OFFERING MEMORANDUM CONFIDENTIAL

The Royal Bank of Scotland Group plcA9.1.1

A13.1.1

$1,600,000,000 Fixed Rate/Floating Rate Preferred Capital SecuritiesIssue Price: 100%

The Royal Bank of Scotland Group plc (the ‘‘Issuer’’) is offering $1,600,000,000 Fixed Rate/Floating Rate Preferred Capital Securities (‘‘Capital Securities’’). TheCapital Securities will accrue interest at the rate of 6.990% per annum from (and including) October 4, 2007 (the ‘‘Issue Date’’) up to (but excluding) October 5,2017 (the ‘‘First Reset Date’’), payable semi-annually in arrears on April 5 and October 5, of each year, commencing April 5, 2008. From (and including) theFirst Reset Date, the Capital Securities will accrue interest at the rate of 2.67% per annum above the London interbank offered rate for 3-month U.S. dollardeposits, reset quarterly, payable quarterly in arrears on January 5, April 5, July 5 and October 5 in each year, starting on January 5, 2018, all as more fullydescribed under ‘‘Description of the Capital Securities — Coupon Payments’’.

Coupon Payments (as defined herein) may be deferred in the Issuer’s absolute discretion, as more fully described under ‘‘Description of the CapitalSecurities — Coupon Payments — Deferral of Coupons’’. Whilst any Coupon Payment is so deferred, the Issuer shall not and shall procure that no member of theGroup (as defined herein) shall (i) declare or pay a distribution or dividend on any Junior Securities (as defined herein) (other than a final dividend declared, madeor paid by the relevant company before the Issuer gives notice that such Coupon Payment is to be deferred and other than distributions or dividends paid by amember of the Group which is wholly-owned by another member of the Group); or (ii) redeem, purchase or otherwise acquire for any consideration any JuniorSecurities or Parity Securities (as defined herein). No interest shall accrue on any such deferred Coupon Payment.

No payment of principal or interest in respect of the Capital Securities may be made on the due date for payment unless the Issuer is able to make suchpayment and remain solvent immediately thereafter, all as more fully described in ‘‘Description of the Capital Securities — Status and Subordination —Subordination — Condition of Payment’’. Subject to the provisions contained in ‘‘Description of the Capital Securities — Status and Subordination —Subordination — Winding-up’’, the Issuer shall have no liability to pay any amount in respect of the principal or interest in respect of the Capital Securities to theextent that the Issuer is insolvent or would become so as a result of making such payment.

The Capital Securities have no fixed final maturity date and will be repaid only in the event the Issuer redeems or repurchases the Capital Securities, asdescribed under ‘‘Description of the Capital Securities — Redemption’’.

The Issuer may at its option redeem in whole, but not in part, the Capital Securities at 100% of their principal amount plus accrued and unpaid interest, ifany, on any Reset Date (as defined herein) all as more fully described under ‘‘Description of the Capital Securities — Redemption — Issuer’s Call Option’’. Inaddition, at any time before the First Reset Date, the Issuer may redeem the Capital Securities in whole, but not in part, upon the occurrence of certain specifiedevents relating to taxation or the treatment of the Capital Securities by the U.K. Financial Services Authority, all as more fully described under ‘‘Description ofthe Capital Securities — Redemption’’.

A13.5.1

The Capital Securities will be unsecured obligations of the Issuer, will be subordinated to the claims of Senior Creditors (as defined herein) and will rankpari passu without preference among themselves, all as more fully described under ‘‘Description of the Capital Securities — Status and Subordination’’. If theIssuer is in Winding Up or in a Qualifying Administration (as each term is defined herein), the Issuer shall pay in respect of the principal and of interest on eachCapital Security (in lieu of any other payment by the Issuer) such amount, if any, as would have been payable to the relevant holder (the ‘‘Holder’’) if, on the dayprior to the commencement of the Winding Up or the notice by the administrator, as the case may be, and thereafter, such Holder and/or the Trustee (as definedherein) were the holder of one of a class of Notional Preference Shares (as defined herein) on the assumption that the amount that such Holder was entitled toreceive in respect of each Notional Preference Share on a return of assets in such Winding Up or in a Qualifying Administration were an amount equal to theprincipal amount of the relevant Capital Security and any other outstanding Payments together with any Deferred Coupon Payment which arises under‘‘Description of the Capital Securities — Status and Subordination — Subordination — Condition of Payment’’.

Application will be made to the Financial Services Authority in its capacity as competent authority for the purposes of the Financial Services and MarketsAct 2000 (the ‘‘FSMA’’) (the ‘‘U.K. Listing Authority’’) for the Capital Securities to be admitted to the official list of the U.K. Listing Authority (the ‘‘OfficialList’’) and to the London Stock Exchange plc (the ‘‘London Stock Exchange’’) for the Capital Securities to be admitted to trading on the London StockExchange’s Gilt-Edged and Fixed Interest Market (the ‘‘Market’’). References in this Offering Memorandum to the Capital Securities being ‘‘listed’’ (and allrelated references) shall mean that the Capital Securities will have been admitted to the Official List and will have been admitted to trading on the Market. TheMarket is a regulated market for the purposes of the Investment Services Directive 93/22/EEC.

Investing in the Capital Securities involves risks. See ‘‘Risk Factors’’ beginning on page 9.None of the Capital Securities, the Ordinary Shares (as defined herein) or any securities issuable upon substitution of the Capital Securities have been or will

be registered under the U.S. Securities Act of 1933, as amended (the ‘‘Securities Act’’). In the United States, the offering is being made only to qualifiedinstitutional buyers (‘‘QIBs’’) in reliance on the exemption from registration provided by Rule 144A under the Securities Act (‘‘Rule 144A’’). Prospectivepurchasers that are QIBs are hereby notified that the seller of the Capital Securities may be relying on the exemption from the provisions of Section 5 of theSecurities Act provided by Rule 144A. Outside the United States, the offering is being made in offshore transactions in reliance on Regulation S under theSecurities Act (‘‘Regulation S’’) and, with regard to qualified investors in the European Economic Area, in reliance on private placement exemptions implementingArticle 3(2) of the Prospectus Directive (as defined herein). For a description of certain restrictions on transfers of Capital Securities, see ‘‘Book Entry, TransferRestrictions and Summary of Provisions Relating to the Capital Securities while in Global Form’’.

