       | 130,641                          |       | 410,678 |   | 541,319 |   |
| Non-current  liabilities             |       | 85,101                           |       | 4,348,482 |   | 4,433,583 |   |
| Net assets                           |       | 778,995                          |       | 94,524 |   | 873,519 |   |
| Group’s equity in net  assets   |       | 202,531                          |       | 39,204 |   | 241,735 |   |

 

F-35

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 15:**   LOANSAND ALLOWANCE FOR LOAN LOSSES

Loansgranted by the Group according to type of loan, which represents the Group’sconcentration of credit risk, at December 31, 2005 comprised:

| ** **                       | ** ** | **2005**                         | ** **     |
|----------------------------------|------------|----------------------------------|----------------|
| ** **                       | ** ** | **Greek residents**         | ** **     | **Foreign** | ** ** | **Total** | ** ** |
| ** **                       | ** ** | **(EUR in thousands)** | ** **     |
| **Consumer:**                    | ** ** |                             | ** **     | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| Residential  mortgages           |       |                             | 11,114,211     |   |   | 358,129 |   | 11,472,340 |   |
| Credit card                      |       |                             | 1,468,940      |   |   | 67,048 |   | 1,535,988 |   |
| Auto financing                   |       |                             | 323,918        |   |   | 36,149 |   | 360,067 |   |
| Other                            |       |                             | 2,253,248      |   |   | 618,955 |   | 2,872,203 |   |
| Total consumer                   | ** ** |                             | **15,160,317** | ** ** |   | **1,080,281** | ** ** | **16,240,598** | ** ** |
| **Commercial:**                  | ** ** |                             | ** **     | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| Industry and  mining             |       |                             | 2,488,629      |   |   | 430,807 |   | 2,919,436 |   |
| Small scale  industry            |       |                             | 854,807        |   |   | 195,662 |   | 1,050,469 |   |
| Trade                            |       |                             | 3,184,510      |   |   | 668,427 |   | 3,852,937 |   |
| Construction                     |       |                             | 421,072        |   |   | 405,887 |   | 826,959 |   |
| Tourism                          |       |                             | 265,026        |   |   | 126,485 |   | 391,511 |   |
| Shipping and  transportation     |       |                             | 914,747        |   |   | 379,265 |   | 1,294,012 |   |
| Mortgage                         |       |                             | 388,377        |   |   | 42,852 |   | 431,229 |   |
| Public                           |       |                             | 1,460,697      |   |   | 12,309 |   | 1,473,006 |   |
| Other                            |       |                             | 1,695,737      |   |   | 503,782 |   | 2,199,519 |   |
| Total commercial                 | ** ** |                             | **11,673,602** | ** ** |   | **2,765,476** | ** ** | **14,439,078** | ** ** |
| Total loans                      | ** ** |                             | **26,833,919** | ** ** |   | **3,845,757** | ** ** | **30,679,676** | ** ** |
| Unearned income                  |       |                             | 7,130          |   |   | (12,633 | ) | (5,503 | ) |
| Loans, net of  unearned income   |       |                             | 26,841,049     |   |   | 3,833,124 |   | 30,674,173 |   |
| Less: Allowance  for loan losses |       |                             | (861,335       | ) |   | (231,210 | ) | (1,092,545 | ) |
| **Total  Net Loans**             | ** ** |                             | **25,979,714** | ** ** |   | **3,601,914** | ** ** | **29,581,628** | ** ** |

 

F-36

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 15:**   LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Loans made by the Groupaccording to type of loan, which represents the Group’s concentration of creditrisk, at December 31, 2006 comprised:

| ** **                       | ** ** | **2006**                         | ** **     |
|----------------------------------|------------|----------------------------------|----------------|
| ** **                       | ** ** | **Greek residents**         | ** **     | **Foreign** | ** ** | **Total** | ** ** |
| ** **                       | ** ** | **(EUR in thousands)** | ** **     |
| **Consumer:**                    | ** ** |                             | ** **     | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| Residential  mortgages           |       |                             | 13,318,430     |   |   | 1,559,995 |   | 14,878,425 |   |
| Credit card                      |       |                             | 1,505,203      |   |   | 991,816 |   | 2,497,019 |   |
| Auto financing                   |       |                             | 250,747        |   |   | 263,342 |   | 514,089 |   |
| Other                            |       |                             | 2,957,806      |   |   | 1,202,391 |   | 4,160,197 |   |
| Total consumer                   | ** ** |                             | **18,032,186** | ** ** |   | **4,017,544** | ** ** | **22,049,730** | ** ** |
| **Commercial:**                  | ** ** |                             | ** **     | ** ** |   | ** ** | ** ** | ** ** | ** ** |
| Industry and  mining             |       |                             | 2,640,360      |   |   | 842,849 |   | 3,483,209 |   |
| Small scale  industry            |       |                             | 1,027,183      |   |   | 867,621 |   | 1,894,804 |   |
| Trade                            |       |                             | 4,079,807      |   |   | 989,898 |   | 5,069,705 |   |
| Construction                     |       |                             | 556,814        |   |   | 878,824 |   | 1,435,638 |   |
| Tourism                          |       |                             | 261,679        |   |   | 327,866 |   | 589,545 |   |
| Shipping and transportation      |       |                             | 1,047,846      |   |   | 638,039 |   | 1,685,885 |   |
| Mortgage                         |       |                             | 530,229        |   |   | 113,982 |   | 644,211 |   |
| Public                           |       |                             | 1,465,205      |   |   | 4,695 |   | 1,469,900 |   |
| Other                            |       |                             | 2,507,644      |   |   | 3,023,958 |   | 5,531,602 |   |
| Total commercial                 | ** ** |                             | **14,116,767** | ** ** |   | **7,687,732** | ** ** | **21,804,499** | ** ** |
| Total loans                      | ** ** |                             | **32,148,953** | ** ** |   | **11,705,276** | ** ** | **43,854,229** | ** ** |
| Unearned income                  |       |                             | 25,097         |   |   | (122,483 | ) | (97,386 | ) |
| Loans, net of  unearned income   |       |                             | 32,174,050     |   |   | 11,582,793 |   | 43,756,843 |   |
| Less: Allowance  for loan losses |       |                             | (906,318       | ) |   | (318,439 | ) | (1,224,757 | ) |
| **Total  Net Loans**             | ** ** |                             | **31,267,732** | ** ** |   | **11,264,354** | ** ** | **42,532,086** | ** ** |

 

Included in the above tables are loans with terms thathave been modified by agreement between the Group and its debtors. Referred toas troubled debt restructuring, these loans totalled EUR 114,417 thousand andnumbered 1,766 in 2005 and EUR 158,980 thousand and numbered 7,822 in 2006.Interest on such loans is recognized on the accrual basis and totalled EUR7,189 thousand and EUR 6,009 thousand in 2005 and 2006, respectively.

Also, included in the above tables are loans for leasefinancing amounting to EUR 640,565 thousand and EUR 1,248,241 thousand in 2005and 2006 respectively.

F-37

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 15:   LOANS ANDALLOWANCE FOR LOAN LOSSES (Continued)**

Ananalysis of the change in the allowance for loan losses for the years ended December 31,follows:

| ** **                                              | ** ** | **2004**                         | ** ** | **2005**      | ** ** | **2006**      | ** ** |
|---------------------------------------------------------|------------|----------------------------------|------------|---------------|------------|---------------|------------|
| ** **                                              | ** ** | **(EUR in thousands)** | ** ** |
| Balance at  January 1                              | ** ** | **1,047,493**                    | ** ** | **1,115,212** | ** ** | **1,092,545** | ** ** |
| Amounts  attributable to discontinued operations        |       | —                           |       | (15,654       | )          | —        |       |
| Subsidiaries  acquired                                  |       | —                           |       | —        |       | 133,227       |       |
| Provision for  loan losses from continuing operations   |       | 201,234                          |       | 225,013       |       | 261,603       |       |
| Provision for  loan losses from discontinued operations |       | (1,393                           | )          | —        |       | —        |       |
| Write-offs                                              |       | (130,431                         | )          | (245,881      | )          | (277,338      | )          |
| Recoveries                                              |       | 1,929                            |       | 7,058         |       | 20,064        |       |
| Net Write-offs                                          |       | (128,502                         | )          | (238,823      | )          | (257,274      | )          |
| Translation  differences                                |       | (3,620                           | )          | 6,797         |       | (5,344        | )          |
| **Allowance  at December 31,**                     | ** ** | **1,115,212**                    | ** ** | **1,092,545** | ** ** | **1,224,757** | ** ** |

 

F-38

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 15:**   LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Non-performing loans bysector, which the Group considers to be impaired at December 31,comprised:

| ** **                       | ** ** | **2005**                         | ** ** |
|----------------------------------|------------|----------------------------------|------------|
| ** **                       | ** ** | **Greek  residents**             | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                       | ** ** | **(EUR in thousands)** | ** ** |
| **Consumer:**                    | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Residential  mortgages           |       | 287,641                          |       | 9,106 |   | 296,747 |   |
| Credit card                      |       | 127,599                          |       | 5,353 |   | 132,952 |   |
| Auto financing                   |       | 5,198                            |       | 4,100 |   | 9,298 |   |
| Other                            |       | 117,912                          |       | 59,206 |   | 177,118 |   |
| **Total consumer**               | ** ** | **538,350**                      | ** ** | **77,765** | ** ** | **616,115** | ** ** |
| **Commercial:**                  | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Industry and  mining             |       | 188,258                          |       | 73,737 |   | 261,995 |   |
| Small scale  industry            |       | 85,435                           |       | 6,218 |   | 91,653 |   |
| Trade                            |       | 143,447                          |       | 116,910 |   | 260,357 |   |
| Construction                     |       | 24,966                           |       | 27,013 |   | 51,979 |   |
| Tourism                          |       | 41,995                           |       | 5,929 |   | 47,924 |   |
| Shipping and  transportation     |       | 13,839                           |       | 39,472 |   | 53,311 |   |
| Mortgage                         |       | —                           |       | 506 |   | 506 |   |
| Public                           |       | 2,189                            |       | 20 |   | 2,209 |   |
| Other                            |       | 52,551                           |       | 8,757 |   | 61,308 |   |
| **Total commercial**             | ** ** | **552,680**                      | ** ** | **278,562** | ** ** | **831,242** | ** ** |
| **Total loans**                  | ** ** | **1,091,030**                    | ** ** | **356,327** | ** ** | **1,447,357** | ** ** |
| Less: Allowance  for loan losses |       | (714,030                         | )          | (231,210 | ) | (945,240 | ) |
|                             | ** ** | **377,000**                      | ** ** | **125,117** | ** ** | **502,117** | ** ** |
| **Average balance**              | ** ** | ** **                       | ** ** | ** ** | ** ** | **1,452,920** | ** ** |
| **Interest  recognized**         | ** ** | ** **                       | ** ** | ** ** | ** ** | **35,192** | ** ** |

 

F-39

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 15:**   LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)

Non-performing loans bysector, which the Group considers to be impaired at December 31,comprised:

| ** **                       | ** ** | **2006**                         | ** ** |
|----------------------------------|------------|----------------------------------|------------|
| ** **                       | ** ** | **Greek  residents**             | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                       | ** ** | **(EUR in thousands)** | ** ** |
| **Consumer:**                    | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Residential  mortgages           |       | 306,750                          |       | 10,371 |   | 317,121 |   |
| Credit card                      |       | 114,424                          |       | 42,975 |   | 157,399 |   |
| Auto financing                   |       | 6,386                            |       | 4,066 |   | 10,452 |   |
| Other                            |       | 171,700                          |       | 53,050 |   | 224,750 |   |
| **Total consumer**               | ** ** | **599,260**                      | ** ** | **110,462** | ** ** | **709,722** | ** ** |
| **Commercial:**                  | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** |
| Industry and  mining             |       | 147,276                          |       | 84,923 |   | 232,199 |   |
| Small scale  industry            |       | 87,548                           |       | 7,362 |   | 94,910 |   |
| Trade                            |       | 139,486                          |       | 90,338 |   | 229,824 |   |
| Construction                     |       | 33,955                           |       | 24,902 |   | 58,857 |   |
| Tourism                          |       | 37,143                           |       | 5,395 |   | 42,538 |   |
| Shipping and  transportation     |       | 12,562                           |       | 17,579 |   | 30,141 |   |
| Mortgage                         |       | —                           |       | 130 |   | 130 |   |
| Public                           |       | 182                              |       | 7 |   | 189 |   |
| Other                            |       | 38,372                           |       | 60,175 |   | 98,547 |   |
| **Total commercial**             | ** ** | **496,524**                      | ** ** | **290,811** | ** ** | **787,335** | ** ** |
| **Total  loans**                 | ** ** | **1,095,784**                    | ** ** | **401,273** | ** ** | **1,497,057** | ** ** |
| Less: Allowance  for loan losses |       | (748,136                         | )          | (241,365 | ) | (989,501 | ) |
|                             | ** ** | **347,648**                      | ** ** | **159,908** | ** ** | **507,556** | ** ** |
| **Average balance**              | ** ** | ** **                       | ** ** | ** ** | ** ** | **1,764,616** | ** ** |
| **Interest  recognized**         | ** ** | ** **                       | ** ** | ** ** | ** ** | **41,635** | ** ** |

 

The average recordedinvestment in impaired loans for 2004, 2005 and 2006 was approximately EUR 1,315,999thousand, EUR 1,452,920 thousand and EUR 1,764,616 thousand, respectively.

F-40

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 16:**   GOODWILL,SOFTWARE AND OTHER INTANGIBLES

Thefollowing presents the allocation of goodwill by segment for December 31:

| ** **       | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|------------------|------------|----------------------------------|------------|---------------|------------|
| ** **       | ** ** | **(EUR in thousands)** | ** ** |
| Banking Greek    |       | 7,956                            |       | 7,956         |       |
| Banking foreign  |       | 133,475                          |       | 582,504       |       |
| Banking Turkey   |       | —                           |       | 1,642,383     |       |
| Insurance        |       | 60,189                           |       | 61,513        |       |
| Other—Greek |       | 103,280                          |       | 55,321        |       |
| **Total**        | ** ** | **304,900**                      | ** ** | **2,349,677** | ** ** |

 

The increase in the Banking Turkey sector is due tothe acquisition of Finansbank (see note 4 “Mergers, Acquisitions and Disposals”)while the increase in Banking foreign relates primarily to the acquisition ofVojvodanska Banca (see note 4 “Mergers, Acquisitions and Disposals”).

In 2006 based on the report of professional valuatorsit was determined using the Direct Capital Values Comparison method and the Investmentmethod that there was an impairment loss of EUR 52 million related to thelogistic business.

This impairment loss primarily results from thedissolution of National Real Estate S.A. and is included in the other Greeksegment.

Thegross carrying amount and accumulated amortization related to software andother intangibles at December 31, are presented below:

| ** **        | ** ** | **2005**                    | ** ** | **2006**                      | ** **  |
|-------------------|------------|-----------------------------|------------|-------------------------------|-------------|
| ** **        | ** ** | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** **  | **Gross  Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
| Software          |       | 214,508                     |       |                          | 180,202     |   |   | 231,737 |   |   | 195,542 |   |   |
| Other Intangibles |       | 13,902                      |       |                          | 5,722       |   |   | 182,763 |   |   | 9,139 |   |   |
| **Total**         | ** ** | **228,410**                 | ** ** | ** **                    | **185,924** |   | ** ** | **414,500** | ** ** | ** ** | **204,681** |   |   |

 

Other intangibles include core deposits of EUR 17,730thousand, customer relationships of EUR 60,919, software of EUR 6,819thousand which have definite lives and trade names of EUR 74,103 thousand whichhave indefinite lives. The estimated useful lives of core deposits and customerrelationships are 6-8 years and software 14 years.

Amortization expense onsoftware and other intangibles was EUR 23,898 thousand and EUR 24,404 thousandin 2005 and 2006 respectively. The Group estimates that aggregate amortizationexpense for the five succeeding fiscal years will be approximately EUR 17,458thousand, EUR 12,492 thousand, EUR 9,084 thousand, EUR 3,478 thousand andEUR 1,779 thousand for 2007, 2008, 2009, 2010 and 2011 respectively.

