5.35% IZOLA BANK PLC SECURED NOTES 2015

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Izola Bank plc - Prospectus dated 10 June 2010

The Company

Izola Bank was incorporated on 8 June 1994. Subsequently on 13 June 1994, the Bank was granted a licence by the Ministry of Finance to carry out the business of banking with non-residents. Following the enactment of the Banking Act on 15 November 1994 the Central Bank of Malta (CBM) issued a new licence to Izola Bank in line with the new legislation. In September 2005, the CBM approved a change to the terms of the licence so that Izola could undertake banking activities in all currencies, excluding the Maltese Lira, with both residents and non-residents. More recently in February 2010, the shareholders of Izola Bank approved a change in the status of the Bank from a private limited liability company to a public limited liability company in anticipation of a Public Debt Issuance Programme.

The principal activities of Izola Bank comprise: (i) the receipt and acceptance of customers’ money on deposit; (ii) the provision of advances; (iii) money transmission services via SWIFT; (iv) factoring services; (v) debit and credit card issuance; (vi) internet banking services;  (vii) cash and treasury management services.

Izola Bank plc is authorised to provide these banking services to residents of Malta, Belgium and France. Izola Bank’s main client is its shareholder, the Van Marcke Group (VMKG). The Bank also services some of the clients of VMKG.

VMKG was established in 1929 and currently employs over 1,350 people. The VMKG is one of Europe’s largest plumbing and heating wholesalers. It also has other interests in manufacturing involving office and laboratory furniture, sanitary ware and hands-free electronic controls for wash basins. The Belgian Group is also engaged in a diverse range of sectors, including packaging, transportation, asphalt supply, road milling contracting and recycling of reclaimed asphalt.

Use of Proceeds

The net proceeds from this bond issue will be primarily used to support the general growth of the Bank mainly through the expansion of its factoring, credit card and short-term credit facilities business. In fact, the Bank intends offering increased credit card limits as well as introducing a new overdraft facility. Izola Bank is also planning to introduce a system through which clients can download an electronic copy of invoices from the Van Marcke Group and also settle these invoices online.

Security

Secured

The Notes shall be secured by virtue of a pledge over the factoring receivables held by the Issuer. The pledge will be held by HSBC Bank Malta plc as the Security Trustee for the benefit of the Note Holders. The pledged amount of receivables shall not be less than 120% of the outstanding nominal amount of the Notes. If the value of the trade receivables falls below this 120% threshold, Izola Bank will make good for the difference by depositing cash in a pledged account also with HSBC Bank Malta plc. The trade receivables will be audited by KPMG on a quarterly basis.

Coupon

5.35%

Amount Issued

€9,000,000

Tranche

First tranche from a €27 million Debt Issuance Programme

ISIN Code

MT0000531203

Maturity

The bonds will be redeemed at 100% (par) on 30 June 2015.

Interest Payment

Annually on 30 June

XD Date

16 June

Listing

Official List

Final Terms

Izola Bank plc – Final Terms 10 June 2010

Directors

Magdalena de Roeck, Countess A d’Oultremont, Peter Van Marcke, Frederick E Amato-Gauci, Joseph Caruana, Charles Hertogs, John Melillo and Patrick H Van Leynseele.

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