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FINANCIAL INSTITUTIONS

CREDIT OPINION27 October 2016

Update

RATINGS

Royal Bank of Scotland N.V.Domicile Amsterdam,

Netherlands

Long Term Debt A3

Type Senior Unsecured - FgnCurr

Outlook Positive

Long Term Deposit A3

Type LT Bank Deposits - FgnCurr

Outlook Positive

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Alessandro Roccati 44-20-7772-1603Senior Vice [email protected]

Michael Eberhardt,CFA

44-20-7772-8611

VP-Sr Credit [email protected]

Daniel Forssen,CFA 44-20-7772-1553Associate [email protected]

Laurie Mayers 44-20-7772-5582Associate [email protected]

Robert Young [email protected]

Royal Bank of Scotland N.V.Semiannual Update

Summary Rating RationaleWe rate RBS NV’s long-term deposit and senior unsecured debt ratings A3. Its CounterpartyRisk Assessment is A3(cr)/Prime-2(cr) and its Baseline Credit Assessment (BCA) is ba1. Theratings outlook on RBS NV is positive.

We align the baseline credit assessment (BCA) of RBS NV to the ba1 BCA of RBS plc (LTdeposits A3 positive, LT senior unsecured A3 positive, BCA: ba1) and we do not perform aseparate analysis on RBS NV, reflecting the ongoing transfer of assets and liabilities fromRBS NV to RBS plc, announced on 19 April 2011. RBS NV, a subsidiary of RBS Group (`RBSG',LT senior unsecured Ba1 positive) that is headquartered and regulated in the Netherlands(Aaa stable), was formed primarily from the ex-ABN AMRO businesses allocated to RBS,subsequent to the acquisition of ABN AMRO in October 2007. However, it has undergonesubstantial restructuring to remove some of its riskiest assets and `right size' the businesses.

On 6 February 2010, the majority of the businesses acquired by the Dutch State were legallydemerged from the RBS's acquired businesses included in ABN AMRO. The former ABNAMRO Bank NV was renamed RBS NV, and a new entity called ABN AMRO Bank NV wasformed from the Dutch state's acquired business. RBS NV is currently a subsidiary of RBSHNV, which in turn is a subsidiary of RBS Holdings BV, over which RBSG has majority control.RBSH NV will eventually become a wholly-owned subsidiary of RBSG.

The positive ratings outlook continues to reflect the substantial progress the group hasmade in its restructuring plan and our expectation that its credit fundamentals will continueto improve over the next 12-18 months, which should not be materially affected by theeconomic and profitability pressures that are expected to arise following the outcome of theUK referendum.

Credit Strengths and Challenges

» Strong integration within the RBSG although RBS NV's franchise is reducing as a resultof the ongoing transfer of its activities to RBS plc and the group's decision to reduce itsinternational presence

» Capitalisation is strong and asset quality will continue to improve as a result of theongoing transfer, sale and wind-down of assets

» Funding and liquidity requirements are reducing because of the ongoing asset transfer,sale and wind-down process

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MOODY'S INVESTORS SERVICE FINANCIAL INSTITUTIONS

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 27 October 2016 Royal Bank of Scotland N.V.: Semiannual Update

Rating OutlookAll ratings carry a positive outlook. This reflects our expectations that RBS's management will continue to progress the restructuring ofthe bank, benefitting its credit fundamentals, and that the correspondent reduction in downside risks will improve the firm's standalonecredit profile.

Factors that Could Lead to an Upgrade/DowngradeThe ratings of RBS NV are aligned with those of RBS plc, reflecting the ongoing process of transfer of assets and liabilities from RBS NVto RBS plc, announced on 19 April 2011. For this reason, any change in the ratings of RBS plc will have a direct bearing on those of RBSNV.

However, the ratings of RBS NV could be de-linked from those on RBS plc in case of a (1) further change in strategy for RBS NV that weassess as reducing the degree of integration and strategic importance for the RBS group, and/or (2) if we were to assess a weakening inthe group and/or systemic support for RBS NV, which are currently incorporated in its ratings.