F-41

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 17:   PREMISESAND EQUIPMENT AND LEASE COMMITMENTS**

Premisesand equipment at December 31, comprised:

| ** **                         | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                         | ** ** | **(EUR in thousands)** | ** ** |
| Land                               |       | 174,150                          |       | 192,934       |       |
| Buildings                          |       | 639,961                          |       | 735,884       |       |
| Furniture,  fittings and machinery |       | 264,648                          |       | 246,883       |       |
| Leasehold improvements             |       | 12,382                           |       | 48,043        |       |
| Office equipment                   |       | 274,257                          |       | 335,317       |       |
| Vehicles                           |       | 13,141                           |       | 12,470        |       |
| Other                              |       | 120,334                          |       | 179,241       |       |
| Total, at cost                     | ** ** | **1,498,873**                    |       | **1,750,772** | ** ** |
| Less: accumulated  depreciation    |       | (753,693                         | )          | (800,210      | )          |
| **Net  book value**                | ** ** | **745,180**                      |       | **950,562**   | ** ** |

 

Certain Group premises and equipment are leased undervarious operating leases. Rental expense was EUR 43,014 thousand, EUR 42,395thousand and EUR 44,953 thousand for the years ended December 31, 2004,2005 and 2006, respectively.

Futureminimum rental commitments under non-cancelable operating leases are presentedbelow. The Group did not enter into any material capital leases.

| ** **                        | ** ** | **Operating  Leases**            | ** **  |
|-----------------------------------|------------|----------------------------------|-------------|
| ** **                        | ** ** | **(EUR in thousands)** | ** **  |
| 2007                              |       |                             | 50,705      |   |   |
| 2008                              |       |                             | 92,701      |   |   |
| 2009                              |       |                             | 26,433      |   |   |
| 2010                              |       |                             | 24,094      |   |   |
| 2011                              |       |                             | 25,097      |   |   |
| Thereafter                        |       |                             | 126,145     |   |   |
| **Total  minimum lease payments** | ** ** | ** **                       | **345,175** |   |   |

 

F-42

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 18:   OTHER ASSETS**

Otherassets at December 31, comprised:

| ** **                                                         | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                                                         | ** ** | **(EUR in thousands)** | ** ** |
| Assets acquired  through foreclosure proceedings                   |       | 69,852                           |       | 91,993        |       |
| Accounts  receivable of non-financial services sector subsidiaries |       | 698,351                          |       | 769,898       |       |
| Deferred tax  assets                                               |       | 558,219                          |       | 582,156       |       |
| Amounts due from  parties with collection agreements               |       | 282                              |       | 615           |       |
| Taxes withheld                                                     |       | 159,373                          |       | 224,991       |       |
| European  Re-development Fund                                      |       | 35,997                           |       | 31,861        |       |
| Amounts  receivable from sales of bonds                            |       | 197,893                          |       | 83,687        |       |
| Other                                                              |       | 825,965                          |       | 776,973       |       |
| **Total**                                                          | ** ** | **2,545,932**                    | ** ** | **2,562,174** | ** ** |

 

**NOTE 19:  **ASSETS ANDLIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS

The Group’s North America operations comprising ofAtlantic Bank of New York (ABNY) and NBG Canada, were sold to CommunityBank of New York and Scotia Bank respectively. NBG Canada was sold in February 2006while the sale of ABNY occurred in April 2006 (see note 4 to theConsolidated Financial Statements).

These transactions are consistent with the Group’ sstrategy to withdraw from mature markets where growth prospects are limited andat the same time retain and expand presence in markets with high growthpotential where the Group commands a competitive advantage.

The proceeds from the disposal exceeded the netcarrying amount of the relevant assets and liabilities and accordingly, noimpairment loss has been recognised upon classification of these operations asheld for sale.

F-43

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 19:**   ASSETS ANDLIABILITIES CLASSIFIED AS HELD FOR SALE AND DISCONTINUED OPERATIONS (Continued)

Theclasses of assets and liabilities comprising the disposal group classified asheld for sale are as follows:

| ** **                                                                  | ** ** | **2005**                     | ** ** | **2006**                     | ** ** |
|-----------------------------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                                                  | ** ** | **(EUR in  thousands)** | ** ** | **(EUR in  thousands)** | ** ** |
| Cash and due from  banks                                                    |       | 51,915                       |       |                         | —     |   |   |
| Interest bearing  deposits with banks                                       |       | 24,739                       |       |                         | —     |   |   |
| Trading assets                                                              |       | 3,893                        |       |                         | —     |   |   |
| Derivative assets                                                           |       | 5,509                        |       |                         | —     |   |   |
| Securities:                                                                 |       |                         |       |                         |       |   |   |
| Available for  sale, at fair value                                          |       | 1,064,138                    |       |                         | —     |   |   |
| Loans                                                                       |       | 1,457,879                    |       |                         | —     |   |   |
| Less: Allowance  for loan losses                                            |       | (13,148                      | )          |                         | —     |   |   |
| Net loans                                                                   |       | 1,444,731                    |       |                         | —     |   |   |
| Goodwill                                                                    |       | 27,991                       |       |                         | —     |   |   |
| Software and  other intangibles                                             |       | 11,792                       |       |                         | —     |   |   |
| Premises and  equipment, net                                                |       | 32,166                       |       |                         | —     |   |   |
| Customers’  liability on acceptances                                   |       | 770                          |       |                         | —     |   |   |
| Accrued interest  receivable                                                |       | 13,385                       |       |                         | —     |   |   |
| Other assets                                                                |       | 73,488                       |       |                         | —     |   |   |
| **Assets  classified as held for sale**                                     | ** ** | **2,754,517**                |       |                         | —     |   |   |
| Interest bearing  deposits                                                  |       | 1,367,196                    |       |                         | —     |   |   |
| Non-interest  bearing deposits                                              |       | 280,215                      |       |                         | —     |   |   |
| Total deposits                                                              |       | 1,647,411                    |       |                         | —     |   |   |
| Federal funds  purchased and securities sold under agreements to repurchase |       | 487,214                      |       |                         | —     |   |   |
| Derivative  liabilities                                                     |       | 202                          |       |                         | —     |   |   |
| Other borrowed  funds                                                       |       | 92,089                       |       |                         | —     |   |   |
| Acceptances  outstanding                                                    |       | 770                          |       |                         | —     |   |   |
| Accounts payable,  accrued expenses and other liabilities                   |       | 27,446                       |       |                         | —     |   |   |
| **Liabilities classified as held  for sale**                                | ** ** | **2,255,132**                |       |                         | —     |   |   |

 

F-44

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 19:**   ASSETS AND LIABILITIES CLASSIFIED AS HELD FOR SALE ANDDISCONTINUED OPERATIONS (Continued)

The results of theoperations of NBG Canada and ABNY for the period up to their disposal and thegain on sale are summarised as follows:

| ** **                                                             | ** ** | **2004**                         | ** ** | **2005**   | ** ** | **2006**   | ** ** |
|------------------------------------------------------------------------|------------|----------------------------------|------------|------------|------------|------------|------------|
| ** **                                                             | ** ** | **(EUR in thousands)** | ** ** |
| Interest income                                                        |       | 134,468                          |       | 139,069    |       | 29,732     |       |
| Interest expense                                                       |       | (41,017                          | )          | (47,738    | )          | (12,672    | )          |
| Net interest  income before provisions                                 |       | 93,451                           |       | 91,331     |       | 17,060     |       |
| Provisions                                                             |       | 1,393                            |       | 4,506      |       | 575        |       |
| Net interest  income after provisions                                  |       | 94,844                           |       | 95,837     |       | 17,635     |       |
| Commission                                                             |       | 12,473                           |       | 11,639     |       | 1,726      |       |
| Net trading  income                                                    |       | 4,893                            |       | 2,685      |       | (392       | )          |
| Net realised  (losses)/gains on sales of available-for-sale-securities |       | 207                              |       | (502       | )          | 249        |       |
| Other operating  income                                                |       | 7,716                            |       | 8,942      |       | 1,465      |       |
| Salaries and  employee benefits                                        |       | (38,055                          | )          | (41,049    | )          | (7,073     | )          |
| Depreciation,  amortisation and impairment charges                     |       | (7,907                           | )          | (7,865     | )          | (1,300     | )          |
| Other operating  expenses                                              |       | (22,293                          | )          | (22,914    | )          | (3,915     | )          |
| Gain on sale of  discontinued operations                               |       | —                           |       | —     |       | 60,931     |       |
| Profit before  income tax (expense) / benefit                          |       | 51,878                           |       | 46,773     |       | 69,326     |       |
| Tax expense  (including tax on gain from disposal)                     |       | (20,396                          | )          | (18,490    | )          | (11,139    | )          |
| **Income from discontinued  operations**                               | ** ** | **31,482**                       | ** ** | **28,283** | ** ** | **58,187** | ** ** |

 

**NOTE20:**   PLEDGEDASSETS

At December 31, 2005and 2006, the Group pledged to the central bank to increase borrowing capacityand to other third parties to secure public deposits and for other purposesbonds and other assets, principally securities, of EUR 1,585,916 thousand andEUR 2,909,822 thousand, respectively.

**NOTE 21:**   DEPOSITS

The aggregate amount of short-term certificates ofdeposit, each with a minimum denomination of EUR 76,000, which approximates USD100,000, was EUR 222 thousand at December 31, 2006. At December 31,2006, interest-bearing deposits with scheduled maturities in excess of one yearwere EUR 391,006 thousand.

F-45

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 21:**   DEPOSITS (Continued)

Deposits made by Greekresidents and foreign customers at December 31, comprised:

| ** **                              | ** ** | **2005**                         | ** ** | **2006**                         | ** ** |
|-----------------------------------------|------------|----------------------------------|------------|----------------------------------|------------|
| ** **                              | ** ** | **Greek  residents**             | ** ** | **Foreign**                      | ** ** | **Total** | ** ** | **Greek  residents** | ** ** | **Foreign** | ** ** | **Total** | ** ** |
| ** **                              | ** ** | **(EUR in thousands)** | ** ** | **(EUR in thousands)** | ** ** |
| **Interest bearing:**                   | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Public sector                           |       | 48,118                           |       | 68,134                           |       | 116,252 |   | 104,390 |   | 121,220 |   | 225,610 |   |
| Private sector  Corporations            |       | 2,436,183                        |       | 1,290,447                        |       | 3,726,630 |   | 3,034,472 |   | 3,423,365 |   | 6,457,837 |   |
| Individuals                             |       | 31,902,395                       |       | 2,333,333                        |       | 34,235,728 |   | 34,742,216 |   | 5,346,844 |   | 40,089,060 |   |
| Interbank                               |       | 1,855,206                        |       | 444,881                          |       | 2,300,087 |   | 1,885,949 |   | 960,352 |   | 2,846,301 |   |
| **Total interest bearing deposits**     | ** ** | **36,241,902**                   | ** ** | **4,136,795**                    | ** ** | **40,378,697** | ** ** | **39,767,027** | ** ** | **9,851,781** | ** ** | **49,618,808** | ** ** |
| **Non-interest  bearing:**              | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Public sector                           |       | 1,915,052                        |       | 1,875                            |       | 1,916,927 |   | 2,121,933 |   | 2,577 |   | 2,124,510 |   |
| Private sector  Corporations            |       | 2,456,113                        |       | 43,945                           |       | 2,500,058 |   | 2,559,552 |   | 725,151 |   | 3,284,703 |   |
| Individuals                             |       | 220,673                          |       | 134,793                          |       | 355,466 |   | 235,963 |   | 431,388 |   | 667,351 |   |
| Interbank                               |       | 46,965                           |       | 52,971                           |       | 99,936 |   | 105,517 |   | 84,172 |   | 189,689 |   |
| **Total non-interest bearing deposits** | ** ** | **4,638,803**                    | ** ** | **233,584**                      | ** ** | **4,872,387** | ** ** | **5,022,965** | ** ** | **1,243,288** | ** ** | **6,266,253** | ** ** |
| **Total:**                              | ** ** | ** **                       | ** ** | ** **                       | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Public sector                           |       | 1,963,170                        |       | 70,009                           |       | 2,033,179 |   | 2,226,323 |   | 123,797 |   | 2,350,120 |   |
| Private sector  Corporations            |       | 4,892,296                        |       | 1,334,392                        |       | 6,226,688 |   | 5,594,024 |   | 4,148,516 |   | 9,742,540 |   |
| Individuals                             |       | 32,123,068                       |       | 2,468,126                        |       | 34,591,194 |   | 34,978,179 |   | 5,778,232 |   | 40,756,411 |   |
| Interbank                               |       | 1,902,171                        |       | 497,852                          |       | 2,400,023 |   | 1,991,466 |   | 1,044,524 |   | 3,035,990 |   |
| **Total deposits**                      | ** ** | **40,880,705**                   | ** ** | **4,370,379**                    | ** ** | **45,251,084** | ** ** | **44,789,992** | ** ** | **11,095,069** | ** ** | **55,885,061** | ** ** |

 

**NOTE 22:**   CENTRALBANK BORROWINGS

Centralbank borrowings consist of funds used by the Bank to manage daily funding andliquidity needs. Interest accrues on these balances at rates determined by thecentral bank and is settled daily.

| ** **                                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
|--------------------------------------------------------------|------------|----------|------------|----------|------------|
| Weighted average rate at year end                            |       | 7.00     | %          | 1.33     | %          |
| Weighted average rate, annual                                |       | 7.17     | %          | 3.59     | %          |
| Average balance outstanding during the year in EUR  thousand |       | 351      |       | 1,221    |       |
| Maximum month-end  amount during the period in EUR thousand  |       | 1,413    |       | 1,653    |       |

 

F-46

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 23:**   SECURITIESSOLD UNDER AGREEMENTS TO REPURCHASE 

Informationconcerning securities sold under agreements to repurchase is summarized asfollows:

| ** **                                       | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|--------------------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                                       | ** ** | **(EUR in thousands)** | ** ** |
| Securities sold  under agreements to repurchase  |       | 2,726,817                        |       | 3,037,503     |       |
|                                             | ** ** | **2,726,817**                    | ** ** | **3,037,503** | ** ** |
| Securities sold under  agreements to repurchase: |       |                             |       |          |       |
| Average outstanding during the year              |       | 5,869,359                        |       | 3,726,654     |       |
| Weighted average interest rate during the year   |       | 2.07                             | %          | 3.41          | %          |
| Weighted average interest rate at year end       |       | 2.19                             | %          | 4.77          | %          |
| Amount outstanding at month end:                 |       |                             |       |          |       |
| January                                          |       | 6,365,014                        |       | 3,941,368     |       |
| February                                         |       | 6,082,505                        |       | 4,296,491     |       |
| March                                            |       | 7,547,856                        |       | 3,169,609     |       |
| April                                            |       | 6,660,873                        |       | 2,975,907     |       |
| May                                              |       | 6,792,757                        |       | 4,976,644     |       |
| June                                             |       | 5,882,297                        |       | 3,126,524     |       |
| July                                             |       | 5,512,647                        |       | 3,681,211     |       |
| August                                           |       | 6,164,893                        |       | 4,930,587     |       |
| September                                        |       | 6,133,798                        |       | 3,896,318     |       |
| October                                          |       | 5,281,606                        |       | 3,692,712     |       |
| November                                         |       | 5,021,441                        |       | 3,990,483     |       |

 

Securities sold underagreements to repurchase are recorded at the amount of cash received inconnection with the transaction. Maturities of such agreements to repurchaseare typically overnight to six months.

**NOTE 24:**   OTHERBORROWED FUNDS

Included in other borrowedfunds are bonds issued by the Group at par on a monthly basis. These bonds,which mature within 1 year of their issue date, had a balance of EUR 195,690thousand and EUR 295,243 thousand in 2005 and 2006, respectively. Theweighted average interest rates were 3.56% and 15.49% in 2005 and 2006respectively. 

