BNK Financial : Decision on Issuance of Bail-in Contingent Capital Securities

Decision on Issuance of Bail-in Contingent Capital Securities

Subsidiary company

Kyongnam Bank

's material business matters to report

1. Type of securities	Series No.	5	Type	Domestic bearer-type, unguaranteed, unsecured, ball-in type contingent capital securities (new capital securities)
2. Total face value of bonds (or electronically registered bonds) (KRW)	135,000,000,000
2-1 (Overseas issuance of bonds)	Total face value of bonds (or electronically registered bonds) (currency unit)	-	-
Basic exchange rate, etc.	-
Region of issuance	-
Name of exchange (if overseas listing)	-
3. Purpose of financing	Facility investment (KRW)	-
Business acquisition (KRW)	-
Operating capital (KRW)	135,000,000,000
Debt repayment (KRW)	-
Acquisition of securities issued by other corporations (KRW)	-
Other purposes (KRW)	-
4. Interest rate	Coupon rate (%)	-
Yield to maturity (%)	-
5. Maturity date of bonds	-
6. Interest payment method	- The interest (dividend) of these securities is paid in arrears every three months from the date of issuance until the day immediately preceding the maturity date. However, if the due date for payment of interest (dividend) falls on a bank holiday, it will be paid on the first following business day, and even if the payment is so delayed, interest (dividend) is not calculated and paid separately for the number of days delayed. - No interest (dividend) is paid on these security once it matures. However, if the maturity falls on a day the bank is closed, interest (dividend) is paid for the period up to the day preceding the next business day, and if this security is pre-paid, the issuer does not pay interest (dividend) after the pre-payment. -The interest (dividend) bearing on this security is paid out of the dividends available for payment based on the Detailed Rules on the Enforcement of Banking Business Supervision ( Criteria for the calculation of the equity ratio for credit and operational risk weighted assets (based on Basel III)- 6 Additional Tier 1- b. Criteria for recognition of Additional Tier 1. - Conditions on which interest (dividend) payment is suspended (1) If the issuer falls under any of the following, interest (dividend) payment is suspended until the cause is resolved, and all interest (dividend) payment obligations during that period are extinguished. ① When the issuer receives a management improvement recommendation, management improvement request, or management improvement order falling under Articles 34 to 36 of the Banking Supervision Regulations from the Financial Services Commission ② When the Financial Services Commission takes emergency measures pursuant to Article 38 of the Banking Supervision Regulations in relation to the issuer ③ When the issuer is designated as an insolvent financial institution as stipulated in the 「Act on Structural Improvement of the Financial Industry」 ④ When the capital ratio including capital reserve buffer capital in accordance with Article 26 Paragraph 4, Article 26-2 Paragraph 6, and Article 26-3 Paragraph 5 of the Banking Supervision Regulations falls short of the capital ratio specified in , as a measure in accordance with Article 34, Paragraph 4 of the Banking Act, dividends or interest payments may be partially or entirely restricted if necessary to comply with the minimum internal reserve ratio of profit dividends, etc. set forth in . (2) The issuer is entitled to the full discretion over the revocation of the payment of interest (dividend) for this security, and the revocation of the interest (dividend) payment does not operate as any form of constraint to the bank other than the relevant dividend related to the common share holders. (3) Cancellation of the above interest (dividend) is not considered as a cause of default or bankruptcy. The issuer will have full rights to use the canceled amount to meet its due obligations.
7. Principal payment method	- As for the interim redemption of these securities, the issuer may decide with full autonomy whether to make the redemption, and it shall be approved in advance by the Governor of the Financial Supervisory Service under any of the following conditions: (1) Where, in consideration of the issuer's profitability, etc., the security is replaced with a capital of high or equivalent quality which is considered to be sufficiently bearable ? (2) When the ratio related to capital adequacy exceeds the ratio related to capital adequacy specified in Paragraph 4 of Article 26 of the Banking Supervision Regulations even after the prepayment of these securities - The interim redemption of this case at the issuer's option may be made in line with the terms and conditions specified at the time of issuance of this bond only if a prior approval is secured from the Governor of the Financial Supervisory Service after five years have elapsed from the date of issuance. If the maturity falls on a closed day of the issuer, the principal shall be paid on the next business day. - Furthermore, no terms and conditions are added to the bond of this case by which any expectation is caused for the investor that redemption will be made, nor are any burdens imposed to cause the issuer to make the redemption thereby.