Key Indicators

Exhibit 1

Royal Bank of Scotland N.V. (Consolidated Financials) [1]6-162 12-152 12-142 12-133 12-123 Avg.

Total Assets (EUR million) 10,720 15,946 21,633 35,837 70,783 -37.64

Total Assets (USD million) 11,909.4 17,322.1 26,177.1 49,381.3 93,319.7 -40.24

Tangible Common Equity (EUR million) 3,700 3,528.5 3,368 3,643.5 3,938.5 -1.54

Tangible Common Equity (USD million) 4,110.5 3,833 4,075.5 5,020.5 5,192.5 -5.74

Problem Loans / Gross Loans (%) - 5.8 5.6 7.8 7.5 6.75

Tangible Common Equity / Risk Weighted Assets (%) 24.4 21.5 16.7 21 12 20.96

Problem Loans / (Tangible Common Equity + Loan Loss Reserve) (%) - 3.7 5.8 8.1 11.8 7.45

Net Interest Margin (%) -0.5 -0.1 0.7 0.5 0.7 0.35

PPI / Average RWA (%) 2.1 -0.7 -0.7 -0.4 2.2 0.26

Net Income / Tangible Assets (%) 2.5 0.1 -0.4 -0.2 0.9 0.65

Cost / Income Ratio (%) 17.6 271.6 199.4 121.4 58.7 133.85

Market Funds / Tangible Banking Assets (%) 36.5 33.9 43.1 65.2 66.4 495

Liquid Banking Assets / Tangible Banking Assets (%) 54.3 58.6 54.6 67.7 53.8 57.85

Gross loans / Due to customers (%) 120.5 153.9 124.5 96.6 256.3 150.45

[1] All figures and ratios are adjusted using Moody's standard adjustments [2] Basel III - fully-loaded or transitional phase-in; IFRS [3] Basel II; IFRS [4] Compound Annual Growth Rate basedon IFRS reporting periods [5] IFRS reporting periods have been used for average calculation [6] Basel III - fully-loaded or transitional phase-in & IFRS reporting periods have been used foraverage calculationSource: Moody's Financial Metrics

Detailed Rating ConsiderationsThe BCA of RBS NV is aligned to that of RBS plc. Please refer to RBSG's Credit Opinion for a detailed analysis of the BCA factors. Thefinancial data in the following sections are sourced from RBS NV's financial statements unless otherwise stated.

RBSG is now mostly exposed to the UK, with its material overseas business limited to its Irish subsidiary (Ulster Bank Ireland DAC,LT deposits Baa3 positive, LT issuer rating Ba1 positive, BCA ba2) and some small activities within the Corporate & InstitutionalBanking business unit in major global financial centres. We consider that the prolonged period of uncertainty for the UK following theoutcome of the referendum, with negative implications for the country’s medium-term growth outlook, presents a more challengingenvironment for the bank but remains compatible with RBS’s ba1 BCA, which we expect will continue to benefit from the group’songoing restructuring.



STRONG INTEGRATION WITHIN THE RBSG ALTHOUGH RBS NV'S FRANCHISE IS REDUCING AS A RESULT OF THE ONGOING TRANSFER OF ITS

ACTIVITIES TO RBS PLC AND THE GROUP'S DECISION TO REDUCE ITS INTERNATIONAL PRESENCE

RBS NV is managed as part of RBS plc and very much integrated within the RBSG. Its core businesses were investment banking(equities, FX and fixed income within specific geographies), international cash management, trade finance and corporate lending.However, these activities are gradually transferring out of RBS NV into RBS plc or being sold or wound down, following the group'srecent decision to reduce its international presence.