F-47

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 25:**   ACCOUNTSPAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES 

Accountspayable, accrued expenses and other liabilities at December 31, comprised:

| ** **                                                      | ** ** | **2005**                         | ** ** | **2006**      | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------|------------|---------------|------------|
| ** **                                                      | ** ** | **(EUR in thousands)** | ** ** |
| Accrued expenses  and deferred income                           |       | 49,155                           |       | 86,410        |       |
| Amounts due to  re-insurers                                     |       | 16,772                           |       | 40,219        |       |
| Income and other  taxes payable                                 |       | 196,205                          |       | 295,807       |       |
| Accounts payable  and other                                     |       | 871,230                          |       | 1,467,376     |       |
| Securities  payable                                             |       | 672,896                          |       | 94,543        |       |
| Accrued interest  and commissions                               |       | 295,179                          |       | 371,556       |       |
| Deferred tax  liability                                         |       | 336,013                          |       | 205,524       |       |
| Amounts due to  third-parties under collection agreements       |       | 350,145                          |       | 321,335       |       |
| Pension liability                                               |       | 189,161                          |       | 245,725       |       |
| Dividends payable                                               |       | 13,108                           |       | 223,769       |       |
| Accounts payable  of non-financial services sector subsidiaries |       | 74,713                           |       | 19,956        |       |
| Amounts due to  government agencies                             |       | 28,082                           |       | 60,808        |       |
| European  Re-development Fund                                   |       | 35,997                           |       | 31,861        |       |
|                                                            | ** ** | **3,128,656**                    | ** ** | **3,464,889** | ** ** |

 

**NOTE 26:**   INSURANCERESERVES

***Property-casualty reserves***

EthnikiHellenic General Insurance Company (“EH”), the insurance company of the Grouphas consistently made a provision for loss reserves by estimating the potentialliability on a claim-by-claim basis. Activity in the liability for unpaidclaims and claim adjustment expenses is summarized as follows:

| ** **                                                                               | ** ** | **Year ended December 31,** | ** ** |
|------------------------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                                               | ** ** | **2004**                                   | ** ** | **2005** | ** ** | **2006** | ** ** |
| ** **                                                                               | ** ** | **(EUR in thousands)**           | ** ** |
| Reserve for  unpaid claims and claim adjustment expenses as at January 1,           |       | 459,163                                    |       | 472,909 |   | 487,058 |   |
| Incurred claims  and claim adjustment expenses:                                          |       |                                       |       |   |   |   |   |
| Provision for insured events of the current year                                         |       | 175,297                                    |       | 179,464 |   | 205,264 |   |
| Change in provision for insured events of prior  years                                   |       | 38,833                                     |       | 13,596 |   | 23,057 |   |
| Total incurred  claims and claim adjustment expenses                                     |       | 214,130                                    |       | 193,060 |   | 228,321 |   |
| Payments                                                                                 |       |                                       |       |   |   |   |   |
| Claims and claim  adjustment expenses attributable to insured events of the current year |       | (66,116                                    | )          | (71,003 | ) | (75,947 | ) |
| Claims and claim  adjustment expenses attributable to insured events of prior years      |       | (109,103                                   | )          | (116,990 | ) | (128,209 | ) |
| Total payments                                                                           |       | (175,219                                   | )          | (187,993 | ) | (204,156 | ) |
| Changes in  unearned premium reserves                                                    |       | (25,165                                    | )          | 9,082 |   | 14,460 |   |
| **Reserves for unpaid claims and  claim adjustment expenses as at December 31,**    | ** ** | **472,909**                                | ** ** | **487,058** | ** ** | **525,683** | ** ** |

 

F-48

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 26:**   INSURANCERESERVES (Continued)

***Reinsurance arrangements***

The reinsurance program ofEH isdesigned to minimize the Group’s exposure to large claims and reduceaccumulation against catastrophic risks. The level of risk retained by thecompany is determined by the levels of shareholder equity, Gross Written Premiaand Possible Maximum Loss per type of risk underwritten. Leaders of thereinsurance treaties are always highly rated reinsurers with a minimum ratingof A+. In the year 2005 the Group’s reinsurance programme was redesigned infavour of excess of loss rather than proportional treaties while no majorchange occurred in the reinsurance programme of 2006.

**NOTE 27:**   LONG-TERMDEBT

Long-termdebt (original maturities of more than one year) at December 31, 2006comprised:

| ** **            | ** ** | **Under 1 year**       | ** **  | **1-5 years** | ** ** | **After 5 years** | ** ** | **TOTAL**  | ** **    |
|-----------------------|------------|----------------------------------|-------------|--------------------|------------|-----------------------------|------------|------------|---------------|
| ** **            | ** ** | **(EUR in thousands)** | ** **  |
| By remaining maturity |       |                             |        |               |       |                        |       |       |          |   |   |   |   |
| Senior Debt:          |       |                             |        |               |       |                        |       |       |          |   |   |   |   |
| Fixed Rate            |       |                             | 43,769      |               |       | 312,398                     |       |       | 98,527        |   |   | 454,694 |   |
| Variable Rate         |       |                             | 48,066      |               |       | 969,762                     |       |       | 44,451        |   |   | 1,062,279 |   |
| Subordinated Debt:    |       |                             |        |               |       |                        |       |       |          |   |   |   |   |
| Fixed Rate            |       |                             | 648         |               |       | 2,329                       |       |       | 1,130,292     |   |   | 1,133,269 |   |
| Variable Rate         |       |                             | 753,833     |               |       | 5,264                       |       |       | 836,673       |   |   | 1,595,770 |   |
| Other                 |       |                             | 955         |               |       | 195,178                     |       |       | 3,420         |   |   | 199,553 |   |
| **Total**             | ** ** | ** **                       | **847,271** |               | ** ** | **1,484,931**               | ** ** | ** ** | **2,113,363** |   | ** ** | **4,445,565** | ** ** |

 

***Senior fixed rate debt***

The Group’s senior fixed rate debt of EUR 14,303thousand at December 31, 2006 is denominated in EUR, carries a weightedaverage interest rate of 4.94% matures through 2012 and pays interestsemi-annually. The debt of EUR 279,448 which is denominated in USD, carries aweighted average interest rate of 6.50% and matures through 2013 while the debtof EUR 160,943 which is denominated in TRY, carries a weighted average interestrate of 11.94% and matures through 2011.

The Group’s senior fixed rate debt includes thefollowing borrowings of Finansbank:

USD 125 million Series 2004—B notes issued in November 2004by a special purpose entity, the proceeds of which were lent to the Bank’ssubsidiary Finansbank. The notes are secured on Finansbank’s diversifiedpayment rights and have a five-year maturity. Interest is 6.1014%, paidquarterly, with no principal payment for two years.

USD 110 million bonds with a five year maturity andUSD 110 million bonds with a seven-year maturity issued in March 2006 by aspecial purpose entity, the proceeds of which were lent to the Bank’ssubsidiary Finansbank. Interest is 6,25% and 6,5% respectively, paid semi-annually.

TRY 300 million, creditcard secured non-amortising loan, with a five-year maturity. Interest is11.94%, paid quarterly.

F-49

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 27:**   LONG-TERM DEBT (Continued)

***Senior variable rate debt***

TheGroup’s senior variable rate debt of EUR 1,062,279 thousand at December 31,2006 consists of debt denominated in EUR amounting to 122,023 thousandwhich carries a weighted average interest rate of 5.79% and matures through2012 and US dollar denominated debt of EUR 940,256 thousand which carries aweighted average interest rate of 7.17% and matures through 2012.

The Group’s senior variable rate debt includes thefollowing borrowings of Finansbank:

USD 500 million Series 2005-A Floating RateNotes issued in March 2005 by a special purpose entity, the proceeds ofwhich were lent to Finansbank. The notes are secured on Finansbank’sdiversified payment rights and have a seven-year maturity. Interest isdetermined as the three-month LIBOR plus 180 bps, paid quarterly, with noprincipal repayment for three years.

USD 700 million term loanfacility in two tranches: USD 479 million with a two-year maturity and interestat LIBOR + 42.5 bps, paid quarterly, and USD 221 million with a three-yearmaturity and interest at LIBOR + 60 bps, paid quarterly.

***Subordinated debt and Variable Interest Entities***

NBG Funding Ltd and NBG Finance plc (the “financesubsidiaries”) are 100% owned unconsolidated finance subsidiaries of the Bank. TheBank has fully and unconditionally guaranteed all securities issued by thesecompanies. There are no restrictions on the ability of these unconsolidatedfinance subsidiaries to transfer funds to the Bank in the form of cashdividends, loans and advances.

NBG Funding Ltdissued the following securities:

1.                EUR 350 million Series AFloating Rate Non-Cumulative Non-Voting Preferred Securities were issued in July 2003.The securities are guaranteed on a subordinate basis by the Bank. Thesecurities are perpetual and may be redeemed by NBG Funding, in whole but notin part, in July 2013 or on any dividend date falling thereafter, subjectto the consent of the Bank. The preferred dividend rate is three-month Euriborplus 175 bps until July 11, 2013 and Euribor plus 275 bps thereafter, paidquarterly.

2.                EUR 350 millionseries B CMS- Linked Subordinated Callable Notes were issued in November 2004.The securities are perpetual and may be redeemed by NBG Funding, in whole butnot in part, in November 2014 or any dividend date falling thereaftersubject to the consent of the Bank. The preferred dividend is 6.25% for thefirst year and is then determined as the 10 year EUR CMS mid swap rate plus12.5 bps reset every six months and capped at 8.00% paid semi-annually.

3.                USD 180 millionseries C CMS- Linked Subordinated Callable Notes were issued in November 2004.The securities are perpetual and may be redeemed by NBG Funding, in whole butnot in part, in November 2014 or any dividend date falling thereaftersubject to the consent of the Bank. The preferred dividend is 6.75% for thefirst year and is then determined as the 10 year USD CMS mid swap rate plus12.5 bps reset every six months and capped at 8.50% paid semi-annually.

F-50

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 27:**   LONG-TERM DEBT (Continued)

4.                EUR 230 millionseries D CMS- Linked Subordinated Callable Notes were issued in February 2005.The securities are perpetual and may be redeemed by NBG Funding, in whole butnot in part, on February 16, 2015 or any dividend date falling thereaftersubject to the consent of the Bank. The preferred dividend rate is 6.00% until February 16,2010 and, thereafter, is determined as the difference of the 10 year EUR CMSmid swap rate minus the 2 year mid swap rate multiplied by four subject to aminimum rate of 3,25% and capped at 10.00% paid annually.

5.                GBP 375 millionseries E Fixed/ Floating Rate Non-cumulative Guaranteed Non/voting PreferredSecurities were issued in November 2006. The securities are perpetual and maybe redeemed by NBG Funding, in whole but not in part, on November 2016 oron any dividend date falling thereafter subject to the consent of the Bank. Thepreferred dividend rate is 6,2889% until November 8, 2016 and three monthLIBOR plus 2,08% thereafter, paid annually until November 8, 2016 andquarterly thereafter.

The proceeds of the instruments issued by NBG Fundingwere lent to NBG Finance through Eurobond issues and ultimately lent to theBank under loan agreements with the same terms as each of the instruments referredto above but with a 30 year maturity.

In addition, NBGFinance plc issued the following securities:

1.                EUR 750 millionCallable Subordinated Floating Rate Notes were issued in June 2002. Thesecurities were due in June 2012 and were guaranteed on a subordinatebasis by the Bank. The notes carried interest at Euribor plus 80 bps to June 2007and Euribor plus 210 bps thereafter, paid quarterly. The notes were redeemed onthe first call date of June 25, 2007 following the decision of the Boardof Directors at its meeting on May 16, 2007.

2.                JPY 30 billionCallable Subordinated Fixed Rate Notes were issued in June 2005. Thesecurities are due in June 2035 and are guaranteed on a subordinate basisby the Bank. The notes may be redeemed at the option of the Bank in or after June 2015.The notes carry a fixed rate of interest of 2,755%, which is payablesemi-annually in arrears.

The proceeds of the above notes issued by NBG Financeare lent to the Bank under loan agreements with the same terms as each of thenotes referred to above.

The following notes have been issued by a specialpurpose entity, the proceeds of which were lent to the Bank’s subsidiaryFinansbank:

USD 200 million Subordinated Callable Notes issued in October 2004.The notes have a 10-year maturity and there is a repayment option at theend of the fifth year. Interest, paid annually, is 9% for the first five yearsand steps up to 11,79% thereafter.

TheGroup does not consolidate the finance subsidiaries following the guidance inFIN 46R. Under this guidance, the Group is not deemed to be the primarybeneficiary of the entities. The Group does not absorb the majority of theentities’ expected losses nor does it receive a majority of the entities’expected returns.

F-51

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 28:**   COMMITMENTSAND CONTINGENCIES

In the normal course of business, the Group entersinto a number of off-balance sheet commitments to meet the financing needs ofits customers, through the use of commitments to extend credit and commercialand standby letters of credit.

The Group’s exposure to credit loss in the event ofnon-performance by the other party to the financial instrument for commitmentsto extend credit and commercial and standby letters of credit is represented bythe contractual notional amount of those instruments. The Group uses the samecredit policies in making commitments and conditional obligations as it doesfor on-balance-sheet instruments.

The following tablesummarizes the Group’s off-balance-sheet financial instruments, whose contractamounts represent credit risk, as of December 31, 2005 and 2006.

| ** **                                                           | ** ** | **2005**                         | ** ** | **2006**   | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|------------|------------|
| ** **                                                           | ** ** | **(EUR in thousands)** | ** ** |
| Financial instruments  whose contract amounts represent credit risk: |       |                             |       |       |       |
| Commitments to extend  credit:                                       |       |                             |       |       |       |
| Commercial and personal                                              |       | 10,090,651                       |       | 22,739,661 |       |
| Commercial real estate                                               |       | 60,807                           |       | 44,991     |       |
| Residential real estate                                              |       | 681,003                          |       | 622,607    |       |
| Commercial  letters of credit                                        |       | 207,544                          |       | 184,782    |       |
| Standby letters of  credit and financial guarantees written          |       | 2,921,104                        |       | 5,769,479  |       |

 

*Commitmentsto Extend Credit.**  *Commitmentsto extend**credit are agreements to lend to acustomer, as long as there is no violation of any condition established in thecontract. Commitments generally have fixed expiration dates or othertermination clauses and may require payment of a fee. Since many of thecommitments are expected to expire without being drawn upon, the totalcommitment amounts do not necessarily represent future cash requirements. Themajority of commitments to extend credit have terms up to one year and arebased on EURIBOR / LIBOR—or other base rates. Management evaluates eachcustomer’s credit worthiness in determining the amount of collateral to obtain.Collateral held varies and may include accounts receivable, inventory,property, plant and equipment and real estate.

*CommercialLetters of Credit.*   Commercial letters of creditensure payment by a bank to a third party for a customer’s foreign or domestictrade transactions, generally to finance a commercial contract for the shipmentof goods. A significant portion of commercial letters of credit is on animmediate payment basis. The Group’s credit risk in these transactions islimited since the contracts are collateralized by the merchandise being shippedand are generally of short duration.

*StandbyLetters of Credit and Financial Guarantees Written.**  *Standbyletters of credit and financial guarantees written are conditional commitmentsissued by the Group to guarantee the performance of a customer to a third party.Those guarantees are primarily issued to support the financing needs of theBank’s commercial customers, and are short-term in nature. The credit riskinvolved in issuing letters of credit is essentially the same as that involvedin extending loan facilities to customers. The Group holds marketablesecurities as collateral supporting those commitments for which collateral isdeemed necessary.

*Legal Contingencies.*   TheGroup is a defendant in certain claims and legal actions arising in theordinary course of business. In the opinion of management, after consultationwith legal counsel, the 

F-52

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 28:**   COMMITMENTS AND CONTINGENCIES (Continued)

ultimatedisposition of these maters is not expected to have a material adverse effecton the consolidated financial condition of the Group.