The Capital Securities will be in registered book-entry form. The Capital Securities sold in the United States pursuant to Rule 144A will be represented byone or more global certificates in registered form (each, a ‘‘Restricted Global Certificate’’) and registered in the name of a nominee of, and will be deposited witha custodian for, The Depository Trust Company (‘‘DTC’’) on or about the Issue Date. The Capital Securities sold outside the United States pursuant toRegulation S will be represented by a global certificate in registered form (the ‘‘Regulation S Global Certificate’’, and together with the Restricted GlobalCertificate, the ‘‘Global Certificates’’) and registered in the name of a nominee of, and deposited with, a common depositary for Euroclear Bank S.A./N.V.(‘‘Euroclear’’) and Clearstream Banking, societe anonyme (‘‘Clearstream, Luxembourg’’, together with Euroclear, the ‘‘Clearing Systems’’) on or about the IssueDate.

On issue, the Capital Securities are expected to be rated ‘‘Aa3’’ by Moody’s Investors Service, Inc. (‘‘Moody’s’’), ‘‘A’’ by Standard & Poor’s RatingServices, a division of The McGraw-Hill Companies, Inc. (‘‘Standard & Poor’s’’) and ‘‘AA’’ by Fitch Ratings Ltd. (‘‘Fitch’’). A credit rating is not arecommendation to buy, sell or hold securities and may be subject to revision, suspension, reduction or withdrawal at any time by the assigning rating agency.

Joint Lead Managers and Joint Bookrunners

MERRILL LYNCH & CO. RBS GREENWICH CAPITALSenior Co-Managers

Banc of America Securities LLC Wachovia SecuritiesJunior Co-Managers

Goldman, Sachs & Co. Lehman BrothersSeptember 26, 2007

TABLE OF CONTENTS

Certain Definitions*********************************************************************** iv

Documents Incorporated by Reference******************************************************* v

Forward-Looking Statements ************************************************************** vii

Overview ****************************************************************************** 1

Risk Factors **************************************************************************** 9

Use of Proceeds************************************************************************* 21

Capitalization of the Group *************************************************************** 22

The ABN AMRO Offer ****************************************************************** 24

Description of the Group ***************************************************************** 32

Directors******************************************************************************* 34

Description of the Capital Securities ******************************************************** 36

Plan of Distribution********************************************************************** 63

Taxation ******************************************************************************* 65

Selling Restrictions ********************************************************************** 70

Book Entry, Transfer Restrictions and Summary of Provisions Relating to the Capital Securities while inGlobal Form************************************************************************** 71

Legal Opinions************************************************************************** 78

Experts ******************************************************************************** 78

Enforcement of Civil Liabilities and Service Of Process **************************************** 78

General Information ********************************************************************* 79

A 9.1.2

A13.1.2

The Issuer accepts responsibility for the information contained in this Offering Memorandum. To thebest of the knowledge of the Issuer (which has taken all reasonable care to ensure that such is the case), theinformation contained in this Offering Memorandum is in accordance with the facts and does not omitanything likely to affect the import of such information.

A 9.13.2

A13.7.4

Where information in this Offering Memorandum has been sourced from third parties, this informationhas been accurately reproduced and as far as the Issuer is aware and is able to ascertain from the informationpublished by such third parties no facts have been omitted which would render the reproduced informationinaccurate or misleading. The source of third party information is identified where used.

You are authorized to use this Offering Memorandum solely for the purpose of considering aninvestment in the Capital Securities offered in this offering as described in this Offering Memorandum. ThisOffering Memorandum is based on information provided by the Issuer and by other sources that the Issuerbelieves are reliable. You acknowledge and agree that the initial purchasers of the Capital Securities namedunder ‘‘Plan of Distribution’’ (the ‘‘Initial Purchasers’’) have not separately verified the information containedherein and, accordingly, make no representation or warranty, express or implied, as to the accuracy orcompleteness of such information, and nothing contained in, or incorporated by reference in, this OfferingMemorandum is, or shall be relied upon as, a promise or representation by the Initial Purchasers. You maynot reproduce or distribute this Offering Memorandum, in whole or in part, and you may not disclose any ofthe contents of this Offering Memorandum or use any information in this Offering Memorandum for anypurpose other than considering an investment in the Capital Securities. You agree to the foregoing byaccepting delivery of this Offering Memorandum.

No person is authorized to give information or to make any representation in connection with thisoffering or sale of the Capital Securities other than as contained in, or incorporated by reference in, thisOffering Memorandum. If any such information is given or made, it must not be relied upon as having beenauthorized by the Issuer or the Initial Purchasers or any of their affiliates or advisers or selling agents.Neither the delivery of this Offering Memorandum nor any sale made hereunder shall under any

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circumstances imply that there has been no change in the Issuer’s affairs or that the information set forth inthis Offering Memorandum is correct as of any date subsequent to the date hereof.

In making an investment decision, prospective investors must rely upon their own examination ofthe Issuer, the Group and the Capital Securities and the terms of this Offering Memorandum,including the risks involved. Investors should satisfy themselves that they understand all the risksassociated with making investments in the Capital Securities. If a prospective investor is in any doubtwhatsoever as to the risks involved in investing in the Capital Securities, he or she should consult his orher professional advisors. See ‘‘Risk Factors’’ for further details of such risks.

This Offering Memorandum does not constitute an offer of, or an invitation by or on behalf of theIssuer or the Initial Purchasers to subscribe or purchase any of the Capital Securities. Prospectiveinvestors should also inform themselves as to the legal requirements and tax consequences within thecountries of their residence and domicile for the acquisition, holding or disposal of Capital Securitiesand any foreign exchange restrictions that might be relevant to them. The distribution of this OfferingMemorandum and the offering and sale of the Capital Securities in certain jurisdictions may berestricted by law. The Initial Purchasers require persons into whose possession this OfferingMemorandum comes to inform themselves about, and to observe, any such restrictions. For adescription of certain restrictions on the offering and sale of the Capital Securities, see ‘‘SellingRestrictions’’ and ‘‘Book Entry, Transfer Restrictions and Summary of Provisions Relating to theCapital Securities while in Global Form’’. This Offering Memorandum does not constitute an offer of,or an invitation to purchase, any of the Capital Securities in any jurisdiction in which such offer orsale would be unlawful. No one has taken any action that would permit a public offering of the CapitalSecurities.

STABILIZATION

In connection with the issue of any Capital Securities, Merrill Lynch, Pierce, Fenner & SmithIncorporated (‘‘Merrill Lynch’’) (the ‘‘Stabilizing Manager’’) (or any person acting on behalf of theStabilizing Manager) may over-allot Capital Securities or effect transactions with a view to supporting themarket price of the Capital Securities at a level higher than that which might otherwise prevail. However,there can be no assurance that the Stabilizing Manager (or any person acting on behalf of the StabilizingManager) will undertake any stabilization action. Any stabilization action may begin on or after the date onwhich adequate public disclosure of the terms of the offer of the Capital Securities is made and, if begun,may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of theCapital Securities and 60 days after the date of the allotment of the Capital Securities. Any stabilizationaction or over-allotment must be conducted in accordance with all applicable laws and rules.

NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED STATES

None of the Capital Securities, the Ordinary Shares or any securities issuable upon substitution of theCapital Securities offered hereby have been or will be registered under the Securities Act, or with anysecurities regulatory authority of any state or other jurisdiction in the United States, and may not be offered,sold, pledged or otherwise transferred except pursuant to an exemption from, or in a transaction not subjectto, the registration requirements of the Securities Act and in compliance with any applicable state securitieslaws. The Capital Securities offered hereby have not been recommended by any U.S. federal or statesecurities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed theaccuracy or determined the adequacy of this Offering Memorandum. Any representation to the contrary is acriminal offense in the United States.

This Offering Memorandum is being provided to a limited number of institutional and othersophisticated investors for informational use solely in connection with the consideration of the purchase of theCapital Securities offered hereby pursuant to Rule 144A or Regulation S. Its use for any other purpose is notauthorized.

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Until 40 days after the commencement of this offering, an offer or sale within the United States by anydealer (whether or not participating in this offering) of the Capital Securities initially sold pursuant toRegulation S may violate the registration requirements of the Securities Act if such offer or sale is madeother than in accordance with Rule 144A. See ‘‘Plan of Distribution’’ in this Offering Memorandum.

Each subsequent purchaser of the securities offered hereby will be deemed by its acceptance of thoseCapital Securities to have made certain acknowledgments, representations and agreements intended to restrictthe resale or other transfer of those Capital Securities as set forth in the Capital Securities or described in thisOffering Memorandum and, in connection therewith, may be required to provide confirmation of itscompliance with such resale or other transfer restrictions in certain cases. See ‘‘Selling Restrictions’’ in thisOffering Memorandum.

NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR ALICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISEDSTATUTES (‘‘RSA’’) WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT ASECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OFNEW HAMPSHIRE IMPLIES THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT ANYEXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANSTHAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS ORQUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TOANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCON-SISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM

This Offering Memorandum is being distributed only to, and is directed at (a) persons outside the UnitedKingdom, (b) persons who have professional experience in matters relating to investments who fall withinArticle 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the‘‘Order’’) and (c) high net worth entities, and other persons to whom it may otherwise lawfully becommunicated, falling within Article 49(1) of the Order (all such persons together being referred to as‘‘relevant persons’’). The Capital Securities are available only to, and any invitation, offer or agreement tosubscribe, purchase or otherwise acquire such Capital Securities will be available only to or will be engagedin only with, relevant persons. Any person who is not a relevant person should not act or rely on thisdocument or any of its contents.

NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN ECONOMIC AREA

This Offering Memorandum is an advertisement and is not a prospectus for the purposes of EU Directive2003/71/EC (the ‘‘Directive’’) and/or Part VI of the FSMA. A final form prospectus will be prepared andmade available to the public in accordance with the Directive. Investors should not subscribe for anysecurities referred to in this document except on the basis of information contained in the final formprospectus. The final form prospectus, when published, will be published in accordance with the Directive.

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CERTAIN DEFINITIONS

In this Offering Memorandum, the following terms are used:

) ‘‘ABN AMRO’’ means ABN AMRO Holding N.V.,

) ‘‘ABN AMRO ADSs’’ means the ABN AMRO American depositary shares, each of which representsone ABN AMRO ordinary share,

) ‘‘ABN AMRO Businesses’’ is defined under ‘‘The ABN AMRO Offer’’ in this Offering Memorandum,

) ‘‘ABN AMRO Group’’ refers to ABN AMRO and its subsidiaries,

) ‘‘ABN AMRO ordinary shares’’ means the ordinary shares, nominal value of 40.56 per share, ofABN AMRO,

) ‘‘Bank of America Agreement’’ refers to the Purchase and Sale Agreement, dated as of April 22,2007, between Bank of America and ABN AMRO Bank in respect of ABN AMRO North AmericaHolding Company, the holding company for LaSalle Bank Corporation, including the subsidiariesLaSalle N.A. and LaSalle Midwest N.A., including any amendment thereto,

) ‘‘Citizens’’ means Citizens Financial Group, Inc.,

) ‘‘Consortium and Shareholders’ Agreement’’ refers to the consortium and shareholders’ agreemententered into by the Consortium Banks and RFS Holdings,

) ‘‘Consortium Banks’’ means Fortis, RBSG and Santander, collectively, and, if the context so requires,their affiliates and RFS Holdings; and ‘‘Consortium Bank’’ means any of them individually,

) ‘‘Fortis’’ means Fortis N.V. and Fortis SA/NV and the group of companies owned and/or controlledby Fortis N.V. and Fortis SA/NV,

) ‘‘Group’’ means The Royal Bank of Scotland Group plc and its subsidiaries,

) ‘‘Offer’’ means the offer by RFS Holdings open to all holders of ABN AMRO ordinary shares whoare located outside of the United States, the offer by RFS Holdings open to all holders ofABN AMRO ordinary shares who are U.S. holders (within the meaning of Rule 14d-1(d) under theSecurities Exchange Act of 1934, as amended) and the offer by RFS Holdings open to all holders ofABN AMRO ADSs, wherever located,

) ‘‘RBS Greenwich Capital’’ means Greenwich Capital Markets, Inc.,

) ‘‘RBSG ordinary shares’’ means the ordinary shares, nominal value £0.25 per share, of RBSG,

) ‘‘RBS plc’’ means The Royal Bank of Scotland plc,

) ‘‘RBSG’’or ‘‘Issuer’’ refers to The Royal Bank of Scotland Group plc (except as the context mayotherwise require, in which case such reference includes our subsidiaries),

) ‘‘RFS Holdings’’ means RFS Holdings B.V.,

) ‘‘Santander’’ means Banco Santander Central Hispano, S.A.,

) ‘‘Transaction’’ means the proposed acquisition by RFS Holdings of ABN AMRO pursuant to the Offerand the reorganization of ABN AMRO and its subsidiaries following completion of the Offer asfurther described in the Issuer’s Form F-4, which the Issuer initially filed with the SEC on July 20,2007, as further amended, and

) ‘‘Ulster Bank’’ means Ulster Bank Group.

