Interview Questions - BIGBANK

1. Why should a potential customer open a savings account with BIGBANK – What
good reasons to do so are there and which services can you offer a client?

BIGBANK is a relatively small bank and our customer administrators, who are mostly native
German speakers, work very closely with each client. Nevertheless BIGBANK is an online-
bank we can offer each and every client a very good personal service and attention. Also we
would offer higher interest rate, if you deposit larger sums - the deposit amount over 65 000
Euros we always make a personal offer with generally higher interest rate. BIGBANK offers
also one kind of the deposit – fixed-term (festgeld) that is why we can better concentrate on
the needs of the clients wishing to deposit in this particular way.

2. BIGBANK is offering interest rates that are very attractive even in comparison to
other market leaders. Why does and can BIGBANK offer such high interest rates on
savings? Is there a hook to the offer customers do not know about?

There is no hook. BIGBANK’s main business area is consumer financing, in particular

consumer loans. Consumer loans provide usually higher earnings margin for the bank than the
other types of loans that is why we are ready to pay a bit more than the market average to our
depositors. BIGBANK is a developing bank and we have certain plans to offer our consumer
loan products also in other countries of the EU, where we are competitive.

3. Even though the fixed-period interest rate is very attractive and high at first sight, the
maximum potential can only be reached when investing a bulk of money for a rather
long period and with interest paid at maturity. That way, there is no impact on interest
and the rate of return ends up lower than it first appears. Why is this offer still
attractive for BIGBANK’s clients and how should a customer chose between annually
paid interest and interest paid at maturity?

The interest rates are generally going down in the market, so if the client invests for longer-
time, he should not be caring about fluctuations of interest rates that would come in the
market – he can always expect a certain income that would come from BIGBANK fixed-term
deposit.
Both ways of interest payments are quite attractive – it is of course up to the customer to
choose the most suitable. If the client chooses the fixed-term deposit with annually paid
interest, then he gets his interest income each year to be paid out to his account and he can
choose what do with it – either he can invest it additionally in BIGBANK deposit or he can
dispose it as any other income. With the interest paid at the maturity the customer entrusts his
investment for longer period and in favor he gets rather very attractive interest rates. Anyway
the customer of BIGBANK usually earns slightly more than the client of another bank in the
market.

4. In comparison to most Western European banks, BIGBANK’s executive committee

members are quite young. Does this have an effect on the bank’s practices or the bank
on the whole? Is there an increased focus on younger generations?

As it is said, we should judge person not by his attributes, but by his deeds. When we talk
about BIGBANK, we talk about Estonian bank that have started in Estonia as early, as 1992
as the idea of students of Tartu University to offer loans to its friends and family. For
Germany or Austria, with the long tradition of banking it is certainly a very young bank, but
in the same time we should not forget Estonia, as well other Baltic neighbors Lithuania and
Latvia have regained its independency only in 1991 and before that any kind of private
business was not allowed in the communist Soviet Union.
So when we get to the younger age of the members of BIGBANK’s executive committee it
apparent, that younger generation, which was free from Soviet past and which is highly
educated and motivated, has built-up the country’s economy and business from the scratch
during that period. BIGBANK has a very ambitious and highly motivated team and
organization that is very adaptive to the changing environment.

5. Looking at the past financial statements of BIGBANK, it is quite astounding how

consistently the bank has been able to make profits and how well it has been doing.
How does BIGBANK make money and what are its strengths?

First of all, it is of course the team – young, ambitious and highly internationalized – our
employees are of over 10 different nationalities. Secondly, we have stayed very concentrated
in our business – we are specialized in consumer financing having a quite well-developed
business concept that we have adapted in several countries already. Thirdly, during the last
turbulent years in economy BIGBANK has proved that it can quickly and successfully adapt
its organization and business activities according to the environment and which is more
important the organization is ready to turn-around very quickly. Fourthly, we have chosen
extremely high goals and we have been very ambitious to reach them. If you want to fly to the
Moon, work and prepare to reach and land on Mars – this is the principle that works for us.

6. BIGBANK is currently operating in Estonia, Latvia and Lithuania, as well as Finland

and Germany. What are the goals for the Austrian market? Why is the Austrian market
attractive and where does BIGBANK see its potential?

In Austria we do plan exactly the same services and products we offer in Germany. At present
it is a very attractive fixed-term deposit product (festgeld), but we do work very hard to
improve our internet services and to come up with a totally new internet-bank and more
savings products by the end of 2010. Austrian and German market has a very long tradition of
saving money and we feel we can be very successful in it. We have come to stay for long and
to be a good and safe alternative to save and grow money for Austrian and German
customers.