**NOTE 29:**   OTHERNON-INTEREST INCOME

Othernon-interest income at December 31, comprised:

| ** **                        | ** ** | **2004**                         | ** ** | **2005**    | ** ** | **2006**    | ** ** |
|-----------------------------------|------------|----------------------------------|------------|-------------|------------|-------------|------------|
| ** **                        | ** ** | **(EUR in thousands)** | ** ** |
| Income from  insurance operations |       | 612,248                          |       | 616,383     |       | 733,330     |       |
| Warehouse fees                    |       | 12,892                           |       | 11,572      |       | 11,270      |       |
| Hotel revenues                    |       | 24,731                           |       | 25,976      |       | 28,315      |       |
| Profit on sales  of properties    |       | 48,022                           |       | 49,322      |       | 77,643      |       |
| Other                             |       | 109,852                          |       | 113,618     |       | 131,403     |       |
| **Total**                         | ** ** | **807,745**                      | ** ** | **816,871** | ** ** | **981,961** | ** ** |

 

**NOTE 30:**   OTHERNON-INTEREST EXPENSE

Othernon-interest expense at December 31, comprised:

| ** **                                                                     | ** ** | **2004**                         | ** ** | **2005**    | ** ** | **2006**      | ** ** |
|--------------------------------------------------------------------------------|------------|----------------------------------|------------|-------------|------------|---------------|------------|
| ** **                                                                     | ** ** | **(EUR in thousands)** | ** ** |
| Insurance claims,  reserves movement, commissions and reinsurance premia ceded |       | 744,418                          |       | 539,251     |       | 655,941       |       |
| Warehouses cost  of services                                                   |       | 1,950                            |       | 3,551       |       | 3,458         |       |
| Hotel running  costs                                                           |       | 21,153                           |       | 25,476      |       | 34,911        |       |
| Credit card costs                                                              |       | 44,348                           |       | 35,362      |       | 31,117        |       |
| Broker costs                                                                   |       | 8,230                            |       | 7,727       |       | 12,994        |       |
| Other                                                                          |       | 364,860                          |       | 304,914     |       | 440,579       |       |
| Total                                                                          | ** ** | **1,184,959**                    |       | **916,281** |       | **1,179,000** | ** ** |

 

**NOTE 31:   INCOMETAXES**

Thesignificant components of the provision for income taxes for the years endedDecember 31, 2004, 2005 and 2006 are as follows:

| ** **                                 | ** ** | **2004**                         | ** ** | **2005**     | ** ** | **2006**     | ** ** |
|--------------------------------------------|------------|----------------------------------|------------|--------------|------------|--------------|------------|
| ** **                                 | ** ** | **(EUR in thousands)** | ** ** |
| Tax provision from  continuing operations: |       |                             |       |         |       |         |       |
| Current tax payable                        |       | (181,987                         | )          | (168,186     | )          | (312,512     | )          |
| Deferred taxation                          |       | 188,022                          |       | (64,600      | )          | 97,813       |       |
| **Total  tax (expense)/ benefit**          | ** ** | **6,035**                        | ** ** | **(232,786** | **)**      | **(214,699** | **)**      |

 

F-53

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 31:   INCOMETAXES (Continued)**

Thedifferences between the statutory income tax rates and the effective tax ratesare summarized as follows:

| ** **                                                           | ** ** | **2004**                         | ** ** | **2005** | ** ** | **2006** | ** ** |
|----------------------------------------------------------------------|------------|----------------------------------|------------|----------|------------|----------|------------|
| ** **                                                           | ** ** | **(EUR in thousands)** | ** ** |
| Average statutory  income tax rates(1)                               |       | 33.11                            | %          | 30.40    | %          | 27.17    | %          |
| Effect of  tax—exempt (income)/losses                           |       | (5.23                            | )%         | (2.70    | )%         | (3.69    | )%         |
| Effect of  companies with losses                                     |       | (2.16                            | )%         | 0.43     | %          | (0.65    | )%         |
| Non deductible  expenses                                             |       | 5.28                             | %          | 7.52     | %          | 2.87     | %          |
| Non deductible  goodwill                                             |       | —                           |       | 0.61     | %          | 1.28     | %          |
| Statutory  revaluation of fixed assets                               |       | (73.86                           | )%         | (0.06    | )%         | (0.00    | )%         |
| Effect of change  in income tax rate                                 |       | 38.81                            | %          | (1.62    | )%         | 0.29     | %          |
| Effect of 5% tax  reduction due to merger activity                   |       | —                           |       | (2.26    | )%         | (2.19    | )%         |
| General allowance  for loans losses recognized only for tax purposes |       | —                           |       | (3.14    | )%         | (5.39    | )%         |
| Other                                                                |       | 0.26                             | %          | (0.09    | )%         | (0.35    | )%         |
| Average effective  rate                                              |       | (3.79                            | )%         | 29.09    | %          | 19.33    | %          |

----

(1)          The average statutory income tax rates are used inview of the fact that the consolidated subsidiaries are taxed under differenttax rates depending on the nature of their entrepreneurial activity, thejurisdiction in which taxes are levied.

On 22 November 2006, a new tax law (Law3513/2006) was enacted whereby the non-taxed and the specially taxed bankingreserves that the Group had recognized a deferred tax liability for in prioryears that had not been distributed or capitalized up until the law waspublished, were subject to one-off taxation at a rate of 15% or 10% based onthe tax status of the respective reserves. The bank paid EUR 100.6 million taxon EUR 672 million non-taxed and specially taxed reserves. These reserves canbe distributed or capitalized without any further tax.

F-54

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 31:**   INCOME TAXES (Continued)

The significant componentsof deferred income tax assets and liabilities at December 31, comprised:

| ** **                                                         | ** ** | **2004**                         | ** ** | **2005**     | ** ** | **2006**     | ** ** |
|--------------------------------------------------------------------|------------|----------------------------------|------------|--------------|------------|--------------|------------|
| ** **                                                         | ** ** | **(EUR in thousands)** | ** ** |
| **Deferred  Tax Assets:**                                          | ** ** | ** **                       | ** ** | ** **   | ** ** | ** **   | ** ** |
| Allowance for  loan losses                                         |       | 14,480                           |       | 4,646        |       | 17,497       |       |
| Accrued expenses                                                   |       | 7,500                            |       | 3,084        |       | 95           |       |
| Mark to market  valuation of securities and derivative liabilities |       | 150,830                          |       | 135,651      |       | 132,827      |       |
| Retirement  Benefits                                               |       | 20,273                           |       | 16,640       |       | 17,725       |       |
| Insurance  Reserves                                                |       | 56,500                           |       | 49,039       |       | 41,851       |       |
| Statutory  revaluation on fixed assets                             |       | 316,453                          |       | 316,934      |       | 305,440      |       |
| Other                                                              |       | 44,476                           |       | 32,225       |       | 66,721       |       |
| **Total deferred tax assets**                                      | ** ** | **610,512**                      | ** ** | **558,219**  | ** ** | **582,156**  | ** ** |
| **Deferred Tax Liabilities:**                                      | ** ** | ** **                       | ** ** | ** **   | ** ** | ** **   | ** ** |
| Tax free reserves                                                  |       | (192,757                         | )          | (224,849     | )          | (110,476     | )          |
| Other(1)                                                           |       | (119,743                         | )          | (111,164     | )          | (95,048      | )          |
| **Total deferred tax liabilities**                                 | ** ** | **(312,500**                     | **)**      | **(336,013** | **)**      | **(205,524** | **)**      |
| **Net  deferred tax asset / (liability)**                          | ** ** | **298,012**                      | ** ** | **222,206**  | ** ** | **376,632**  | ** ** |

----

(1)          Consists mainly of the mark to market valuation oftrading, available-for-sale securities and derivative assets.

The deferred tax on the mark-to-market valuation ofsecurities includes both trading and available-for-sale securities, as most ofthese mark-to-market valuations are not recognized for Greek income taxpurposes.

In February 2004, the Greek Parliament approvedlegislation whereby companies were allowed for tax purposes to revalue land andbuildings to their current market value. Companies were required to pay tax atthe rate of 2% for land and 10% for buildings on the difference between the taxbase prior to the revaluation and the re-valued amount. The law also stipulatedthat, if the reserve was capitalized to share capital, full depreciation on there-valued amounts for buildings would be allowed for tax purposes.

Following legislation enacted in December 2004,the applicable Greek statutory rate of tax is reduced from 35% for 2004, to 32%for 2005, 29% for 2006 and 25% for 2007 and thereafter. The rates for 2005 and2006 applicable to the Bank are 27% and 24%, respectively, based on a law,which reduced the tax rate by 5% for companies, which effected legal mergersuntil December 31, 2005.

Tax-free reservesrepresent profits made on the sale of shares, property, bonds and other similarassets as well as income taxed at privileged rates, such as interest earned ontreasury bills and bonds, which are not distributed. These reserves are fullytaxed upon distribution and have, therefore, been treated as temporarydifferences in the deferred tax computations.

F-55

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 32:**   RELATEDPARTY TRANSACTIONS

The Bank has entered intotransactions with its directors, significant shareholders, and affiliates(related parties). The aggregate amount of loans to such related partiestotaled EUR 206 million and EUR 88.3 million at December 31, 2005 and2006, respectively. The terms extended to related parties are similar to thoseextended to unrelated parties. The Bank has also granted a fully collateralisedloan to the Lump-Sum Benefit Plan for its employees, a post retirement benefitplan to which the Group does not pay contributions to, the outstanding balanceof which was EUR 68 million and EUR 63.4 million on December 31, 2005 and2006 respectively.

In prior years wedisclosed loans to the Hellenic Republic. The Hellenic Republic as at31.12.2006 was not a related party of the Group. For more information on ourrelationship with the Hellenic Republic see ITEM 7: *“Major Shareholders and Related Party Transactions”.*

**NOTE33:**   ADDITIONAL PAID-IN CAPITAL

In February 2004, theGreek Parliament approved legislation whereby companies were allowed for taxpurposes to revalue land and buildings to their current market value. Companieswere required to pay tax at the rate of 2% for land and 10% for buildings onthe difference between the tax base prior to the revaluation and the re-valuedamount. The law also stipulated that, if the reserve was capitalized to sharecapital, full depreciation on the re-valued amounts for buildings would beallowed for tax purposes. If the reserve was not capitalized, the tax benefitsfrom calculating depreciation and capital gains and losses on the re-valuedamount would be lost. The Group decided to take advantage of this law andcapitalize the statutory revaluation surplus to share capital.

For US GAAP reportingpurposes, where property is carried at cost, no such revaluation surplusexisted and Accumulated Surplus was not sufficient to reflect thiscapitalization. As such, this capitalization was effected through AdditionalPaid In Capital.

Both capitalizations havethe benefit of increasing the number of shares held by investors. Theadditional shares have identical rights as the previous existing shares. Furthermore,the new shares were distributed in the same proportion as pre-existing shares,causing no dilution. The Bank’s ability to pay dividends from AccumulatedSurplus is not presently affected, as the capitalization was effected through astatutory revaluation reserve.

Consequently, the computationsof basic and diluted EPS were adjusted retroactively for all periods presentedto reflect the change in capital structure. When the changes in common stockoccur after the close of the period, but before the issuance of the financialstatements (which was the case for the 2003 financial statements), the pershare computations for those and any prior-period financial statementspresented were based on the new number of shares.

In 2005 following thelegal merger of the Bank with National Investment Company, the Bank raised thepar value of the shares from EUR 4.50 to EUR 4.80 thus increasing share capitalamount recorded in the balance sheet (by EUR 100,979 thousand in 2005). Thiscapitalization was effected through Additional paid in Capital. There was noeffect on basic and diluted earnings per share.

On June 1, 2006 the2nd Repeat General Meeting of the Bank’s shareholders approved the sharecapital increase of EUR 3 billion through a rights issue to existingshareholders at a ratio of 4 new shares to 10 existing at a price of EUR 22.11for each new share. The share capital increase was completed and fullysubscribed on July 5, 2006 and was authorized by Approval K2-10274/7.7.2006of the Ministry of Development. Consequently, the Bank’s share capital wasincreased by EUR 678,539 thousand with the 

F-56

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 33:**   ADDITIONALPAID-IN CAPITAL (Continued)

issue of135.707.764 new shares. The difference from the issue of shares above par valueof a total amount of EUR 2,321,960 thousand less the share capital issuecosts net of tax of EUR 64,063 thousand was credited to the “additionalpaid-in-capital”.

On March 31, 2006following the legal merger of the Bank with National Real Estate Company, the Bankraised the par value of the shares from EUR 4.80 to EUR 5.00 thus increasingshare capital amount recorded in the balance sheet (by EUR 67,854 thousand in2006). This capitalization was effected through Additional paid-in Capital.There was no effect on basic and diluted earnings per share.

On December 21, 2006,following the Bank’s stock option program the share capital was increased byEUR 1,550 thousand with the issue of 310.043 shares. The difference from theissue of shares above par value of a total amount of EUR 5,829 thousand wascredited to the “additional paid-in-capital”. Furthermore, the totalcompensation cost for 2006 derived from share options amounted to EUR 6,383thousand and was credited to “additional paid-in-capital”.

**NOTE34:**   EARNINGS PER SHARE DATA

Basicearnings per share is computed by dividing net income for the year attributableto ordinary shareholders by the weighted average number of ordinary sharesoutstanding during the year (amounts in EUR thousand, except share and pershare data).

| ** **                                                                          | ** ** | **2004**        | ** ** | **2005**        | ** ** | **2006**        | ** ** |
|-------------------------------------------------------------------------------------|------------|-----------------|------------|-----------------|------------|-----------------|------------|
| Net Income                                                                          |       | 210,270         |       | 555,194         |       | 858,064         |       |
| Net Income adjusted for  diluted computation                                        |       | 210,270         |       | 555,194         |       | 858,064         |       |
| Weighted Average common  share outstanding                                          |       | 339,942,604     |       | 345,793,420     |       | 417,341,186     |       |
| Dilutive shares                                                                     |       |            |       |            |       | 35,957          |       |
| Weighted Average common  share outstanding for dilutive earnings per share          | ** ** | **339,942,604** | ** ** | **345,793,420** | ** ** | **417,377,143** | ** ** |
| Earnings per common  share—Basic and diluted                                   |       | 0.62            |       | 1.61            |       | 2.06            |       |
| Earnings per common share—Basic and diluted  excluding discontinued operations |       | 0.53            |       | 1.52            |       | 1.92            |       |

 

**NOTE35:   REGULATORY MATTERS**

Quantitative measuresestablished by regulation to ensure capital adequacy require the Bank tomaintain minimum amounts and ratios determined on a risk-weighted basis,capital (as defined) to assets, certain off-balance sheet items, and thenotional credit equivalent arising from the total capital requirements againstmarket risk, of at least 8%. At least half of the required capital must consistof “Tier I” capital (as defined), and the rest of “Tier II” capital (asdefined). The framework applicable to Greek banks conforms to European Unionrequirements, in particular the Own Funds, the Solvency Ratio and the CapitalAdequacy Directives. However, under the relevant European legislation,supervisory authorities of the member-states have some discretion indetermining whether to include particular instruments as capital guidelines andto assign different weights, within a prescribed range, to various categoriesof assets.

As of December 31,2006, the Bank was adequately capitalized under the applicable regulatoryframework. To be categorized as adequately capitalized the Bank must maintainminimum total risk-based and Tier I risk based ratios as set forth in the tablebelow. There are no conditions or events since December 31, 2006 thatmanagement believes have changed the Bank’s compliance with capitalrequirements.

F-57

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 35:   REGULATORYMATTERS (Continued)**

The Bank’s actual capitalamounts and ratios are also presented in the table below (amounts are expressedin EUR thousand, except ratios):

|                                | ** ** | ** ** | ** ** | ** **                | ** ** | **For Capital  Adequacy Purposes** | ** ** |
|--------------------------------|------------|------------|------------|---------------------------|------------|----------------------------------------------|------------|
| ** **                     | ** ** | **Actual** | ** ** | **Minimum Required** | ** ** |
| ** **                     | ** ** | **Amount** | ** ** | **Ratio**                 | ** ** | **Amount**                                   | ** ** | **Ratio** | ** ** |
| As of December 31,  2006: |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Total Capital                  |       | 8,071,217  |       |                      | 23.1       | %                                            |       | 2,792,980 |   |   | 8.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Tier 1 Capital                 |       | 5,568,561  |       |                      | 15.9       | %                                            |       | 1,396,490 |   |   | 4.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| As of  December 31, 2005: |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Total Capital                  |       | 4,574,768  |       |                      | 16.8       | %                                            |       | 2,176,505 |   |   | 8.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Tier 1 Capital                 |       | 2,525,997  |       |                      | 9.3        | %                                            |       | 1,088,252 |   |   | 4.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| As of December 31,  2004: |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Total Capital                  |       | 3,811,761  |       |                      | 15.8       | %                                            |       | 1,930,005 |   |   | 8.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Tier 1 Capital                 |       | 2,475,922  |       |                      | 10.3       | %                                            |       | 961,523 |   |   | 4.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |

 

Theactual capital amounts and ratios for the Group are presented in the tablebelow (amounts are expressed in EUR thousand, except ratios):

|                                | ** ** | ** ** | ** ** | ** **                | ** ** | **For Capital  Adequacy Purposes** | ** ** |
|--------------------------------|------------|------------|------------|---------------------------|------------|----------------------------------------------|------------|
| ** **                     | ** ** | **Actual** | ** ** | **Minimum Required** | ** ** |
| ** **                     | ** ** | **Amount** | ** ** | **Ratio**                 | ** ** | **Amount**                                   | ** ** | **Ratio** | ** ** |
| As of December 31,  2006: |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Total Capital                  |       | 6,778,382  |       |                      | 15.6       | %                                            |       | 3,480,955 |   |   | 8.0 | % |   |
| (to Risk-Weighted  Assets)     |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Tier 1 Capital                 |       | 5,377,673  |       |                      | 12,4       | %                                            |       | 2,175,597 |   |   | 5.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| As of December 31,  2005: |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Total Capital                  |       | 4,756,946  |       |                      | 15.2       | %                                            |       | 2,504,619 |   |   | 8.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Tier 1 Capital                 |       | 3,854,903  |       |                      | 12.3       | %                                            |       | 1,565,386 |   |   | 5.0 | % |   |
| (to Risk-Weighted  Assets)     |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| As of December 31,  2004: |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Total Capital                  |       | 4,062,865  |       |                      | 14.8       | %                                            |       | 2,196,143 |   |   | 8.0 | % |   |
| (to Risk-Weighted  Assets)     |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |
| Tier 1 Capital                 |       | 3,266,858  |       |                      | 11.9       | %                                            |       | 1,372,629 |   |   | 5.0 | % |   |
| (to Risk-Weighted Assets)      |       |       |       |                      |       |                                         |       |   |   |   |   |   |   |

 

F-58

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 36:   FAIR VALUEOF FINANCIAL INSTRUMENTS**

Management uses its best judgment in estimating thefair value of the Group’s financial instruments; however, there are inherentweaknesses in any estimation technique. Therefore, for substantially allfinancial instruments, the fair value estimates herein are not necessarilyindicative of the amounts the Group could have realized in a sale transactionon the dates indicated. The estimated fair value amounts have been measured asof their respective year-ends, and have not been re-evaluated or updatedsubsequent to those respective dates for the purpose of these consolidatedfinancial statements. As such, the estimated fair values of these financialinstruments subsequent to the respective reporting dates may be different thanthe amounts reported at each year-end.