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DOCUMENTS INCORPORATED BY REFERENCE

This Offering Memorandum incorporates by reference important business and financial information aboutthe Issuer that the Issuer files with the SEC and, as a result, this information is not included in or deliveredwith this Offering Memorandum. This means the Issuer can disclose important information to you byreferring you to those documents. The information incorporated by reference is an important part of thisOffering Memorandum and information that the Issuer files with the SEC after the date of this OfferingMemorandum will automatically be deemed to update and supersede the information in this OfferingMemorandum.

A9.11.3.3

A9.11.1

A9.11.2

A9.11.3.1

A9.11.4.1

The Issuer incorporates by reference into this Offering Memorandum the following business and financialinformation, which has been previously published and has been filed with the U.K. Financial ServicesAuthority: (i) its Annual Report on Form 20-F for the fiscal year ended December 31, 2006, filed with theSEC on April 24, 2007 and the audited consolidated annual financial statements of the Group for the financialyear ended December 31, 2005 together with the audit report thereon contained on pages 134 to 229 of theIssuer’s Annual Report and Accounts 2005; (ii) its interim financial results for the six months ended June 30,2007 on Form 6-K furnished to the SEC on August 15, 2007; (iii) a Form 6-K furnished to the SEC onSeptember 25, 2007, containing certain pro forma unaudited condensed combined financial information andthe related notes thereto in relation to the proposed acquisition of ABN AMRO and (iv) any subsequentForm 6-K containing updated or revised pro forma financial information ((iii) and (iv) together referred toherein as the ‘‘Pro Forma Financial Information’’). Unless otherwise noted, all documents incorporated byreference and filed with the SEC have the SEC file number 001-10306.

Such documents shall be incorporated in, and form part of, this Offering Memorandum, provided thatany statement contained in a document which is incorporated by reference herein shall be modified orsuperseded for the purpose of this Offering Memorandum to the extent that a statement contained hereinmodifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statementso modified or superseded shall not, except as so modified or superseded, constitute a part of this OfferingMemorandum.

The Issuer’s Annual Report on Form 20-F includes, among other things, information about its business,the identity of directors and senior management, its history and development, its organizational structure, itssignificant properties, its operating and financial review and prospects, its liquidity and capital resources, itsemployees, its major shareholders and related party transactions. It also includes the Issuer’s audited financialstatements as of and for the three years ended December 31, 2006.

You are advised that the Pro Forma Financial Information has been derived from Amendment No. 5 to theIssuer’s Registration Statement on Form F-4 filed with the SEC on September 24, 2007 (‘‘Amendment No. 5’’).This Registration Statement has not yet been declared effective by the SEC and remains subject to review andcomment by the SEC until such date as it is declared effective. As a result of such review and comment and asa consequence of changes to relevant share prices, interest rates and currency exchange rates during theintervening periods, any amendments to the Registration Statement subsequent to Amendment No. 5 areexpected to amend, supplement or revise the Pro Forma Financial Information.

Upon written or oral request, the Issuer will provide free of charge a copy of any or all of thedocuments that we incorporate by reference into this Offering Memorandum, other than exhibits which arenot specifically incorporated by reference into this Offering Memorandum. To obtain copies you shouldcontact us at Citizens Financial Group, Inc., 28 State Street, Boston, Massachusetts 02109 U.S.A. Attention:Donald J. Barry, Jr., telephone (617) 725-5810. Documents incorporated by reference are available from usupon request without charge. You may also obtain documents incorporated by reference into this OfferingMemorandum from the internet site of the SEC, at http://www.sec.gov.

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You should rely only on the information contained in, or incorporated by reference into, this OfferingMemorandum in deciding whether to invest in the Capital Securities. The Issuer has not authorized anyone toprovide you with information that is different than what is contained in, or incorporated by reference into,this Offering Memorandum. This Offering Memorandum is accurate as of its date. You should not assumethat the information contained in this Offering Memorandum is accurate as of any date other than that date,and the mailing of this Offering Memorandum to you shall not create any implication to the contrary.

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FORWARD-LOOKING STATEMENTS

From time to time, the Issuer may make statements regarding its assumptions, projections, expectations,intentions or beliefs about future events, including statements relating to the Transaction and the Pro FormaFinancial Information included in this Offering Memorandum. The Issuer cautions that these statements mayand often do vary materially from actual results. Accordingly, the Issuer cannot assure you that actual resultswill not differ materially from those expressed or implied by the forward-looking statements. You should readthe sections entitled ‘‘Forward-looking statements’’ in the Issuer’s Annual Report on Form 20-F for the yearended December 31, 2006, and in the Form 6-K with the Issuer’s interim financial results for the six monthsended June 30, 2007, and in the Form 6-K with the Pro Forma Financial Information, which are incorporatedby reference in this Offering Memorandum as described under ‘‘Documents Incorporated by Reference’’above.

The Issuer undertakes no obligation to publicly update or revise any forward-looking statements, whetheras a result of new information, future events or otherwise. In light of these risks, uncertainties andassumptions, forward-looking events discussed in this Offering Memorandum or any information incorporatedby reference in this Offering Memorandum might not occur.

Statements that are not statements of historical fact, including expressions and expectations, are forward-looking in nature and are based on current plans, estimates and projections. The forward-looking statementsinclude statements regarding the Issuer’s financial position; the Issuer’s expectations concerning futureoperations, margins, profitability, liquidity and capital resources; the Issuer’s business strategy and other plansand objectives for future operations and all other statements that are not historical facts. In some cases youcan identify forward-looking statements by terminology such as ‘‘seek(s),’’ ‘‘intends,’’ ‘‘aims,’’ ‘‘expects,’’‘‘will,’’ ‘‘may,’’ ‘‘believe(s),’’ ‘‘should,’’ ‘‘anticipate(s),’’ ‘‘project(s),’’ ‘‘probability,’’ ‘‘risk,’’ ‘‘target,’’‘‘goal,’’ ‘‘objective,’’ ‘‘estimate,’’ ‘‘future,’’ ‘‘potential,’’ ‘‘predicts,’’ and similar expressions. The Issuer hasbased these forward-looking statements on the Issuer’s current expectations and projections about futureevents. Although the Issuer believes that these statements are based on reasonable assumptions, they aresubject to numerous factors, risks and uncertainties that could cause actual outcomes and results to bematerially different from those projected. It is also possible that any or all events described in forward-looking statements may not occur.

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OVERVIEW

This overview highlights information contained elsewhere in this Offering Memorandum. Because it is anoverview, it does not contain all the information you should consider before investing in the CapitalSecurities. Before making an investment decision in relation to Capital Securities, you should carefully readthis entire Offering Memorandum, including the section entitled ‘‘Risk Factors’’ and the Issuer’s financialstatements and Pro Forma Financial Information, including the notes thereto, which are incorporated byreference in this Offering Memorandum. Unless otherwise indicated, all financial information refers to that ofthe Group on a consolidated basis.

