Letter from the Chairman

Dear Shareholders:

As well you all know, the persistence of the harsh crisis unleashed in 2007 has had and continues to have a major impact on Spain’s economic performance. Against this backdrop, I would like to thank our shareholders, our customers, our Board members, for their dedication, and, most especially, all our staff, whose professional attitude has been beyond reproach, with all my heart.

Today, our solvency and liquidity ratios are well above the sector average. At 31 December 2010, Banco Caminos was the top-ranked entity in terms of structural liquidity, at 139.7% in relative terms, and the second-ranked entity by solvency, at 16.36%.

As you can see, 2010 was shaped by consolidation of the main financial indicators, maintaining a healthy balance between assets and liabilities. In all, we extended our customers €186.12 million of financing, so that the Entity’s loan book reached €646.35 million.

An astute risk management policy enabled the Entity to keep its non-performing loan ratio at 2.80%, compared to an average across the financial sector of 5.81%, with an NPL coverage ratio of 95.92%, compared to a sector average of 67.2%.

Although spreads are narrowing, in part driven by aggressive, and at times reckless, deposit pricing at some entities, practices which have been criticised by the financial authorities on a number of occasions, total funds at Banco Camino reached €956.64 million.

Off-balance sheet assets under management totalled €601.98 million, broken down as follows:

	Million of euros
Investment companies and funds	266.529
Pension funds	18.535
Customer portfolios under management	81.330
Funds marketed but not managed	235.581

Adding in off-balance sheet funds, total customer funds amounted to €1,558.61 million

It is worth highlighting the commendable performance by the Bank in Catalonia, where the Entity topped the targets set at the beginning of the year for the region. This strong performance reinforces what has been our trademark philosophy from the outset: offering our customers the most suitable and profitable products and services at all times, without levying most of the service fees and commissions applied by the rest of the sector, lending them financial support when required, ensuring careful risk management and the utmost confidentiality.

In acknowledgement of our unwavering effort to add value for our customers and shareholders, I am very pleased to inform you that our fund manager, Gestifonsa SGIIC, has recently been named Top Fixed-Income Fund Manager in Spain by the nation’s leading financial daily, Expansión, while Dinercam FI was awarded Best Money Market Fund, accolades which follow a stream of prizes in recent years.

Elsewhere, and rounding out the Entity’s strong performance, note that one of the shareholder resolutions to be submitted at the upcoming General Meeting is a 7.15% increase in the value of the Bank’s shares.

I remain at your disposal, as always.

My kindest regards to you all.

CLEMENTE SOLÉ PARELLADA
Chairman, Banco Caminos