The following information should not be interpreted asan estimate of the fair value of the entire Group. A fair value calculation isonly provided for a limited portion of the Group’s assets. Due to a wide rangeof valuation techniques and the degree of subjectivity used in making theestimates, comparisons between the Group’s disclosures and those of othercompanies may not be meaningful. The following methods and assumptions wereused to estimate the fair values of the Group’s financial instruments at December 31,2005 and 2006:

*FinancialInstruments Stated at Carrying Amount.*   Thecarrying amount of cash and due from banks, interest-bearing deposits withbanks and resale agreements approximates their fair value. Fair value fortrading assets, which also is the amount recognized in the consolidated balancesheet, is based on quoted market prices of comparable instruments. The carryingamount of liabilities on acceptances and acceptances outstanding approximatestheir fair value. The carrying amount of federal funds purchased, borrowingsunder repurchase agreements, and other borrowed funds maturing within 90 daysapproximates their fair value. Fair value of other borrowed funds in excess of90 days is estimated using discounted cash flow analysis based on the Group’scurrent incremental borrowing rates for similar types of borrowingsarrangements. The carrying amount of accrued interest approximates their fairvalue.

*DerivativeFinancial Instruments.**  *Allderivatives are recognized on the balance sheet at fair value. For exchangetraded contracts, fair value is based on quoted market prices. For non-exchangetraded contracts, fair value is based on dealer quotes, pricing models,discounted cash flow analysis or quoted prices for instruments with similarcharacteristics.

*Available-for-SaleSecurities.*   Fair values for securities are basedon available quoted market prices. Available-for-sale securities are carried attheir aggregate fair value.

*Loans.*   Forvariable rate commercial loans that re-price frequently (within a relativelyshort time frame) and have no significant change in credit risk, fair value isbased on carrying amount. Fair value for mortgage loans, consumer installmentloans, credit-card loans, and other consumer loans is estimated usingdiscounted cash flow models. The discount rates are based on current marketinterest rates for similar types of loans. Fair value for commercial realestate and commercial loans that do not re-price or mature within relativelyshort time frames is estimated using discounted cash flow analysis. Thediscount rates used are those currently being offered for loans with similarterms to borrowers of similar credit quality. Fair value for impaired loans isestimated using discounted cash flow analysis or underlying collateral values,where applicable.

*Deposits.*   Thefair value for demand deposits and deposits with no defined maturity isdetermined to be the amount payable on demand at the reporting date. The fairvalue for fixed-maturity deposits is 

F-59

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 36:**   FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

estimated using discountedcash flow models based on rates currently offered for the relevant producttypes with similar remaining maturities.

*Long-TermDebt.**  *Theestimated fair value was determined using a discounted cash flow analysis,based on current market rates of similar maturity debt securities, to discountcash flows.

*Off-BalanceSheet Financial Instruments whose contract amounts represent credit risk.*   Thefair value of standby and other letters of credit and the unfunded portion ofcommitments to extend credit is not material.

The carrying amount, theamount at which financial instruments are reported in the balance sheet, andthe estimated fair value of the Group’s financial instruments at December 31,is presented below. For items, which re-price frequently and/or are short induration, carrying amount approximates fair value.

| ** **                                                     | ** ** | **Year ended December 31,** | ** ** |
|----------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                                     | ** ** | **2005**                                   | ** ** | **2006** | ** ** |
| ** **                                                     | ** ** | **Carrying  Amount**                       | ** ** | **Fair  Value** | ** ** | **Carrying  Amount** | ** ** | **Fair  Value** | ** ** |
| ** **                                                     | ** ** | **(EUR in thousands)**           | ** ** | **(EUR in thousands)** | ** ** |
| **Financial Assets:**                                          | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Cash and due from  banks                                       |       | 1,510,972                                  |       | 1,510,972 |   | 1,863,974 |   | 1,863,974 |   |
| Deposits with  central bank                                    |       | 1,184,383                                  |       | 1,184,383 |   | 2,110,191 |   | 2,110,191 |   |
| Securities  purchased under agreements to resell               |       | 2,495,733                                  |       | 2,495,733 |   | 2,398,097 |   | 2,398,097 |   |
| Interest bearing  deposits with banks                          |       | 1,322,015                                  |       | 1,322,015 |   | 2,272,043 |   | 2,270,151 |   |
| Money market  investments                                      |       | 179,073                                    |       | 179,073 |   | 367,653 |   | 367,653 |   |
| Trading assets                                                 |       | 8,558,662                                  |       | 8,558,662 |   | 7,374,207 |   | 7,374,207 |   |
| Financial  instruments marked to market through profit or loss |       | 5,104,757                                  |       | 5,104,757 |   | 5,307,946 |   | 5,307,946 |   |
| Derivative assets                                              |       | 284,469                                    |       | 284,469 |   | 325,013 |   | 325,013 |   |
| Securities  available-for-sale                                 |       | 2,607,009                                  |       | 2,607,009 |   | 4,155,066 |   | 4,155,066 |   |
| Securities held  to maturity                                   |       | 20,867                                     |       | 20,867 |   | — |   | — |   |
| Loans, net of  allowance                                       |       | 29,581,628                                 |       | 30,242,207 |   | 42,532,086 |   | 43,555,342 |   |
| Customers’  liability on acceptances                      |       | 205                                        |       | 205 |   | — |   | — |   |
| Accrued interest  receivable                                   |       | 534,594                                    |       | 534,594 |   | 700,660 |   | 700,660 |   |
| **Total financial assets**                                     | ** ** | **53,384,367**                             | ** ** | **54,044,946** | ** ** | **69,406,936** | ** ** | **70,428,300** | ** ** |
| **Financial  Liabilities:**                                    | ** ** | ** **                                 | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| Total deposits                                                 |       | 45,251,084                                 |       | 45,252,049 |   | 55,885,061 |   | 55,819,163 |   |
| Central bank  borrowings                                       |       | 353                                        |       | 353 |   | 1,024 |   | 1,024 |   |
| Securities sold  under agreements to repurchase                |       | 2,726,817                                  |       | 2,726,817 |   | 3,037,503 |   | 3,037,503 |   |
| Derivative  liabilities                                        |       | 297,867                                    |       | 297,867 |   | 423,685 |   | 423,685 |   |
| Other borrowed  funds                                          |       | 195,690                                    |       | 195,690 |   | 295,243 |   | 302,089 |   |
| Acceptances  outstanding                                       |       | 205                                        |       | 205 |   | — |   | — |   |
| Long-term debt                                                 |       | 2,151,942                                  |       | 2,061,553 |   | 4,445,565 |   | 4,412,288 |   |
| **Total  financial liabilities**                               | ** ** | **50,623,958**                             | ** ** | **50,534,534** | ** ** | **64,088,081** | ** ** | **63,995,752** | ** ** |

 

F-60

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE37:   SEGMENT INFORMATION**

The Group is adiversified financial services company operating primarily in Greece withoperations in various countries including the United Kingdom, France (closeddown in 2004), Cyprus, South Africa, Bulgaria, Former Yugoslav Republic ofMacedonia, Romania, Germany (closed down in 2004), Egypt, Albania and theNetherlands (closed down in 2005) and from 2006 in Turkey. The Group’sreportable segments are presented below, and no other industry or geographicsegment in which the Group operates is individually significant. TheDiscontinued operations are the North America operations (United States andCanada). All segment information in 2004 has been reclassified to present theeffect of discontinued operations.

| ** **                                      | ** ** | **Total Assets**        | ** ** | **Interest Income** | ** ** | **Interest expense**    | ** **    | **Non-interest income** | ** ** | **Non-interest expense** | ** ** |       |
|-------------------------------------------------|------------|------------------------------|------------|--------------------------|------------|------------------------------|---------------|------------------------------|------------|-------------------------------|------------|------------|
| ** **                                      | ** ** | **(EUR in  thousands)** | ** ** | **%**                    | ** ** | **(EUR in  thousands)** | ** **    | **%**                        | ** ** | **(EUR in  thousands)**  | ** ** | **%**      | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** |   |
| **December 31, 2004:**                     |       |                         |       |                     |       |                         |          |                         |       |                          |       |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Banking-Greek                                   |       | 42,620,962                   |       | 78.0                     | %          |                         | 1,695,176     |                         |       | 76.7                          | %          |       | 494,252 |   |   | 70.3 | % |   | 415,339 |   |   | 31.6 | % |   | 1,159,620 |   |   | 48.4 | % |
| Banking Foreign                                 |       | 6,965,987                    |       | 12.7                     | %          |                         | 347,520       |                         |       | 15.7                          | %          |       | 160,353 |   |   | 22.8 | % |   | 115,161 |   |   | 8.9 | % |   | 185,193 |   |   | 7.7 | % |
| Investment banking                              |       | 260,868                      |       | 0.5                      | %          |                         | 5,262         |                         |       | 0.2                           | %          |       | 4,185 |   |   | 0.6 | % |   | 26,300 |   |   | 2.0 | % |   | 15,340 |   |   | 0.7 | % |
| Global  Investment & Private   Banking |       | 273,121                      |       | 0.5                      | %          |                         | 7,197         |                         |       | 0.4                           | %          |       | — |   |   | — |   |   | 50,305 |   |   | 3.8 | % |   | 12,875 |   |   | 0.6 | % |
| Insurance                                       |       | 1,517,332                    |       | 2.8                      | %          |                         | 18,598        |                         |       | 0.9                           | %          |       | 2,557 |   |   | 0.4 | % |   | 637,414 |   |   | 48.5 | % |   | 913,394 |   |   | 38.1 | % |
| Other-Greek(1)                                  |       | 329,764                      |       | 0.6                      | %          |                         | 863           |                         |       | 0.0                           | %          |       | 560 |   |   | 0.1 | % |   | 43,755 |   |   | 3.3 | % |   | 40,574 |   |   | 1.7 | % |
| Continuing  operations                          |       | 51,968,034                   |       | 95.1                     | %          |                         | 2,074,616     |                         |       | 93.9                          | %          |       | 661,907 |   |   | 94.2 | % |   | 1,288,274 |   |   | 98.1 | % |   | 2,326,996 |   |   | 97.2 | % |   |
| Discontinued  operations                        |       | 2,684,746                    |       | 4.9                      | %          |                         | 134,468       |                         |       | 6.1                           | %          |       | 41,017 |   |   | 5.8 | % |   | 25,289 |   |   | 1.9 | % |   | 68,255 |   |   | 2.8 | % |   |
| Total                                           | ** ** | **54,652,780**               |       | **100.0**                | **%**      | ** **                   | **2,209,084** |                         | ** ** | **100.0**                     | **%**      | ** ** | **702,924** |   | ** ** | **100.0** | **%** | ** ** | **1,313,563** |   | ** ** | **100.0** | **%** | ** ** | **2,395,251** |   | ** ** | **100.0** | **%** |   |
|                                                 |            |                              |            |                          |            |                              |               |                              |            |                               |            |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

| ** **                                    | ** ** | **Net income  before taxes** | ** **  | **Income Tax  (Expense)/Benefit** | ** ** | **Depreciation and  amortization expense** | ** ** | **Revenue from  transactions  with other segments** | ** **  |
|-----------------------------------------------|------------|----------------------------------------|-------------|----------------------------------------|------------|------------------------------------------------------|------------|--------------------------------------------------------------------|-------------|
| ** **                                    | ** ** | **(EUR in  thousands)**           | ** **  | **%**                                  | ** ** | **(EUR in  thousands)  **             | ** ** | **%**                                                              | ** **  | **  (EUR in  thousands)  ** | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** |
| **December 31, 2004:**                   |       |                                   |        |                                   |       |                                                 |       |                                                               |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Banking-Greek                                 |       |                                   | 313,670     |                                   |       | 139.6                                                | %          |                                                               | (76,739     | ) |   | 534.4 | % |   | 72,390 |   |   | 64.0 | % |   | (102,813 | ) |   | 57.1 | % |
| Banking Foreign                               |       |                                   | 58,665      |                                   |       | 26.1                                                 | %          |                                                               | (26,090     | ) |   | 181.7 | % |   | 22,030 |   |   | 19.5 | % |   | (49,831 | ) |   | 27.7 | % |
| Investment banking                            |       |                                   | 12,036      |                                   |       | 5.3                                                  | %          |                                                               | (2,757      | ) |   | 19.2 | % |   | 392 |   |   | 0.3 | % |   | (3,458 | ) |   | 1.9 | % |
| Global Investment &  Private Banking |       |                                   | 44,627      |                                   |       | 19.9                                                 | %          |                                                               | (4,471      | ) |   | 31.1 | % |   | 789 |   |   | 0.7 | % |   | (3,637 | ) |   | 2.0 | % |
| Insurance                                     |       |                                   | (259,730    | )                                      |       | (115.6                                               | )%         |                                                               | 73,641      |   |   | (512.8 | )% |   | 6,469 |   |   | 5.7 | % |   | (13,820 | ) |   | 7.7 | % |
| Other-Greek(1)                                |       |                                   | 3,485       |                                   |       | 1.6                                                  | %          |                                                               | 42,451      |   |   | (295.6 | )% |   | 3,107 |   |   | 2.8 | % |   | (6,021 | ) |   | 3.4 | % |
| Continuing  operations                        |       |                                   | 172,753     |                                   |       | 76.9                                                 | %          |                                                               | 6,035       |   |   | (42.0 | )% |   | 105,177 |   |   | 93.0 | % |   | (179,580 | ) |   | 99.8 | % |
| Discontinued  operations                      |       |                                   | 51,878      |                                   |       | 23.1                                                 | %          |                                                               | (20,396     | ) |   | 142.0 | % |   | 7,906 |   |   | 7.0 | % |   | (383 | ) |   | 0.2 | % |
| Total                                         | ** ** | ** **                             | **224,631** |                                   | ** ** | **100.0**                                            | **%**      | ** **                                                         | **(14,361** | **)** | ** ** | **100.0** | **%** | ** ** | **113,083** |   | ** ** | **100.0** | **%** | ** ** | **(179,963** | **)** | ** ** | **100.0** | **%** |

----

(1)             Includedin Other-Greek are non-financial services subsidiaries in Greece.