The Group

A9.4.1.1

A9.6.1

A9.4.1.4

A9.5.1.2

The Royal Bank of Scotland Group plc had a market capitalization of £59.9 billion as at June 30, 2007.The purpose of the Group is to carry on the business of banking in all its aspects, including (but withoutlimitation) the transaction of all financial, monetary or other business. Headquartered in Edinburgh, the Groupoperates in the United Kingdom, the United States and internationally. The Group’s operations are conductedprincipally through RBS and its subsidiaries (including National Westminster Bank Plc (‘‘NatWest’’)), otherthan the general insurance business (which is primarily conducted through Direct Line Group and ChurchillInsurance). Both RBS and NatWest are U.K. clearing banks whose origins go back over 275 years. In theUnited States, the Group’s subsidiary Citizens Financial Group, Inc. is a commercial banking organization.The Group has a diversified customer base and provides a range of products and services to personal,commercial and large corporate and institutional customers. The registered office is 36 St Andrew Square,Edinburgh EH2 2YB, Scotland and the principal place of business is RBS Gogarburn, PO Box 1000,Edinburgh EH12 1HQ, Scotland, telephone +44 131 626 0000.

The Group had total assets of £1,011.3 billion and shareholders’ equity of £41.5 billion as at June 30,2007. The Group had a total capital ratio of 12.5% and tier 1 capital ratio of 7.4% as at June 30, 2007.

Key Features of the Offering

The following key features are provided solely for your convenience. These key features are not intendedto be complete. You should read the full text and more specific details contained elsewhere in this OfferingMemorandum. For a more detailed description of the Capital Securities, see ‘‘Description of the CapitalSecurities’’. Terms used in this overview and not otherwise defined have the meanings given to them in the‘‘Description of the Capital Securities’’ section.

Issuer************************ The Royal Bank of Scotland Group plc.

A13.4.1Securities Offered************** $1,600,000,000 in aggregate principal amount of Fixed Rate/FloatingRate Preferred Capital Securities.

A13.4.5Issue Price ******************* 100%

A13.4.8Issue Date******************** October 4, 2007

Coupon Payments************** The Capital Securities bear interest at the Coupon Rate from (andincluding) the Issue Date.

The Coupon Rate in respect of the period from (and including) the IssueDate to (but excluding) October 5, 2017 (the ‘‘First Reset Date’’) is6.990% per annum. Coupon Payments during this period will be paid,subject as provided herein, semi-annually in arrears on April 5 andOctober 5 in each year, with the first such payment being made onApril 5, 2008 and the last such payment being made on the First ResetDate.

After the First Reset Date, the Coupon Rate in respect of each ResetPeriod shall be the aggregate of 2.67% per annum and the London

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interbank offered rate for three-month deposits in U.S. dollars. CouponPayments during this period will be paid, subject as provided herein,quarterly in arrears on January 5, April 5, July 5 and October 5 in eachyear, with the first such payment being made on January 5, 2018.

A13.4.10

Yield ************************ The effective yield of the Capital Securities is 6.990% per annum andapplies in respect of the period until the First Reset Date only. The yieldis calculated as at the Issue Date on the basis of the Issue Price. It isnot an indication of future yield.

A13.4.6Subordination ***************** The rights and claims of the holders of the Capital Securities aresubordinated to the claims of Senior Creditors. Payments in respect ofthe Capital Securities will be conditional upon the Issuer being solventat the time of payment, as provided in ‘‘Description of the CapitalSecurities — Status and Subordination — Subordination — Condition ofPayment’’, and the Issuer shall have no liability to pay any such amountto the extent that the Issuer is insolvent or would become insolvent as aresult of making such payment.

The holders of Capital Securities will, in the event of the Winding Upor Qualifying Administration of the Issuer, be subordinated andpostponed in right of payment in the manner provided in the Trust Deedand as specified under ‘‘Description of the Capital Securities — Statusand Subordination — Subordination — Winding-up’’.

Deferral of Payments andRestrictions during Period ofDeferral******************** The Issuer may elect to defer any Coupon Payment in its absolute

discretion. Subject as provided under ‘‘Description of the CapitalSecurities — Alternative Coupon Satisfaction Mechanism — Market Dis-ruption’’, no interest will accrue on any Deferred Coupon Payments. If,on any Coupon Payment Date, all Coupon Payments in respect of theCapital Securities which would otherwise have been due on such dateshall not have been paid as a result of either the exercise by the Issuerof its discretion to defer such Coupon Payments or the operation of theprovisions relating to subordination as more fully described under‘‘Description of the Capital Securities — Subordination — Condition ofPayment’’, then from the date on which payment was originally, orwould have been, due until (x) the date on which the Issuer next pays infull the Coupon Payment due and payable on a Coupon Payment Dateon all outstanding Capital Securities or, if earlier, (y) any OptionalDeferred Coupon Settlement Date upon which the Issuer satisfies in fullall Outstanding Coupon Payments, the Issuer shall not and shall procurethat no member of the Group shall (i) declare or pay a distribution ordividend on any Junior Securities (other than a final dividend declared,made or paid by the relevant company before the Issuer gives notice thatsuch Coupon Payment is to be deferred and other than distributions ordividends paid by a member of the Group which is wholly-owned byanother member of the Group); or (ii) redeem, purchase or otherwiseacquire for any consideration any Junior Securities or Parity Securities.

Subject to the Issuer being solvent in accordance with ‘‘Description ofthe Capital Securities — Status and Subordination — Condition of Pay-ment’’, the Issuer may elect to pay such Deferred Coupon Payment atany time, provided that the Issuer must satisfy such Deferred Coupon

2

Payment on the first to occur of (i) the redemption of the CapitalSecurities, (ii) the substitution or variation of the terms of the CapitalSecurities under ‘‘Description of the Capital Securities — Redemption —Substitution or Variation instead of Redemption’’ or (iii) the substitutionof the Capital Securities under ‘‘Description of the Capital Securities —Redemption — Substitution for Substituted Preference Shares’’.

Optional Redemption *********** The Capital Securities are perpetual securities and have no final maturitydate. However, the Capital Securities may be redeemed in whole, butnot in part, at the option of the Issuer, on any Reset Date at theirprincipal amount together with any Outstanding Payments provided thatthe Issuer is solvent at the time of such redemption and will remainsolvent immediately thereafter, as more fully described under ‘‘Descrip-tion of the Capital Securities — Redemption — Issuer’s Call Option’’.