7. In August of 2009, BIGBANK entered the German market. What have the experiences
in Germany been so far? Do you expect the Austrian market to be similar to its big
neighbor’s?

We have had extremely positive experience in German market. Of course we understand that
we are a new name in those markets and we can not expect trust right away, but we are sure
the longer time we are in the market the higher trust of German and Austrian customers we
will gain. In Austrian market though it will be a bit difficult for pure internet-bank concept as
Austrian clients are quite accustomed to come to the physical branch and to talk to the
customer administrator in flesh, but we expect that popularity of internet-banking and
especially saving through internet will certainly grow in Austria over the years.

8. As savings and deposit protection is very a current topic that has enjoyed a lot of
attention in the media, how secure is the customer’s money with BIGBANK? How do
you prevent a comparison with Kaupthing Bank or Parex Bank?

It is very understandable that this topic gets a lot of attention. We’ve got a lot of feedback
regarding that and many advised not to make deposits to BIGBANK, making direct
comparision to Kaupthing Bank or Parex Bank. At this point it is mainly based on emotions
than on pure rationality. It is extremely difficult to compare BIGBANK to Kaupthing, as
BIGBANK is so much smaller than Kaupthing was. Even in such hardly possible event of
BIGBANK’s bankruptcy the Estonian Guarantee Fund has enough of own funds to return
investments to BIGBANK depositors. You should keep in mind that BIGBANK by assets is a
comparatively small bank even in Estonia.

9. The global financial crisis has hit Estonia quite harshly. And to put it nicely, Estonia
and its banks do not count amongst the strongest and most secure banks here in
Europe. Therefore, the deposit protection might be a thorn in the customers’ side when
looking at BIGBANK’s services. Even though BIGBANK is part of the Estonian
deposit protection scheme, securing up to €50.000 in case of bankruptcy, the bank did
not enter an additional scheme in Germany voluntarily despite the possibility to do so.
Why has no such steps been taken and is there something along those lines planned for
Austria?

Today many expert evaluations of the economy are mostly based on emotions. Situation
changes very quickly. Estonia is on right course to turn-around and Estonia has one of the
lowest external debts in the EU. It is also important that apparently all conditions to adapt the
Euro had been met in 2009, which means it is quite expected that Estonia adapts Euro from 1st
of January of 2011. We do expect a lot of positive news about Estonian economy in 2010.
It is also apparent that quite often analytics do not make difference between three small Baltic
countries describing all three as the region, while the economical situation of Estonia is in far
better shape than of the neighbors.

The main change that will affect our clients quite soon is the change in the Estonian
legislation, which is expected in July 2010. The protected deposit amount will rise from
50 000 euros to 100 000 euros, as well as Estonian banks will pay additional membership fees
into Estonian Guarantee Fund. Both measures will certainly raise the protection of Austrian
an German customers.

10. Direct banks such as the ING Diba or the Easy Bank have an established name in the
Austrian market and have built up a strong customer base in these past years. Do you
see them as BIGBANK’s direct competition? If so, how will BIGBANK prevail over
its competitors?

We are sure that Austrian market is large enough so that each customer could find the most
suitable offer for him either at BIGBANK or ING Diba or other banks offering similar
products. We do understand that we are an unknown name in Austrian market so it will just
take time to gain the trust of customers.

11. On February 1st, BIGBANK put in effect some changes in its fixed-period interest
rates. While the rates for deposits with interest paid at maturity have slightly
decreased, deposits with an annual interest rate have been raised. Are there further
changes in the level of interest rates planned for the near future? What can current as
well as future BIGBANK customers expect?

Our customers can expect that our offer is usually better than of other banks. Of course we
follow the market and competition in that matter. In instance, interest rates in Estonia have
fallen dramatically over last 2 months due to the expectation of adopting euro.
 12. Lastly, something that is increasingly important to customers - How difficult and time
consuming is it to open an account with BIGBANK? Will there be local branches in
Austria, or will opening an account solely work via the internet?

It should not take more than 5-7 minutes to fill-in online registration application. Then the
customer should expect the confirmation e-mail and Ident.Brief package to be delivered
during 1-2 weeks by Österreichische Post AG at customer’s home and handed to him
personally along with internet-bank passwords. The Ident.Brief process is developed by the
postal company to identify the customer and to hand him the internet-bank passwords safely.
At this point he is ready to use BIGBANK internet-banking.
At present we do not plan to open branches, but rather we would develop the concept of
internet-banking to be even more customer friendly. The future of banking services lies within
internet and BIGBANK is just keeping up at being in the lead with own solutions.

Thank you very much for your time and all the best with your new venture!