The purpose of the transfers is to simplify client interaction across RBSG and reduce operating complexity. In its announcement of 19April 2011 and in subsequent updates on RBS NV's restructuring, provided in the annual accounts, RBSG has stated it intends to providethe necessary support to ensure that RBS NV continues to meet its commitments during and after the asset transfer process.

CAPITALISATION IS STRONG AND ASSET QUALITY WILL FURTHER IMPROVE OVER TIME AS A RESULT OF THE ONGOING TRANSFER, SALE AND

WINDDOWN OF ASSETS

We expect the bank's asset quality profile to improve over time, as a result of the ongoing transfer of assets to RBS plc as well asthe sale and wind-down of assets as part of the group's plan to reduce its international presence. At the latest disclosure available(end-2015), the problem loans (RBS’s internal definition or Risk Elements in Lending) over gross loans ratio was 5.8%, up 20 basispoints from the previous year. However, the asset quality metrics of RBS NV for the last few years are not directly comparable, giventhe extent to which its loan book has been reduced as a result of the asset transfer process, announced in 2011.

We consider that RBS NV is well capitalised in relation to its risk profile and we expect it to remain as such until its full wind-down incompleted. At end-June 2016, RBS Holdings NV reported a common equity Tier 1 (CET1) ratio of 22.3% (transitional basis) up from21.2% at end-2015, as a result of the ongoing deleveraging.

In the first six months of 2016, RBS NV generated a profit of EUR132 million relative to a loss of EUR46 million in the same periodlast year. The return to profit primarily reflected an improved trading result and net impairment releases (relative to net impairmentprovisions last year).

RBS NV'S FUNDING AND LIQUIDITY REQUIREMENTS ARE REDUCING BECAUSE OF THE ONGOING TRANSFER, SALE AND WIND-DOWN OF ASSETS

RBS NV's balance sheet reduced to EUR10.7 billion at end-June 2016 from EUR16.0 billion at end-2015 and substantially down fromEUR70.9 billion at end-2012, as a result of the ongoing asset transfer process (Exhibit 1). At end-June 2016, the bank's balance sheet wasprimarily funded via intra-group funding and in the interbank market. RBS NV's stock of subordinated debt, its main long-term fundingoutstanding, substantially reduced to EUR1.4 billion at end-June 2016 from EUR4.5 billion at end-2015. The reduction in subordinateddebt reflected redemptions in the period of the outstanding Trust Preferred Securities which had been included in Additional Tier 1 andTier 2 capital. RBS NV’s liquidity reserves have reduced materially since 2012, largely due to lower liquidity requirements. Finally, wepositively note that the bank is fully integrated within RBSG's funding and liquidity risk management framework.

Exhibit 2

RBS NV: Total assets

Source: Company financials



Notching ConsiderationsThe ongoing transfer of assets and liabilities from RBS NV to RBS plc announced on 19 April 2011, has led us to consider RBS NV as partof RBS plc, despite it being incorporated in the Netherlands, which falls outside the UK resolution perimeter. Please refer to the CreditOpinion for RBSG for a detailed analysis of the group's LGF and Government Support.



Ratings

Exhibit 3Category Moody's RatingROYAL BANK OF SCOTLAND N.V.

Outlook PositiveBank Deposits A3/P-2Baseline Credit Assessment ba1Adjusted Baseline Credit Assessment ba1Counterparty Risk Assessment A3(cr)/P-2(cr)Issuer Rating A3Senior Unsecured A3Subordinate Ba2Jr Subordinate MTN -Dom Curr (P)Ba3Commercial Paper P-2Other Short Term (P)P-2

ULT PARENT: THE ROYAL BANK OF SCOTLANDGROUP PLC

Outlook PositiveSenior Unsecured Ba1Subordinate Ba3Jr Subordinate Ba3 (hyb)Pref. Stock Ba3 (hyb)Pref. Stock Non-cumulative B1 (hyb)Preference Shelf (P)B1Commercial Paper NPOther Short Term (P)NP

Source: Moody's Investors Service



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