Redemption due to Tax Event**** The Issuer may elect to redeem all, but not some only, of the CapitalSecurities at their principal amount together with any OutstandingPayments at any time prior to the First Reset Date, if the Issuer satisfiesthe Trustee that:

(i) it has or will or would, but for redemption, become obliged to payadditional amounts as provided or referred to under ‘‘Description of theSecurities — Taxation’’;

(ii) any Coupon Payment would be a ‘‘distribution’’ for UnitedKingdom tax purposes;

(iii) in respect of the obligation of the Issuer to make any CouponPayment on the next following Coupon Payment Date, it would not toany material extent be entitled to have any attributable loss or non-trading deficit set against the profits of companies with which it isgrouped for applicable United Kingdom tax purposes (whether under thegroup relief system current as at the date of this Offering Memorandumor any similar system or systems having like effect as may from time totime exist); or

(iv) in respect of our obligation to make any Coupon Payment on thenext following Coupon Payment Date, it would otherwise suffer adversetax consequences,

in each such case, as a result of any change in, or amendment to, thelaws or regulation of the United Kingdom or any political subdivision orany authority thereof or therein having power to tax, or any change inthe application or official interpretation of such laws or regulations,which change or amendment becomes effective on or after the date ofthis Offering Memorandum and cannot be avoided by the Issuer takingreasonable steps available to it (each a ‘‘Tax Event’’), all as more fullydescribed under ‘‘Description of the Capital Securities — Redemption —Redemption due to Taxation’’.

Redemption due to Capital Disqualification Event ******** The Issuer may elect to redeem all, but not some only, of the Capital

Securities at their principal amount together with any OutstandingPayments, provided it is solvent at the time of such redemption and willremain solvent immediately thereafter, at any time prior to the FirstReset Date, if a Capital Disqualification Event has occurred and iscontinuing, all as more fully described under ‘‘Description of the Capital

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Securities — Redemption — Redemption for Capital DisqualificationEvent’’.

Substitution or Variation instead ofRedemption***************** If the Issuer has a right to redeem the Capital Securities for tax reasons

or due to a Capital Disqualification Event, then it may, instead of givingnotice to redeem, substitute at any time all (but not some only) of theCapital Securities for, or vary the terms of the Capital Securities so thatthey remain Qualifying Tier 1 Securities or become Qualifying UpperTier 2 Securities, and the Trustee shall agree to such substitution orvariation, all as more fully described in ‘‘Description of the CapitalSecurities — Redemption — Substitution or Variation instead ofRedemption’’.

In connection therewith, all Deferred Coupon Payments (if any) will besatisfied by the operation of the Alternative Coupon SatisfactionMechanism.

If the Issuer varies the terms of the Capital Securities or substitutes newsecurities or non-cumulative preference shares for the Capital Securities,the tax (including United States federal income tax) consequences ofsuch variation or substitution are uncertain because such consequenceswill depend on the terms and conditions that are varied or the terms andconditions of the substituted securities. In certain cases a Holder mayrecognize a gain or loss for tax (including U.S. federal income tax)purposes on such a variation or substitution and have to pay tax thereon,even though no cash will actually be distributed to the holder pursuantto the variation or substitution. Prospective holders should consultwith their own tax advisor about the potential tax consequences tothem of a variation or substitution of the Capital Securities and ofreceiving, holding, and disposing of new securities. This OfferingMemorandum does not describe the tax consequences for Holders ofany such substitution or variation.

Purchase ********************* The Issuer may (subject to the prior consent of, or notification to (andno objection being raised by) the U.K. Financial Services Authority, ineach case solely to the extent then required) at any time purchasebeneficially or procure others to purchase beneficially for its accountCapital Securities in the open market, by tender or by private treaty.Capital Securities purchased or otherwise acquired by the Issuer shall besurrendered to the Registrar for cancellation.

Substitution for SubstitutedPreference Shares************ At any time a Capital Breach Event has occurred and is continuing, the

Issuer may cause the substitution of all, but not some only, of theCapital Securities for Substituted Preference Shares.

The terms of the Substituted Preference Shares shall provide that (x) theSubstituted Preference Shares will have a First Reset Date (or as suchterm may otherwise be defined in the terms thereof) which falls on thesame day as the First Reset Date; (y) the Issuer has the right to choosewhether or not to pay any dividend on the Substituted PreferenceShares; and (z) any dividend payable on the Substituted PreferenceShares shall be non-cumulative, and otherwise shall in all materialrespects provide the holders thereof with at least the same economicrights and benefits as are attached to the Capital Securities, in all cases

4

as more fully described under ‘‘Description of the Capital Securities —Redemption — Substitution for Substituted Preference Shares’’.

In connection with any Preference Share Substitution, all DeferredCoupon Payments and Accrued Payments (if any) will be satisfied onthe Substitution Date by the operation of the Alternative CouponSatisfaction Mechanism.

The Issuer will procure that transfers of the Substituted PreferenceShares, or the relevant certificates in the case of Substituted PreferenceShares deposited in an ADR Facility, shall be able to be effectedbetween holders thereof free of any stamp duty, stamp duty reserve taxor similar taxes arising on transfer of such securities.

The Issuer will pay any stamp duty reserve taxes or capital duties orstamp duties or similar taxes payable in the United Kingdom arising onthe allotment and issue of the Substituted Preference Shares, includingtheir delivery to a common depositary and/or deposit in an ADR Facility(and the issue of the relevant certificates in respect thereof).

If the Issuer substitutes the Capital Securities with Substituted Prefer-ence Shares, the tax (including United States federal income tax)consequences of such substitution are uncertain because such conse-quences will depend on the terms and conditions of the SubstitutedPreference Shares. In certain cases Holders may recognize gain or lossfor tax (including U.S. federal income tax) purposes on such asubstitution and have to pay tax thereon, even though no cash willactually be distributed to the holder pursuant to the substitution.Prospective holders should consult with their own tax advisor aboutthe potential tax consequences to them of a substitution and ofreceiving, holding, and disposing of such Substituted PreferenceShares. This Offering Memorandum does not describe the taxconsequences for Holders of any such substitution.

Alternative Coupon SatisfactionMechanism ***************** Investors will receive payments in respect of the Capital Securities in

cash. However, as more fully described in ‘‘Description of the CapitalSecurities — Alternative Coupon Satisfaction Mechanism’’, (i) in respectof any Deferred Coupon Payment and/or any Accrued Payment, theIssuer must, and (ii) in respect of any Coupon Payment, the Issuer may,satisfy its obligation to make such payments (which term does notinclude any payment of principal) to holders by issuing and/ortransferring Ordinary Shares to the Trustee or its agent.

