Daiwa Securities Group Annual Report 2012 The Daiwa Securities Group has established a framework of  liquidity management that conforms to the standards set by the  Basel Committee on Banking Supervision. Specifically, the Group  conducts various stress scenarios that consider the repayment  periods of existing unsecured debt and the possible market and  environmental stresses that might coincide with repayment dates. It  then establishes a portfolio which is capable of providing enough  liquidity to withstand the events anticipated in the stress scenarios.  This portfolio is reviewed on a daily basis, and the liquidity manage- ment framework is designed to ensure that the Daiwa Securities  Group would be able to maintain stable operations even in the  event that no new unsecured funding could be procured for the  space of a full year. As of the end of FY2011, the Daiwa Securities  Group’s liquidity portfolio and balance of short-term unsecured  debt was as follows: Daiwa Securities Group Inc. and Daiwa Securities Co. Ltd. have  been assigned long-term and short-term credit ratings by major  credit ratings agencies. These ratings take into account the impact  of multiple factors on the Group’s creditworthiness. Factors consid- ered by the ratings agencies include current macroeconomic condi- tions, the business environment and condition of the securities  markets, management strategy, Group management structure, the  competitive position of Group companies in their respective mar- kets, profitability, profit volatility, cost structure elasticity, risk man- agement structure, liquidity conditions, capital policy, adequacy of  capital, corporate governance, and other issues. The securities issued by Daiwa Securities Group Inc. and Daiwa  Securities Co. Ltd. in order to obtain funds have also been  assigned credit ratings by leading agencies. As of June 30, 2012,  the credit ratings assigned were as follows: As of the end of FY2011, the Daiwa Securities Group’s liquidity  portfolio had a balance of ¥1,304.6 billion, and the supplementary  liquidity portfolio increases this to ¥2,243.8 billion. This provided a  coverage ratio equal to 206.2% of total unsecured short-term debt. Unsecured Capital Procurement Conditions and Liquidity  Portfolio at the Group (As of March 31, 2012) Note: The above does not include assets and liabilities in the banking business. Credit Ratings by Major Credit Ratings Agencies Daiwa Securities Group Inc. Billions of yen Short-term borrowings from banks and other  financial institutions ¥ 265 Other short-term borrowings 332 Commercial paper 275 Current portion of bonds 215 Short-term unsecured capital procurement 1,088 Cash 1,196 Government bonds,  government-backed bonds, other 109 Liquidity portfolio 1,305 Other bonds 672 Publicly listed shares, other 258 Other 10 Supplementary liquidity portfolio 939 Liquidity portfolio and other total ¥2,244 59 Daiwa Securities Credit ratings agencies Long-term Short-term Moody’s Japan Baa3 — Standard & Poor’s Ratings Japan BBB A-2 Rating and Investment Information (R&I) A a-1 Japan Credit Rating Agency (JCR) A — Credit ratings agencies Long-term Short-term Moody’s Japan Baa2 P-2 Standard & Poor’s Ratings Japan BBB + A-2 Fitch Ratings BBB + F2 Rating and Investment Information (R&I) A a-1 Japan Credit Rating Agency (JCR) A —