F-61

----

**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 37:   SEGMENTINFORMATION (Continued)**

|                                               | ** ** | **Total Assets**        | ** ** | **Interest Income** | ** ** | **Interest expense**    | ** ** | **Non-interest income** | ** ** | **Non-interest expense** | ** **  |
|-----------------------------------------------|------------|------------------------------|------------|--------------------------|------------|------------------------------|------------|------------------------------|------------|-------------------------------|-------------|
| ** **                                    | ** ** | **(EUR in  thousands)** | ** ** | **%**                    | ** ** | **(EUR in  thousands)** | ** ** | **%**                        | ** ** | **(EUR in  thousands)**  | ** **  | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** |
| **December 31, 2005:**                   |       |                         |       |                     |       |                         |       |                         |       |                          |        |   |   |   |   |   |   |   |   |   |   |   |   |
| Banking-Greek                                 |       | 46,975,406                   |       | 78.3                     | %          | 1,965,193                    |       | 77.7                         | %          |                          | 617,964     |   |   | 69.8 | % | 488,964 |   | 32.9 | % | 1,074,221 |   | 51.0 | % |
| Banking Foreign                               |       | 8,035,375                    |       | 13.4                     | %          | 399,568                      |       | 15.8                         | %          |                          | 217,340     |   |   | 24.6 | % | 189,267 |   | 12.7 | % | 210,185 |   | 10.0 | % |
| Investment  banking                           |       | 265,454                      |       | 0.4                      | %          | 1,331                        |       | 0.1                          | %          |                          | 40          |   |   | — |   | 44,389 |   | 3.0 | % | 22,135 |   | 1.1 | % |
| Global Investment &  Private Banking |       | 28,865                       |       | 0.0                      | %          | 929                          |       | 0.0                          | %          |                          | —      |   |   | — |   | 9,455 |   | 0.6 | % | 9,109 |   | 0.4 | % |
| Insurance                                     |       | 1,604,622                    |       | 2.7                      | %          | 23,286                       |       | 0.9                          | %          |                          | 1,646       |   |   | 0.2 | % | 685,800 |   | 46.0 | % | 672,655 |   | 31.9 | % |
| Other-Greek(1)                                |       | 343,260                      |       | 0.6                      | %          | 81                           |       | —                       |       |                          | 131         |   |   | 0.0 | % | 48,898 |   | 3.3 | % | 47,025 |   | 2.2 | % |
| Continuing  operations                        |       | 57,252,982                   |       | 95.4                     | %          | 2,390,388                    |       | 94.5                         | %          |                          | 837,121     |   |   | 94.6 | % | 1,466,773 |   | 98.5 | % | 2,035,330 |   | 96.6 | % |
| Discontinued operations                       |       | 2,754,517                    |       | 4.6                      | %          | 139,069                      |       | 5.5                          | %          |                          | 47,738      |   |   | 5.4 | % | 22,764 |   | 1.5 | % | 71,828 |   | 3.4 | % |
| Total                                         | ** ** | **60,007,499**               | ** ** | **100.0**                | **%**      | **2,529,457**                | ** ** | **100.0**                    | **%**      | ** **                    | **884,859** |   | ** ** | **100.0** | **%** | **1,489,537** | ** ** | **100.0** | **%** | **2,107,158** | ** ** | **100.0** | **%** |
|                                          | ** ** | ** **                   | ** ** | ** **               | ** ** | ** **                   | ** ** | ** **                   | ** ** | ** **                    | ** **  |   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |

 

|                                               | ** ** | **Net Income  before taxes** | ** **  | **Income Tax  (Expense)/Benefit** | ** ** | **Depreciation and  amortization expense** | ** ** | **Revenue from  transactions  with other segments** | ** **   |
|-----------------------------------------------|------------|----------------------------------------|-------------|----------------------------------------|------------|------------------------------------------------------|------------|--------------------------------------------------------------------|--------------|
| ** **                                    | ** ** | **(EUR in  thousands)**           | ** **  | **%**                                  | ** ** | **(EUR in  thousands)**                         | ** ** | **%**                                                              | ** **   | **(EUR in  thousands)** | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** |
| **December 31, 2005:**                   |       |                                   |        |                                   |       |                                                 |       |                                                               |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Banking-Greek                                 |       |                                   | 571,328     |                                   |       | 70.8                                                 | %          |                                                               | (176,583     | ) |   | 70.3 | % |   | 55,933 |   |   | 60.8 | % |   | (111,278 | ) |   | 70.9 | % |
| Banking Foreign                               |       |                                   | 126,942     |                                   |       | 15.7                                                 | %          |                                                               | (16,247      | ) |   | 6.5 | % |   | 19,441 |   |   | 21.1 | % |   | (9,445 | ) |   | 6.0 | % |
| Investment  banking                           |       |                                   | 23,545      |                                   |       | 2.9                                                  | %          |                                                               | (7,376       | ) |   | 2.9 | % |   | 315 |   |   | 0.3 | % |   | (3,569 | ) |   | 2.3 | % |
| Global Investment &  Private Banking |       |                                   | 1,274       |                                   |       | 0.2                                                  | %          |                                                               | (2,365       | ) |   | 0.9 | % |   | 63 |   |   | 0.1 | % |   | (3,884 | ) |   | 2.5 | % |
| Insurance                                     |       |                                   | 34,785      |                                   |       | 4.4                                                  | %          |                                                               | (23,871      | ) |   | 9.5 | % |   | 6,133 |   |   | 6.7 | % |   | (22,469 | ) |   | 14.3 | % |
| Other-Greek(1)                                |       |                                   | 1,823       |                                   |       | 0.2                                                  | %          |                                                               | (6,344       | ) |   | 2.5 | % |   | 2,222 |   |   | 2.4 | % |   | (6,084 | ) |   | 3.9 | % |
| Continuing  operations                        |       |                                   | 759,697     |                                   |       | 94.2                                                 | %          |                                                               | (232,786     | ) |   | 92.6 | % |   | 84,107 |   |   | 91.4 | % |   | (156,729 | ) |   | 99.9 | % |
| Discontinued operations                       |       |                                   | 46,773      |                                   |       | 5.8                                                  | %          |                                                               | (18,490      | ) |   | 7.4 | % |   | 7,865 |   |   | 8.6 | % |   | (223 | ) |   | 0.1 | % |
| Total                                         | ** ** | ** **                             | **806,470** |                                   | ** ** | **100.0**                                            | **%**      | ** **                                                         | **(251,276** | **)** | ** ** | **100.0** | **%** | ** ** | **91,972** |   | ** ** | **100.0** | **%** | ** ** | **(156,952** | **)** | ** ** | **100.0** | **%** |
|                                          | ** ** | ** **                             | ** **  |                                   | ** ** | ** **                                           | ** ** | ** **                                                         | ** **   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |

----

(1)             Includedin Other-Greek are non-financial services subsidiaries in Greece.

F-62

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 37:   SEGMENTINFORMATION (Continued)**

| ** **                                    | ** ** | **Total Assets**        | ** ** | **Interest Income** | ** ** | **Interest expense**    | ** **    | **Non-interest income** | ** ** | **Non-interest expense** | ** ** |
|-----------------------------------------------|------------|------------------------------|------------|--------------------------|------------|------------------------------|---------------|------------------------------|------------|-------------------------------|------------|
| ** **                                    | ** ** | **(EUR in  thousands)** | ** ** | **%**                    | ** ** | **(EUR in  thousands)** | ** **    | **%**                        | ** ** | **(EUR in  thousands)**  | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** |
| **December 31, 2006:**                   |       |                         |       |                     |       |                         |          |                         |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Banking-Greek                                 |       | 52,490,658                   |       | 69.3                     | %          |                         | 2,339,366     |                         |       | 66.3                          | %          |   | 877,068 |   |   | 62.0 | % |   | 591,820 |   |   | 32.5 | % |   | 1,222,410 |   |   | 47.1 | % |
| Banking Foreign                               |       | 10,066,336                   |       | 13.3                     | %          |                         | 597,798       |                         |       | 16.9                          | %          |   | 253,411 |   |   | 17.9 | % |   | 158,484 |   |   | 8.7 | % |   | 207,450 |   |   | 8.0 | % |
| Banking Turkey                                |       | 10,706,009                   |       | 14.1                     | %          |                         | 530,900       |                         |       | 15.0                          | %          |   | 270,507 |   |   | 19.1 | % |   | 120,467 |   |   | 6.6 | % |   | 255,695 |   |   | 9.9 | % |
| Investment banking                            |       | 224,552                      |       | 0.3                      | %          |                         | 5,403         |                         |       | 0.2                           | %          |   | 84 |   |   | 0.0 | % |   | 66,653 |   |   | 3.7 | % |   | 31,944 |   |   | 1.2 | % |
| Global Investment & Private  Banking |       | 11,976                       |       | 0.0                      | %          |                         | 573           |                         |       | 0.0                           | %          |   | — |   |   | — |   |   | 7,509 |   |   | 0.4 | % |   | 9,562 |   |   | 0.4 | % |
| Insurance                                     |       | 1,938,699                    |       | 2.6                      | %          |                         | 28,726        |                         |       | 0.8                           | %          |   | 1,349 |   |   | 0.1 | % |   | 773,952 |   |   | 42.4 | % |   | 809,940 |   |   | 31.1 | % |
| Other-Greek(1)                                |       | 275,508                      |       | 0.4                      | %          |                         | 8             |                         |       | —                        |       |   | — |   |   | — |   |   | 38,398 |   |   | 2.1 | % |   | 44,458 |   |   | 1.7 | % |
| Continuing operations                         |       | 75,713,738                   |       | 100.0                    | %          |                         | 3,502,774     |                         |       | 99.2                          | %          |   | 1,402,419 |   |   | 99.1 | % |   | 1,757,283 |   |   | 96.4 | % |   | 2,581,459 |   |   | 99.4 | % |
| Discontinued operations                       |       | —                       |       | —                   |       |                         | 29,732        |                         |       | 0.8                           | %          |   | 12,672 |   |   | 0.9 | % |   | 65,979 |   |   | 3.6 | % |   | 14,288 |   |   | 0.6 | % |
| Total                                         | ** ** | **75,713,738**               | ** ** | **100.0**                | **%**      | ** **                   | **3,532,506** |                         | ** ** | **100.0**                     | **%**      | ** ** | **1,415,091** |   | ** ** | **100.0** | **%** | ** ** | **1,823,262** |   | ** ** | **100.0** | **%** | ** ** | **2,595,747** |   | ** ** | **100.0** | **%** |
|                                          | ** ** | ** **                   | ** ** | ** **               | ** ** | ** **                   | ** **    |                         | ** ** | ** **                    | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** |

 

| ** **                                   | ** ** | **Net income  before taxes** | ** **    | **Income Tax  (Expense)/Benefit** | ** ** | **Depreciation and  amortization  expense** | ** ** | **Revenue from  transactions  with other segments** | ** **   |
|----------------------------------------------|------------|----------------------------------------|---------------|----------------------------------------|------------|--------------------------------------------------|------------|--------------------------------------------------------------------|--------------|
| ** **                                   | ** ** | **(EUR in  thousands)**           | ** **    | **%**                                  | ** ** | **(EUR in  thousands)**                     | ** ** | **%**                                                              | ** **   | **(EUR in  thousands)** | ** ** | **%** | ** ** | **(EUR in  thousands)** | ** ** | **%** | ** ** |
| **December 31, 2006:**                  |       |                                   |          |                                   |       |                                             |       |                                                               |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Banking-Greek                                |       |                                   | 606,337       |                                   |       | 56.0                                             | %          |                                                               | (136,068     | ) |   | 60.3 | % |   | 56,313 |   |   | 56.3 | % |   | (161,870 | ) |   | 67.8 | % |
| Banking Foreign                              |       |                                   | 272,905       |                                   |       | 25.2                                             | %          |                                                               | (19,353      | ) |   | 8.6 | % |   | 21,556 |   |   | 21.6 | % |   | (26,352 | ) |   | 11.0 | % |
| Banking Turkey                               |       |                                   | 111,674       |                                   |       | 10.3                                             | %          |                                                               | (34,347      | ) |   | 15.2 | % |   | 14,022 |   |   | 14.0 | % |   | — |   |   | — |   |
| Investment banking                           |       |                                   | 40,028        |                                   |       | 3.7                                              | %          |                                                               | (13,900      | ) |   | 6.2 | % |   | 185 |   |   | 0.2 | % |   | (10,807 | ) |   | 4.5 | % |
| Global Investment & Private Banking |       |                                   | (1,704        | )                                      |       | (0.2                                             | )%         |                                                               | (3,001       | ) |   | 1.3 | % |   | 70 |   |   | 0.1 | % |   | (12,431 | ) |   | 5.2 | % |
| Insurance                                    |       |                                   | (8,611        | )                                      |       | (0.8                                             | )%         |                                                               | (7,759       | ) |   | 3.4 | % |   | 5,742 |   |   | 5.7 | % |   | (23,532 | ) |   | 9.9 | % |
| Other-Greek(1)                               |       |                                   | (6,053        | )                                      |       | (0.6                                             | )%         |                                                               | (271         | ) |   | 0.1 | % |   | 792 |   |   | 0.8 | % |   | (3,859 | ) |   | 1.6 | % |
| Continuing operations                        |       |                                   | 1,014,576     |                                   |       | 93.6                                             | %          |                                                               | (214,699     | ) |   | 95.1 | % |   | 98,680 |   |   | 98.7 | % |   | (238,851 | ) |   | 100.0 | % |
| Discontinued operations                      |       |                                   | 69,326        |                                   |       | 6.4                                              | %          |                                                               | (11,139      | ) |   | 4.9 | % |   | 1,300 |   |   | 1.3 | % |   | (16 | ) |   | 0.0 | % |
| Total                                        | ** ** | ** **                             | **1,083,902** |                                   | ** ** | **100.0**                                        | **%**      | ** **                                                         | **(225,838** | **)** | ** ** | **100.0** | **%** | ** ** | **99,980** |   | ** ** | **100.0** | **%** | ** ** | **(238,867** | **)** | ** ** | **100.0** | **%** |
|                                         | ** ** | ** **                             | ** **    |                                   | ** ** | ** **                                       | ** ** | ** **                                                         | ** **   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |   | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |

----

(1)    Includedin Other-Greek are non-financial services subsidiaries in Greece. Theinformation reported to management for purposes of making decisions aboutallocating resources to each segment and assessing its performance does notmaterially differ from the information presented above.

F-63

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEE BENEFITPLANS

***a)***   DefinedContribution Main Pension Plans Covered by Greek Law 2084/1992

Group employees participate in pension plans governedby Greek Law 2084/1992, which encompasses or amends certain provisions of laws1902/1990 and 1976/1991. These plans, described below, have contribution ratesand benefit schemes that are established by and may only be adjusted byMinisterial Decree. As such, these plans are controlled by the HellenicRepublic and substitute for standard Greek social security retirement benefitstypically available to employees in other Greek companies. The plans also havedeficit funding responsibilities as described below that may change in thefuture by legislative action. The funding deficits described below refer tosituations whereby the plan assets, including current year contributions, arenot sufficient to pay benefits in the same period.

In 1992, the GreekParliament passed Law 2084/1992 which, considering the provisions of other lawsmentioned above, limits the Group’s obligation to fund these “main plan’’deficits up to the funding deficits which existed in 1992 for each plan. Theeffect of the change in legislation was to limit the Group’s fundingobligations to the contributions set out by the Ministry of Labor and SocialSecurity plus each fund’s deficit should one arise, capped at the amount ofdeficit as of 1992.

*National Bank of GreeceEmployee Main Pension Plan*

The Bank’s employees’ Main Pension Plan provides fordefined contributions to be made by the Bank at a rate of 26.5% of the employee’ssalary, for employees who joined any social security plan prior to 1.1.1993.The corresponding rate for employees insured by any social security fund afterthat date is 13,33%. Such contributions totaled EUR 93.8 million and EUR 98.2million in 2005 and 2006 respectively. The Bank must also fund amounts up toEUR 25.24 million per annum for any funding deficits, to the extent that anyfunding deficit occurs in that year as discussed above. Current projections indicatethat such funding deficits will arise again after 2008, by which time undercurrent legislation the Plan would have to merge with the State Main PensionPlan (IKA). Employee contributions are 11% of the employee’s salary, foremployees insured by any social security plan prior to 1.1.1993. Thecorresponding rate for employees insured by any social security fund after thatdate is 6.67%. The benefits paid are determined by a formula, which takes intoaccount years of service with the Bank and the employee’s final pensionablesalary. The annual pension after 35 years of service is approximately 80% offinal annual pensionable pay. Final pensionable pay is typically less than 75%of actual pay.

In 2005 and 2006, the Greek Government passed furtherlegislation (Law 3371/2005, as amended) permitting certain bank employee mainpension schemes to merge into IKA earlier than in 2008, if the respectiveauxiliary pension plans were previously dissolved and the employees andpensioners insured by them would be transferred to the state sponsoredauxiliary fund IKA-ETEAM and the new Insurance Fund of Bank Employees (“ETAT”).

In April 2006, theBank applied under Law 3371/2005, as amended, to merge the Main Pension Fundwith IKA earlier than 2008. As of June 2007 there have not been anyfurther developments.