If any ACSM Payment is to be satisfied through the issue of OrdinaryShares then: (i) by or before the close of business on the seventhbusiness day prior to the relevant ACSM Payment Date, the Issuer willissue and/or transfer to the Trustee such number of Ordinary Shares (the‘‘Payment Ordinary Shares’’) as, in the determination of the CalculationAgent, will have a market value as near as practicable to, but not lessthan, the relevant ACSM Payment to be satisfied in accordance with theAlternative Coupon Satisfaction Mechanism; and (ii) the Trustee hasagreed to use reasonable endeavors to effect the transfer or instruct itsagent to effect the transfer of such Payment Ordinary Shares to or to theorder of the Calculation Agent as soon as practicable and theCalculation Agent shall be required to agree in the Calculation Agency

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Agreement to use reasonable endeavors to procure purchasers for suchPayment Ordinary Shares.

The Issuer has agreed to fund any shortfall through issuing additionalPayment Ordinary Shares as part of the operation of a similar shareissue, exchange and sale mechanism to that summarized above.

The Issuer shall not be entitled to exercise its option to redeem,substitute or vary the terms of the Capital Securities until such time as ithas available for issue such number of Payment Ordinary Shares as isrequired to be issued in accordance with the Alternative CouponSatisfaction Mechanism for the purposes of satisfying in full inaccordance with ‘‘Description of the Capital Securities — AlternativeCoupon Satisfaction Mechanism’’ any ACSM Payment required to besatisfied in connection with such redemption, substitution or variation ofthe terms of the Capital Securities.

Market Disruption Event ******** If there exists, in the Issuer’s opinion, a Market Disruption Event withrespect to Payment Ordinary Shares on or after the 15th business daypreceding any ACSM Payment Date, then the relevant ACSM Paymentmay be deferred until such time as the Market Disruption Event, in theIssuer’s opinion, no longer exists.

Any such deferred ACSM Payment will be satisfied as soon aspracticable following such time as the Market Disruption Event nolonger exists. Interest shall not accrue on such deferred ACSM Payment,unless, as a consequence of the existence of the relevant MarketDisruption Event, the Issuer does not satisfy the relevant ACSMPayment for a period of 14 days or more after the due date therefor, inwhich case interest shall accrue on such deferred ACSM Payment at arate determined in accordance with the provisions under ‘‘Description ofthe Capital Securities — Coupon Payments’’ and shall be satisfied onlyin accordance with the provisions under ‘‘— Alternative CouponSatisfaction Mechanism,’’ as soon as reasonably practicable after therelevant deferred ACSM Payment is made, all as more fully describedunder ‘‘Description of the Capital Securities — Alternative CouponSatisfaction Mechanism — Market Disruption’’.

Additional Amounts************ All payments by the Issuer or on the Issuer’s behalf of CouponPayments, Deferred Coupon Payments and Accrued Payments in respectof the Capital Securities shall be made without withholding of ordeduction for, or on any account of, any present or future tax, duty orcharge of whatsoever nature imposed or levied by or on behalf of theUnited Kingdom or any authority thereof or therein having power to tax,unless the withholding or deduction is required by law. In that event theIssuer shall pay such additional amounts as will result (after suchwithholding or deduction) in the payment to Holders of the sums whichwould have been receivable (in the absence of such withholding ordeduction) from it in respect of the Capital Securities, subject tocustomary exceptions.

Remedy from Non-Payment ***** The sole remedy against the Issuer available to the Trustee or anyHolder for recovery of amounts owing in respect of any payment ofprincipal or interest in respect of the Capital Securities will be theinstitution of proceedings for the winding-up of the Issuer and/orproving in such winding-up.

6

Form ************************ The Capital Securities will be issued in registered form. CapitalSecurities which are offered and sold outside the United States inreliance on Regulation S will be represented by interests in theRegulation S Global Certificate, registered in the name of the nomineefor a common depositary for Euroclear and Clearstream, Luxembourg onor about the Issue Date. Up to and including the fortieth day after thelater of the commencement of the offering of the Capital Securities andthe Issue Date, beneficial interests in the Regulation S Global Certificatemay be held only through Euroclear or Clearstream. Capital Securitieswhich are offered and sold in the United States in reliance onRule 144A will be represented by interests in the Restricted GlobalCertificate, deposited with a custodian for, and registered in the name ofa nominee of, DTC on or about the Issue Date. Interests in the GlobalCertificates will be shown on, and transfers thereof will be effected onlythrough, records in book-entry form maintained by DTC and its directand indirect participants, in the case of the Restricted Global Certificate,and Euroclear and Clearstream, Luxembourg, in the case of theRegulation S Global Certificate. Individual Certificates evidencingholdings of Capital Securities will only be available in certain limitedcircumstances. See ‘‘Book Entry, Transfer Restrictions and Summary ofProvisions Relating to the Capital Securities while in Global Form’’.

Denominations **************** The Capital Securities will be issued in minimum denominations of$100,000 and integral multiples of $1,000 in excess thereof.

Securities Law Restrictions ****** The Issuer has not registered the Capital Securities, the Ordinary Sharesor any securities issued upon the substitution of the Capital Securitiesunder the Securities Act or any state securities law. You may only offeror sell Capital Securities in a transaction exempt from or not subject tothe registration requirements of the Securities Act. The CapitalSecurities offered hereby are being offered and sold in the United Statesonly to qualified institutional buyers in accordance with Rule 144Aunder the Securities Act and to investors outside the United States inreliance on Regulation S under the Securities Act. See ‘‘SellingRestrictions’’ and ‘‘Book Entry, Transfer Restrictions and Summary ofProvisions Relating to the Capital Securities while in Global Form’’.

A13.4.3Governing Law**************** The Trust Deed and the Capital Securities are governed by the laws ofEngland, except that the status and subordination of the CapitalSecurities and the corresponding provisions of the Trust Deed relating tothe subordination of the Capital Securities are governed by the laws ofScotland. The Paying and Transfer Agency Agreement is governed bythe laws of England.

A13.5.1

Listing and Trading ************ Applications have been made to the U.K. Listing Authority for theCapital Securities to be admitted to the Official List and to the LondonStock Exchange for the Capital Securities to be admitted to trading onthe Market.

Taxation ********************* For a summary of the U.K. tax and U.S. federal income taxconsequences of, and ERISA considerations relating to, an investment inthe Capital Securities, see ‘‘Taxation.’’

