BCV's participation certificates

PREFERENCE DIVIDEND FOR THE PERIOD 2004-2009

Taking advantage of the favourable conditions on the capital market, the Canton of Vaud recently took up loans at an average rate of 2.92% for a total of CHF 1.25 billion. These loans allow for the long-term refinancing of BCV's participation capital subscribed by the Canton of Vaud in February 2003. BCV's Board of Directors will thus propose to the Bank's 2004 Ordinary General Meeting of Shareholders as well as to an Extraordinary Meeting of Participation certificate holders that the preference dividend which the Bank will start to pay from the financial year 2004 onwards, inasmuch as its results allow it do so, be set at CHF 2.69 per certificate, or 4.30% of the nominal value.

When the Cantonal Government of Vaud announced at the end of October 2002 that it would back the capital increase, it had stated that the preference dividend would be fixed by taking into account the long-term financing conditions that the Canton of Vaud would obtain on the market in order to ensure that the Canton would not bear any additional costs as a result of this operation. The Canton of Vaud had at first secured the financing of its subscription by short-term loans. Owing to the highly favourable conditions currently prevailing on the capital market, the Cantonal Government of Vaud has decided to consolidate its short-term debt right now. It has thus been able to secure three long-term loans (10 years and 7 years) totalling CHF 1.25 billion at an average rate of 2.9%.

To cover the cost of these issues, BCV intends to pay out for the financial years 2004 to 2009 - provided that the proposed amendments to the Bank's Articles of Association are accepted and that the Bank's results allow it to do so - a preference dividend of CHF 2.69 per certificate on the participation capital. The amount corresponds to 4.30% of the certificates' nominal value, of CHF 62.50. As a reminder, for the financial year 2003, the preference dividend was set at CHF 3.33, or 5.328% of the nominal value.

The solution found by the Canton for the long-term financing of its subscription to BCV's participation capital requires that the Bank's Articles of Association be amended. It indeed implies a departure from the principle included in the Articles in February 2003, requiring the preference dividend to be set by the end of February 2004, for a period of 10 years, based on the annual yield on Swiss government 10-year bonds plus 0.7% (multiplied by the conversion factor between the issue price and the nominal value). The amended Articles of Association will set the preference dividend at CHF 2.69, or 4.30% of the certificates' nominal value. This amendment to the Articles will be submitted on 28 April 2004 to the Ordinary General Meeting of Shareholders and will come into force as of 2004 until it is amended, an amendment that can be envisaged from the financial year 2010 onwards. An Extraordinary Meeting of Participation certificate holders will be held together with the Ordinary General Meeting.

Lausanne, 7 July 2003

Contact(s)

Daniel Herrera, Head of Communications
Phone +41 844 228 228
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