*Ethniki Hellenic GeneralInsurance Co (“EH”) Employee Plan (T.A.P.E.)*

The Group’s insurancecompany contributes to a main pension plan, which provides for a monthlypension to be paid upon retirement. The benefit structure, as relates to thepension, is similar to that provided under the Bank’s employees ́ main plan.Accrued benefits are also paid on an earlier date in the 

F-64

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEE BENEFIT PLANS (Continued)

event ofdeath or disability. T.A.P.E. also provides for health benefits to its members.Pursuant to the provisions of Law 3029/11.07.2002 this plan is accounted for asa defined contribution plan. Employer contributions to this plan totaled EUR10.8 million both in 2005 and in 2006.

***b)***   DefinedContribution Plans Covered by Greek Law 2084/1992 and 2556/1997

Group employees participate in auxiliary pension plansgoverned by Greek Law 2084/1992 as amended by Law 2556/1997. Similar to the “main”plans above, the employees of the Bank and several of its subsidiariesparticipate in auxiliary pension funds rather than participating instate-sponsored auxiliary social security schemes. These plans, describedbelow, have contribution rates and benefit schemes that are determined byMinisterial Decree. As such, these plans are substitutes for standard Greekemployees’ auxiliary social security benefits typically available to employeesin other Greek companies.

New legislation passed in 2005 and 2006 (Law3371/2005, as amended) as mentioned previously, provides that employees thatwere hired by the Bank from January 1, 2005 and thereafter are insured inthe state auxiliary pension plan IKA-ETEAM. Employees hired before January 1,2005 and pensioners of the bank will also be covered by the same plan shouldthe interested parties (employees and employers) decide to dissolve the Bank’sauxiliary plan. In this case employees will be expected to make contributionsto this fund, which will be a percentage of the salaries paid. The exactpercentage will be assessed through a special financial study. The new law alsoprovides for the creation of a new Insurance Fund of Bank Employees andpensioners insured in the social security system before January 1, 1993 (“ETAT”),that will pay additional benefits to the aforementioned employees andpensioners, being the difference between those provided by the existingauxiliary plan and those provided by IKA-ETEAM.

In April 2006, theBank applied under Law 3371/2005, as amended, to merge its Auxiliary PensionFund into ETAT. An independent financial study commissioned by the Ministry ofFinance pursuant to this legislation will be carried out to assess thecontribution of the employer to the fund.

*National Bank of GreeceAuxiliary Pension Plan*

The Bank’s employees’Auxiliary Pension Plan provides for defined contributions to be made by theBank at a rate of 9.0% of the employee’s salary. Such contributions totaled EUR33.0 million and EUR 35.5 million in 2005 and in 2006 respectively. Employeescontribute at a rate of 3.5% of their salary. The benefits paid are determinedby a formula, which takes into account years of service with the Bank and theemployee’s final pensionable pay.

***c)***   DefinedContribution Plans Other Than Pensions

*National Bank of GreeceHealth Plan (T.Y.P.E.T.)*

T.Y.P.E.T. is accounted for as a defined contributionplan according to Law 3029/2002. The Bank has no legal obligation to contributeany amounts in excess of its defined contributions of 6.25% of employees’salaries. Contributions to this plan totaled EUR 22.7 million and EUR 24.9 millionin 2005 and in 2006 respectively.

T.A.P.E. mentioned abovealso falls into this category.

F-65

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEE BENEFIT PLANS (Continued)

***d)***   Other DefinedContribution Plans

The Group makescontributions to other defined contribution pension plans. Group contributionsto these plans totaled approximately EUR 1.1 million and EUR 2.4 million in2005 and 2006 respectively.

***e)***   National Bank ofGreece Lump Sum Benefit Plan

The Bank does not make anycontributions to this plan. The Bank has granted a loan to the plan, theoutstanding balance of which was EUR 68.0 million and EUR 63.4 million on December 31,2005 and 2006 respectively, maturing in 2020, bearing interest at three-monthEuribor and fully collateralized.

***f)***   Defined BenefitPension Plans

In addition to the plans discussed above, the Bank andcertain of its subsidiaries sponsor defined benefit pension plans. The plansvary in their specific features, but most are contributory, final pay andaccumulated years of service-based defined benefit plans. The funding policiesvary slightly but typically include employee and employer monthly contributionsin accordance with Greek or local laws regarding such plans. Some companieswithin the Group also provide termination indemnities. Benefits paid outdirectly by Group Companies to the members of such plans were EUR 16.8 million,EUR 32.5 million and EUR 34.1 million over 2004, 2005 and 2006 respectively.

Net periodic pension costsfor these defined benefit plans include the following components for the yearsended December 31:

| ** **                        | ** ** | **2004**                        | ** ** | **2005** | ** ** | **2006** | ** ** |
|-----------------------------------|------------|---------------------------------|------------|----------|------------|----------|------------|
| ** **                        | ** ** | **(EUR in millions)** | ** ** |
| Service cost                      |       | 11.4                            |       | 11.6     |       | 11.7     |       |
| Interest cost                     |       | 16.9                            |       | 17.7     |       | 15.3     |       |
| Expected return on plan  assets   |       | (6.8                            | )          | (7.5     | )          | (8.7     | )          |
| Amortization of  actuarial losses |       | 3.0                             |       | 4.7      |       | 5.3      |       |
| Amortization of prior  year cost  |       | —                          |       | 0.1      |       | 0.4      |       |
| Costs of additional  benefits     |       | 26.5                            |       | 2.4      |       | 38.8     |       |
| Other expense (income)            |       | (6.1                            | )          | 5.6      |       | 0.6      |       |
| Net periodic pension  cost        |       | 44.9                            |       | 34.6     |       | 63.4     |       |

 

Included in cost of additional benefits are costs ofvoluntary retirement schemes of Group companies: National Management andOrganization Company (“Ethnokarta”) EUR 15.6 million, Ethniki Insurance EUR15.0 million and ASTIR Palace Vouliagmenis EUR 8.0 million, as well as smallcosts of additional payments to employees by Group banks UBB and Stopanska.

Weighted averageassumptions used to determine the net periodic pension cost for the years endedDecember 31:

| ** **                      | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
|---------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Discount rate                   |       |     | 5.5        | %        |       |     | 5.2        | % |   |   | 4.3 | % |   |
| Expected return on plan  assets |       |     | 6.5        | %        |       |     | 6.3        | % |   |   | 6.4 | % |   |
| Rate of compensation  increase  |       |     | 4.0        | %        |       |     | 4.1        | % |   |   | 4.1 | % |   |

 

F-66

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEE BENEFIT PLANS (Continued)

To set the expectedlong-term rate of return assumptions the Group, in consultation with itsadvisors, uses forward-looking assumptions in the context of historical returnsand volatilities of each asset class as well as correlations among assetclasses. The expected long-term rate of return assumption is annually adjustedbased on revised expectations of future investment performance of the overallcapital markets, as well as changes to local regulations affecting investmentstrategy. The weighted average expected long-term rate of return assumptionused in computing the 2006 net periodic pension cost was 6.4%.

The aggregated fundingstatus recognized in the consolidated balance sheet is reconciled below asfollows for the years ended December 31:

| ** **                                   | ** ** | **2004**                        | ** ** | **2005**  | ** ** | **2006**  | ** ** |
|----------------------------------------------|------------|---------------------------------|------------|-----------|------------|-----------|------------|
| ** **                                   | ** ** | **(EUR in millions)** | ** ** |
| **Change in benefit obligation:**            |       |                            |       |      |       |      |       |
| PBO, beginning of year                       |       | 348.0                           |       | 400.1     |       | 372.1     |       |
| Acquisition of  subsidiaries                 |       | —                          |       | —    |       | 8.8       |       |
| Discontinued operations                      |       | —                          |       | (26.8     | )          | —    |       |
| Disposal of subsidiary                       |       | —                          |       | —    |       | (0.6      | )          |
| Service cost                                 |       | 11.4                            |       | 11.6      |       | 11.7      |       |
| Share of discontinued  operations            |       | 2.0                             |       | —    |       | —    |       |
| Interest cost                                |       | 16.9                            |       | 17.7      |       | 15.3      |       |
| Share of discontinued  operations            |       | 1.5                             |       | —    |       | —    |       |
| Employee contributions                       |       | 5.6                             |       | 6.5       |       | 6.1       |       |
| Actuarial loss                               |       | 42.0                            |       | 32.7      |       | 19.2      |       |
| Adjustment for disposal  and other           |       | (0.6                            | )          | 2.0       |       | 0.4       |       |
| Benefits paid                                |       | (47.1                           | )          | (63.0     | )          | (67.9     | )          |
| Settlements/  Terminations/ Curtailments     |       | 19.5                            |       | (8.7      | )          | 26.7      |       |
| Prior service cost  arising over last period |       | 0.9                             |       | —    |       | 0.3       |       |
| **PBO,  end of year**                        | ** ** | **400.1**                       | ** ** | **372.1** | ** ** | **392.1** | ** ** |

 

| ** **                          | ** ** | **2004**                        | ** ** | **2005**  | ** ** | **2006**  | ** ** |
|-------------------------------------|------------|---------------------------------|------------|-----------|------------|-----------|------------|
| ** **                          | ** ** | **(EUR in millions)** | ** ** |
| **Change in plan assets:**          |       |                            |       |      |       |      |       |
| Fair value, beginning of  year      |       | 135.0                           |       | 156.2     |       | 141.2     |       |
| Discontinued operations             |       | —                          |       | (24.5     | )          | —    |       |
| Actual return on assets             |       | 30.4                            |       | 34.0      |       | 8.9       |       |
| Adjustment for disposals  and other |       | (1.6                            | )          | —    |       | —    |       |
| Employer contributions              |       | 17.3                            |       | 11.0      |       | 24.1      |       |
| Employee contributions              |       | 5.6                             |       | 6.5       |       | 6.1       |       |
| Expenses                            |       | (0.2                            | )          | —    |       | (0.2      | )          |
| Benefits paid                       |       | (30.3                           | )          | (42.0     | )          | (33.7     | )          |
| **Fair  value, end of year**        | ** ** | **156.2**                       | ** ** | **141.2** | ** ** | **146.4** | ** ** |
| **Funded  status, end of year**     | ** ** | **243.9**                       | ** ** | **230.9** | ** ** | **245.7** | ** ** |

 

F-67

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEE BENEFIT PLANS (Continued)

The weighted-average assumptions used in determiningthe benefit obligation of such plans at December 31 are as follows:

| ** **                     | ** ** | **2004** | ** ** | **2005** | ** ** | **2006** | ** ** |
|--------------------------------|------------|----------|------------|----------|------------|----------|------------|
| Discount rate                  |       |     | 5.2        | %        |       |     | 4.4        | % |   |   | 4.7 | % |   |
| Rate of compensation  increase |       |     | 4.1        | %        |       |     | 4.1        | % |   |   | 4.6 | % |   |
| Pension increase               |       |     | 2.3        | %        |       |     | 2.5        | % |   |   | 2.5 | % |   |

 

Additionalyear-end information for pension plans with accumulated benefit obligations inexcess of plan assets:

| ** **                      | ** ** | **   2005   ** | ** ** | **   2006   ** | ** ** |
|---------------------------------|------------|----------------------------------------------|------------|----------------------------------------------|------------|
| ** **                      | ** ** | **(EUR in millions)**              | ** ** |
| Projected benefit  obligation   |       |                                         | 372.1      |                                         |       |   | 265.6 |   |   |
| Accumulated  benefit obligation |       |                                         | 292.9      |                                         |       |   | 201.0 |   |   |
| Fair value of plan  assets      |       |                                         | 141.2      |                                         |       |   | 49.4 |   |   |

 

For the financial years ended December 31, 2004and 2005, the Group recognized an additional minimum pension liability in othercomprehensive income and an intangible asset, to the extent where theaccumulated benefit obligation exceeded the fair value of plan assets. On December 31,2004 and 2005 respectively, past service cost amounted EUR 1.0 million and EUR0.7 million and actuarial loss amounted to EUR 84.5 million and EUR 75 millionrespectively. Of the aforementioned amounts EUR 0.9 million and EUR 0.7 millionwere recognized as an intangible asset and EUR 21.9 million and EUR 34.0million were recognized as an additional minimum pension liability on December 31,2004 and 2005 respectively.

On December 31, 2006, the Group adopted SFAS 158,which requires the recognition of a plan’s over-funded or under-funded statusas an asset or liability with an offsetting adjustment to Accumulated OCI. SFAS158 requires the determination of the fair values of a plan’s assets at acompany’s year-end and recognition of actuarial gains and losses, prior servicecosts or credits, and transition assets or obligations as a component ofAccumulated OCI. These amounts will be subsequently recognized as components ofnet periodic benefit costs.

Further, actuarial gains and losses that arise insubsequent periods that are not initially recognized as a component of netperiodic benefit cost will be recognized as a component of Accumulated OCI. Thoseamounts will subsequently be recognized as a component of net periodic benefitcost as they are amortized during future periods. The adoption of SFAS 158 hadno effect on the Group’s Consolidated Statement of Income for the year ended December 31,2006, or for any year presented.

The amount recognized in the statement of financialposition on December 31, 2006 is EUR 245.7 million. Amounts recognized inaccumulated other comprehensive income on December 31, 2006 are transitionobligation of nil, past service cost of EUR 0.5 million and net actuarial lossof EUR 77.1 million.

The estimated amounts to be amortized from accumulatedother comprehensive income into net periodic benefit cost during financial year2007 are EUR 0.05 million of prior service cost and EUR 3.5 million of netactuarial loss.

F-68

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEEBENEFIT PLANS (Continued)

The Incremental impact ofapplying FAS 158 on Individual line items in the statement of financialposition is as follows on December 31:

| ** **                              | ** ** | **2006 before  FAS 158** | ** ** | **Adjustment** | ** ** | **2006 after  FAS 158** | ** ** |
|-----------------------------------------|------------|------------------------------------|------------|----------------|------------|-----------------------------------|------------|
| Prepaid benefit                         |       |                               | —     |           |       |                              | —     |   |   |   | — |   |   |
| Accrued benefit  liability              |       |                               | (181.3     | )              |       |                              | (64.4      | ) |   |   | (245.7 | ) |   |
| Intangible asset                        |       |                               | 0.5        |           |       |                              | (0.5       | ) |   |   | — |   |   |
| Accumulated Other  Comprehensive Income |       |                               | 12.7       |           |       |                              | 64.9       |   |   |   | 77.6 |   |   |

 

The above disclosure assumes that the incrementalimpact of applying FAS 158 is determined after the application of the existingFAS 87 requirements.

In addition to the abovementioned amounts, alsoincluded in accumulated other comprehensive income are EUR 7.1 million relatingto the Bank’s share in its associated company AGET Heracles, which wassubsequently sold in April 2007.

Thefollowing table indicates actual and targeted plan asset allocation for theGroup’s funded defined benefit pension plans:

| ** **                 | ** ** | **Target  Allocation** | ** ** | **Percentage of Plan  Assets as at December 31**   | ** ** |
|----------------------------|------------|------------------------|------------|----------------------------------------------------------------------------------|------------|
| ** **                 | ** ** | **2007**               | ** ** | **      2006      ** | ** ** | **      2005      ** | ** ** |
| **Asset category:**        |       |                   |       |                                                                             |       |   |   |   |   |   |   |
| Equity securities          |       | 65% - 80               | %          |                                                                             | 75         | % |   |   | 66 | % |   |
| Debt securities            |       | 10% - 20               | %          |                                                                             | 15         | % |   |   | 13 | % |   |
| Real estate                |       | 3% - 10                | %          |                                                                             | 5          | % |   |   | 2 | % |   |
| Cash and cash  equivalents |       | 0% - 10                | %          |                                                                             | 0          | % |   |   | 14 | % |   |
| Other                      |       | 3% - 10                | %          |                                                                             | 5          | % |   |   | 5 | % |   |
|                       |       |                   | ** ** | ** **                                                                       | **100**    | **%** | ** ** | ** ** | **100** | **%** | ** ** |

 

The overall investment objective of the Group is tooptimize returns at an acceptable level of risk within the requirements of thelocal laws, where applicable.

Equity securities include common stock of the Bank atthe amount of EUR 90.6 million (64.2% of total plan assets) and EUR 103.2million (70.5% of total plan assets) at December 31, 2005 and 2006respectively. There was no Group debt included in the Plan Assets in 2005 and2006 respectively.

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 38:**   EMPLOYEE BENEFIT PLANS (Continued)

Benefit payments projectedto be made from the defined benefit Pension Plans are as follows:

| ** ** | ** ** | **Benefit  payments  projected** | ** ** |
|------------|------------|----------------------------------|------------|
| ** ** | ** ** | **(EUR in millions)**  | ** ** |
| 2007       |       |                             | 21.6       |   |   |
| 2008       |       |                             | 16.7       |   |   |
| 2009       |       |                             | 20.2       |   |   |
| 2010       |       |                             | 28.0       |   |   |
| 2011       |       |                             | 30.0       |   |   |
| 2012-2016  |       |                             | 199.7      |   |   |

 

The Group expects tocontribute EUR 13 million in 2007 with respect to defined benefit plans.