8. Bond issuance method	Public offering
9. Details on debt adjustment	Cause of debt adjustment	Occurs when the issuer is designated an insolvent financial institution pursuant to the Act on the Structural Improvement of the Financial Industry
Scope of debt adjustment	Total face value of the bonds
Procedures used to determine scope of debt adjustment	When a cause for debt rescheduling of the issuer arises, these securities will be permanently amortized in full, at which time, the amortization of these securities will not be considered as a cause of non-performance or default. The amortization will enter into force and become effective on the third business day from the date on which the cause for debt rescheduling takes place.
9-1. Details of option	- Type of option : Call option - Option exercised by : Issuer - Option structure : While the date of maturity for the bond is perpetual, there is a five-year call option. (Interim redemption is available only in the cases where the approval of the Governor of the Financial Supervisory Service is secured in advance at the issuer's option after the date of the option's maturity)
10. Date of subscription	-
11. Date of payment	-
12. Lead underwriter	-
13. Guarantor	-
14. Date of board resolution (decision date)	2022-04-26
- Attendance of outside directors	Present (No.)	5
Absent (No.)	-
- Attendance of auditors (members of Audit Committee)	Present
15. Subject to filing of securities registration statement?	Yes
16. Reasons for exemption from filing securities registration statement, if exempted	-
17. Details of securities lending & borrowing transactions related to overseas issuance of securities	-
18. Subject to reporting to the Fair Trade Commission?	No
19. Other matters to be factored into investment decisions	- The details of disclosure above are intended for the purposes of enhancing the BIS total capital ratio and basic capital ratio by expanding Additional Tier 1. - "2. Total face amount of bonds" above will be determined according to the results of the demand forecast within the issuance amount decided by the board of directors. - The coupon rate and yield to maturity of "4. Interest rate" will be determined by reflecting the market rate at the time of issuance according to the demand forecast results. - "5. Maturity date of bonds" above is not specified, and it shall be assumed to have matured on the earlier of the following dates. (1) The date on which bankruptcy procedures or equivalent procedures are commenced after the issuer is declared bankrupt under the Debtor Rehabilitation and Bankruptcy Act or a statute replacing the Act (2) The date on which liquidation procedures other than bankruptcy or rehabilitation procedures are commenced for the issuer - As for "5. Maturity date of bonds," notwithstanding the perpetual form, call option is granted after five years, and interim repayment may be made at the option of the issuer at every date of interest (three-month dividend) after the maturity date of the option is reached. - "5. Maturity date of bonds," "10. Date of subscription," and "11. Date of payment" above will be decided according to the schedule of consultation with the regulatory authority and the conditions of the primary market. - "12. Managing underwriter" has not yet been confirmed, and will be selected around one month prior to the date of subscription within the permissible range of the related laws and regulations. - For more details related to these securities, please refer to the Bank's securities declaration form which will be submitted in the future. - Disclosure on material matters of management of subsidiary Name of subsidiary : Kyongnam Bank Co., Ltd. Share of total asset value: 28.56% (As of December 31, 2021)

[Details of Issuance to Designated Purchasers]

Name	Relationship to company or the largest shareholder	Total face value of bonds (or electronically registered bonds) (KRW)
-	-	-

[Intended Use of Funds]

To enhance the BIS capital adequacy ratio and basic capital ratio through expansion of other basic capital, by using the funds raised for operating capital.