***g)***   Post-retirementDefined Benefit Plans Other Than Pensions:

There were no Groupcompanies supporting post retirement defined benefit plans other than pensions.

**NOTE 39:**   SHAREBASED PAYMENT

On June 22, 2005, at a General Meeting ofShareholders, a stock options program (Program A) was approved for theexecutive members of the Board of Directors, management and staff of the Group.The Program shall last for five years and expires in 2010. The Bank’s BoD maydecide to grant the options one-off or in parts at any time at its discretion.The maximum number of new ordinary shares to issue under the Program shall be3.5 million. The strike price shall be within the range of EUR 5 to 70% ofthe average price thereof within the time period from 1 January of theyear the options are granted until the date they can be exercised. Share basedpayments to employees under Program A were granted in 2006, as discussed below.

At the repeat General Meeting of Shareholders on June 1,2006, a new Group-wide stock option program (Program B) was approved for theBank’s executive members of the Board of Directors, management and staff of theGroup. The program provided that a maximum number of 3.5 million newordinary shares should be issued at a price floating within a range of aminimum price which is the nominal value of EUR 5 per share to a maximum pricewhich is 70% of the average market price thereof within the time period fromthe date following the date of the General Meeting (i.e. June 1, 2006)until the date the options can be exercised for the first time. The stockoption program expires in 2011. No options have yet been issued under thisprogram.

On November 29, 2006, the Board of Directorsapproved the issue of 2,992,620 share options under the Program A. The exerciseprice was set at EUR 23.8 per share. The fair value of the granted shareoptions amounted to EUR 32.6 million. The vesting conditions are as follows:

15%of the options:  None, vest immediately

35%of the options:  after 1 year

50% of the options: after 2 years

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 39:**   SHAREBASED PAYMENT (Continued)

The vested options are exercisable between 6 and 15December for 2006 and between 1 and 10 December for each subsequentyear until 2010. After that date the unexercised options are cancelled. Theoptions are forfeited if the employee leaves the Group before the options vest.

Between 6 and December 15, 2006, 310,043 out of amaximum 448,893 vested share options, with fair value of EUR 3.4 million, wereexercised. The balance of 138,850 vested share options has not been exercisedby December 31, 2006. The total cash received from the exercised shareoptions amounted to EUR 7,379, of which EUR 1,550 increased common stock whilethe remaining the additional paid-in capital.

Detailsof the share options outstanding during the year are as follows:

| **Stock options**                                 | ** ** | ** **    | ** ** | **Balance** | ** ** | **Weighted  average  remaining  contractual  term** | ** ** | **Aggregate  Intrinsic value** | ** **     |
|--------------------------------------------------------|------------|---------------|------------|-------------|------------|-----------------------------------------------------|------------|-------------------------------------|----------------|
| **Outstanding  at 1 January 2006**                |       | —        |       |        |       |                                                |       |                                |           |   |   |
| Granted during  the year                               |       | 2,992,620     |       |        |       |                                                |       |                                |           |   |   |
| Exercised during  the year                             |       | (310,043      | )          |        |       |                                                |       |                                |           |   |   |
| **Outstanding  at 31 December 2006**              | ** ** | **2,682,577** | ** ** | ** **  | **3.97**   |                                                | ** ** | ** **                          | **29,776,602** |   |   |
| **Vested but not exercised at 31  December 2006** | ** ** | **138,850**   | ** ** | ** **  | **3.97**   |                                                | ** ** | ** **                          | **1,541,233**  |   |   |

 

The exercised price per option was EUR 23.8 and theweighted average remaining contractual term of options outstanding is 3.97years. As of December 31, 2006, there was EUR 24.1 million of totalunrecognized compensation cost related to non vested share-based compensationarrangements granted under the Plan. That cost is expected to be recognizedover a weighted-average period of 1.29 years.

Theestimated fair value of the options granted is EUR 10.91 for each option. Thisfair value was calculated using the Black-Scholes option-pricing model. Theinputs into the model were as follows:

| **Option-pricing model—Inputs** | ** ** | ** ** | ** ** | **2006** | ** ** |
|-------------------------------------------|------------|------------|------------|----------|------------|
| Share price at  grant date                |       | EUR 34.62  |       |
| Exercise price                            |       | EUR 23.80  |       |
| Exercise period  (years)                  |       | 1.96       |       |
| Expected  volatility                      |       | 20         | %          |
| Risk free rate                            |       | 3.9        | %          |
| Expected dividend yield                   |       | 2.7        | %          |

 

The weighted average expected volatility was determinedby calculating the historical volatility of the Bank’s share price over thelast 24 months. Also, expected future volatility has been taken into account.

According to the terms ofthe program the vested options are recognised in the income statement whereasthe outstanding options that will vest in future periods affect the incomestatement on a straight-line basis over the vesting period. The totalexpense recognised during the period amounted to EUR 6,383.

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 40:**   ACCUMULATEDOTHER COMPREHENSIVE INCOME

Thecomponents of accumulated other comprehensive income, net of taxes, comprise:

| ** **                           | ** ** | **Foreign  Currency  Items**     | ** **  | **Unrealized  Gains on  Available-for-Sale  Securities** | ** ** | **Pension  Liability** | ** ** | **Accumulated  Other  Comprehensive  Income** | ** ** |
|--------------------------------------|------------|----------------------------------|-------------|---------------------------------------------------------------|------------|------------------------|------------|-----------------------------------------------|------------|
| ** **                           | ** ** | **(EUR in thousands)** | ** **  |
| Balance,  January 1, 2004       |       |                             | (20,939     | )                                                             |       |                   | 18,031     |                                          |       |   | — |   |   |   | (2,908 | ) |   |
| Changes during  2004                 |       |                             | (9,202      | )                                                             |       |                   | 46,098     |                                          |       |   | (18,796 | ) |   |   | 18,100 |   |   |
| Balance,  December 31, 2004     |       |                             | (30,141     | )                                                             |       |                   | 64,129     |                                          |       |   | (18,796 | ) |   |   | 15,192 |   |   |
| Changes during 2005                  |       |                             | 24,520      |                                                          |       |                   | (27,779    | )                                             |       |   | (9,611 | ) |   |   | (12,870 | ) |   |
| Balance,  December 31, 2005     |       |                             | (5,621      | )                                                             |       |                   | 36,350     |                                          |       |   | (28,407 | ) |   |   | 2,322 |   |   |
| Changes during 2006                  |       |                             | (24,097     | )                                                             |       |                   | 11,788     |                                          |       |   | 18,589 |   |   |   | 6.280 |   |   |
| Impact of SFAS 158                   |       |                             | —      |                                                          |       |                   | —     |                                          |       |   | (57,337 | ) |   |   | (57,337 | ) |   |
| **Balance,  December 31, 2006** | ** ** | ** **                       | **(29,718** | **)**                                                         | ** ** | ** **             | **48,138** |                                          | ** ** | ** ** | **(67,155** | **)** | ** ** | ** ** | **(48,735** | **)** | ** ** |

 

**NOTE 41:**   FOREIGNEXCHANGE POSITION

At December 31, 2006,the EUR equivalent of the assets and liabilities, which are denominated inforeign currency, amounted to EUR 17,585,672 thousand (EUR 9,075,938 thousandfor 2005 and EUR 9,812,199 thousand for 2004) and EUR 18,526,823 thousand(EUR 12,233,803 thousand for 2005 and EUR 10,333,271 thousand for 2004),respectively.

**NOTE 42:**   POSTBALANCE SHEET EVENTS

**(a)**Mergers,acquisitions and disposals

1.                From January 8through to January 29, 2007, the Bank acquired via the Mandatory TenderOffer 5,430 million shares of Finansbank, corresponding to 43.44% of its sharecapital. The total consideration paid amounted to EUR 1,733 million. Therefore,the total participation in share capital of Finansbank amounted to 89,44% as ofJanuary 29, 2007.

2.                On January 24,2007, the Bank and International Finance Corporation (IFC) signed an agreementby which IFC will acquire shares of Finansbank of up to 5% of its share capitalafter the completion of the Mandatory Tender Offer. The price per share to IFCwas determined to be the price per share paid by the Bank to the Finansbankshareholders during the Mandatory Tender Offer. The transaction concluded on April 5,2007.

3.                On January 25,2007 the Boards of Directors of the Bank and National Management &Organization Co (Ethnokarta) decided the merger of the two companies throughabsorption of the latter by the Bank. The date of the Merger Balance Sheets hasbeen set as 31 March 2007. The bank holds 100% of National Management &Organization Co (Ethnokarta) shares, so that NBG’s share capital will notincrease following the completion of the merger.

4.                From 1 February upto June 11, 2007, the Bank acquired 2,488,042 shares of Finansbank for aconsideration of EUR 7.7 million (TRY 14.3 million).

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 42:**   POST BALANCE SHEET EVENTS (Continued)

5.                On March 15,2007the Boards of Directors of the Bank and NBG Venture Capital SA announce thedraft agreement for the divestment of the warehousing section of the Bank andthe transfer of the section, through absorption, to the latter. The NBG VentureCapital SA will undertake the assets and liabilities of the section accordingto the Divestment Balance Sheet as at March 13, 2007. The NBG VentureCapital SA will increase its share capital by EUR 109,492,401 with the issuanceof 37,369,420 new shares with a nominal value of EUR 2.93 each. Upon completionof the divestment the above shares will be transferred to the Bank.

6.                On April 19,2007 the Bank signed an agreement for the sale of its minority shareholding inAGET Heracles to majority shareholders Lafarge Group. Pursuant to thisagreement, the Bank sold 18,480,899 shares, representing 26% of the sharecapital of AGET Heracles.

This sale is consistent with the stated strategy ofthe Bank to focus on its core banking activities and exit from itsnon-financial participations. The sale price was EUR 17.40 per share, orEUR 321.6 million in total and is in line with the average closing priceof the last 30 trading days preceding the transaction.

7.                On May 10,2007, P&K Investment Services SA, sold its subsidiary P&K Mutual FundManagement SA to Millennium Bank S.A. for EUR 1.68 million.

8.                On May 16,2007, Finansbank, following application to the General Directorate ofInsurance, received permission to establish Finans Emeklilik ve Hayat A.S. asthe main shareholder. The new company will complete its organisationalpreparations and obtain a licence to conduct life, personal accident andpension business, and is expected to commence operations shortly. The sharecapital of the company amounts to TRY 20 million.

9.                OnMay 30, 2007 the Bank acquired from TBIF Financial Services BV, the 100%of the share capital of TBI Lizing d.o.o, a leasing company, for the amount ofEUR 2.5 million.

**(b) Share capitalincrease**

On May 18, 2007, theBoard of Directors of Finansbank decided to increase the share capital of thebank from TRY 1.250 million to TRY 1.400 million.

**(c) DividendsDeclared**

The Bank’s Annual OrdinaryMeeting of its Shareholders held on May 25, 2007 approved the payment of aEUR 1 dividend per share for the financial year 2006. The holders of Bank’sshares as at the closing of the Athens Exchange session of 31 May 2007were entitled to the dividend. The dividend was paid on 11 June 2007.

**(d) Approval ofbuy-back program of own shares**

At the annual General Meeting of Shareholders on April 27,2006, a share buy-back program in accordance with article 16 par. 5et seq. of Companies’ Act 2190/1920 was approved, allowing the buy-backof shares up to 10% of the aggregate amount of the shares of the Bank with aminimum purchase price of EUR 5.00 and a maximum of EUR 60.00 per share for thetime period between May 5, 2006 and April 27, 2007.

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 42:**   POST BALANCE SHEET EVENTS (Continued)

The Board of Directors at its meeting on April 24,2007, decided to sell up to 583,110 shares, that were bought under the previousbuy-back programs, during May 2 to August 1, 2007 at a minimum priceof EUR 42.60. On May 16, 2007, 583,110 shares were sold at the price ofEUR 42.70.

On May 25, 2007, theannual General Meeting of the Shareholders approved the Bank’s own stockbuy-back programme pursuant to article 16, par. 5 et seq. of Companies’ Act2190/1920. In accordance with the programme, the Bank is opted to purchase ownshares up to 10% of its total shares at a minimum purchase price of EUR 5.00and maximum purchase price of EUR 60.00 per share for the time period from June 1,2007 through May 24, 2008. In implementation of the said General Meetingresolution, from June 11, 2007 through September 30, 2007, the Bankintends to purchase up to 20,000,000 own shares at a minimum purchase price ofEUR 5.00 and maximum purchase price of EUR 60.00 per share.

**(e) Stock OptionProgram and bonus shares**

On May 25, 2007, the annual General Meeting ofthe Shareholders of the Bank approved the distribution to the staff, pursuantto article 16, par. 2 case f of Companies’ Act 2190/1920 and article 1 ofPresidential Decree 30/1988, of 350.000 bonus shares which will derive from theBank’s share capital increase through capitalization of profits.

On June 28, 2007 therepeat General Meeting of the Shareholders of the Bank approved a newGroup-wide stock option plan. The new Program shall last 8 years and expires in2015. The stock option must be granted up until 2010. The maximum number of newordinary shares to issue under the Program shall be 12 million. The maximumnumber of options that can be granted per year cannot exceed 1% of the totalnumber of shares outstanding. The strike price shall be within the range of EUR5 to 85% of the average price thereof within the time period from 1 January ofthe year the options are granted until the 31st October of the same year.

**f) Other**

On May 11, 2007, the Bank launched and priced aEUR 1.5 billion at a discount (99,94), 2 year Floating Rate Note (FRN), throughits U.K. subsidiary NBG Finance plc. The Note bears a coupon of 3 monthEuribor +8 bps. and was priced at a re-offer spread of +11 bps. The notes wereissued on 22 May 2007 and are traded in the Luxembourg Exchange.

TheBoard of Directors at its meeting on May 16, 2007 has decided theredemption of the EUR 750 million Subordinated Callable Floating RateNotes on the first call date of June 25, 2007. The notes were redeemed onJune 25, 2007.

**NOTE 43:**   RECLASSIFICATION

Certain amounts in priorperiods have been reclassified to conform to the current presentation and toreflect the disposal of ABNY and NBG Canada (see Note 18 “DiscontinuedOperations”).

**NOTE 44:**   RESTATEMENTOF CASH FLOW STATEMENTS

The Group cash flow statements for the years ended 31 December 2005and 2004 have been restated in order to reflect the impact of the change in theclassification of “obligatory deposits with central bank” 

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**NATIONAL BANK OF GREECE S.A. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)**

**NOTE 44:**   RESTATEMENT OF CASH FLOW STATEMENTS (Continued)

from operating activitiesto investing activities since these balances are restricted balances. No othercaption is affected and the amount of cash and cash equivalents is unchanged.

The tables below show theeffect of the restatements:

**Statement of cash flows**

| ** **                                                                              | ** ** | **2004**                         | ** ** | **2005**       | ** ** |
|-----------------------------------------------------------------------------------------|------------|----------------------------------|------------|----------------|------------|
| ** **                                                                              | ** ** | **Previously  reported**         | ** ** | **Restated**   | ** ** | **Previously  reported** | ** ** | **Restated** | ** ** |
| ** **                                                                              | ** ** | **(EUR in thousands)** | ** ** |
| **Cash flows from Operating  Activities:**                                              | ** ** | ** **                       | ** ** | ** **     | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Changes  in assets and liabilities**                                                  | ** ** | ** **                       | ** ** | ** **     | ** ** | ** ** | ** ** | ** ** | ** ** |
| Obligatory deposits with central bank                                                   |       | 139,656                          |       | —         |       | (793,615 | ) | — |   |
| **Cash flows provided by / (used in) operating  activities from continuing operations** | ** ** | **3,389,563**                    | ** ** | **3,249,907**  | ** ** | **(2,581,925** | **)** | **(1,788,310** | **)** |
| **Cash  flows from Investing Activities:**                                              |       |                             |       |           |       |   |   |   |   |
| Obligatory deposits with central bank                                                   |       | —                           |       | 139,656        |       | — |   | (793,615 | ) |
| **Cash  flows provided by / (used in) investing activities from continuing operations** | ** ** | **(2,741,841**                   | **)**      | **(2,602,185** | **)**      | **(494,534** | **)** | **(1,288,149** | **)** |

 

 

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