A13.4.11Trustee ********************** BNY Corporate Trustee Services Limited.

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A13.5.2Paying Agent, Registrar********* The Bank of New York of 40th Floor, One Canada Square, LondonE14 5AL.

Use of Proceeds *************** The Issuer will use the net proceeds from the sale of the CapitalSecurities, estimated to be approximately $1,583.5 million after thededuction of estimated fees and expenses, to fund in part the cashportion of the Offer attributable to RBSG, to strengthen the Group’scapital base and for general corporate purposes. The Issuer may issueother securities, including other capital securities, debt securities andpreference shares, in connection with financing the portion of the Offerwhich is attributable to the Issuer.

A13.7.5Ratings ********************** The Capital Securities are expected on issue to be rated ‘‘Aa3’’ byMoody’s, ‘‘A’’ by Standard & Poor’s and ‘‘AA’’ by Fitch. A creditrating is not a recommendation to buy, sell or hold securities and maybe subject to revision, suspension, reduction or withdrawal at any timeby the assigning rating agency.

A13.4.2Securities Codes: ************** Restricted Capital Securities

CUSIP: 780097AS0

ISIN: US780097AS09

Regulation S Capital Securities

Common Code: 32386504

ISIN: XS0323865047

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RISK FACTORS

A13.2

A9.3.1

Investing in the securities offered using this Offering Memorandum involves risk. You should carefullyconsider the following factors and the other information in this Offering Memorandum and the informationincorporated by reference herein before deciding to invest in the Capital Securities. If any of these risksoccurs, the business, financial condition, and results of operations of the Group could suffer, and the tradingprice and liquidity of the Capital Securities could decline, in which case you could lose part or all of yourinvestment. The Issuer also believes that the factors set forth in this section under ‘‘Risks Relating to theCapital Securities’’ may affect its ability to satisfy its obligations under the Capital Securities. All of thesefactors are contingencies which may or may not occur and the Issuer is not in a position to express a viewon the likelihood of any such contingency occurring. The Issuer believes that the factors described belowrepresent the principal risks inherent in investing in the Capital Securities, but the Issuer may be unable topay interest, principal or other amounts on or in connection with the Capital Securities for other reasons andthe Issuer does not represent that the statements below regarding the risks of holding any Capital Securitiesare exhaustive. Terms used in this section and not otherwise defined have the meanings given to them in the‘‘Description of the Capital Securities’’ section. The Issuer is the Group’s ultimate parent company and isaffected by business and financial risks across the spectrum of the Group’s operations.

Risks Related to the Business of the Group

Set out below are certain risk factors which could affect the Group’s future results and cause them to bematerially different from expected results. The Group’s results could also be affected by competition andother factors. Although the following sets out all the material risk factors which may affect the Group’sresults and of which the Issuer is aware, the factors discussed below may not be a complete andcomprehensive statement of all potential risks and uncertainties its businesses face. Investors should note thatthey bear the risk of insolvency of the Issuer.

The Group’s business and earnings are affected by general business and geopolitical conditions.

The performance of the Group is influenced by economic conditions particularly in the United Kingdom,United States and Europe. Downturns in these economies could result in a general reduction in businessactivity and a consequent loss of income for the Group. It could also cause a higher incidence of credit lossesand losses in its trading portfolios. Geopolitical conditions can also affect the earnings of the Group. Terroristacts and threats and the response of governments in the United Kingdom, United States and elsewhere tothem could affect the level of economic activity. The business of the Group is also exposed to the risk ofbusiness interruption and economic slowdown following the outbreak of a pandemic.

The financial performance of the Group is affected by borrower credit quality.

Risks arising from changes in credit quality and the recoverability of loans and amounts due fromcounterparties are inherent in a wide range of the businesses of the Group. Adverse changes in the creditquality of its borrowers and counterparties or a general deterioration in the United Kingdom, United States,European or global economic conditions, or arising from systemic risks in the financial systems, could affectthe recoverability and value of the assets of the Group and require an increase in its provision for impairmentlosses and other provisions.

Changes in interest rates, foreign exchange rates, equity prices and other market factors affect thebusiness of the Group.

The most significant market risks the Group faces are interest rate, foreign exchange and bond andequity price risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate marginrealized between lending and borrowing costs. Changes in currency rates, particularly in the sterling-dollarand sterling-euro exchange rates, affect the value of assets and liabilities denominated in foreign currenciesand affect earnings reported by the Issuer’s non-U.K. subsidiaries, mainly Citizens, RBS Greenwich Capitaland Ulster Bank, and may affect income from foreign exchange dealing. The performance of financial

9

markets may cause changes in the value of its investment and trading portfolios. The Group has implementedrisk management methods to mitigate and control these and other market risks to which it is exposed.However, it is difficult to predict with accuracy changes in economic or market conditions and to anticipatethe effects that such changes could have on the financial performance and business operations of the Group.

The insurance businesses of the Group are subject to inherent risks involving claims.

Future claims in the general and life assurance business of the Group may be higher than expected as aresult of changing trends in claims experience resulting from catastrophic weather conditions, demographicdevelopments, changes in mortality rates and other causes outside its control. Such changes would affect theprofitability of current and future insurance products and services. The Group re-insures some of the risks ithas assumed.

Operational risks are inherent in the businesses of the Group.

The businesses of the Group are dependent on its ability to process a very large number of transactionsefficiently and accurately. Operational losses can result from fraud, errors by employees, failure to documenttransactions properly or to obtain proper authorization, failure to comply with regulatory requirements andConduct of Business Rules, equipment failures, natural disasters or the failure of external systems, forexample, those of the suppliers or counterparties of the Group. Although the Group has implemented riskcontrols and loss mitigation actions, and substantial resources are devoted to developing efficient proceduresand to staff training, it is only possible to be reasonably, but not absolutely, certain that such procedures willbe effective in controlling each of the operational risks faced by the Group.

Each of the businesses of the Group is subject to substantial regulation and regulatory oversight. Anysignificant regulatory developments could have an effect on how the Group conducts its business and onthe results of operations.

The Group is subject to financial services laws, regulations, administrative actions and policies in eachlocation in which it operates. This supervision and regulation, in particular in the United Kingdom and theUnited States, if changed, could materially affect the business of the Group, the products and services offeredor the value of assets.

Future growth in the earnings of the Group depends on strategic decisions regarding organic growthand potential acquisitions.

The Group devotes substantial management and planning resources to the development of strategic plansfor organic growth and identification of possible acquisitions, supported by substantial expenditure to generategrowth in customer business. If these strategic plans do not reach completion in a timely manner or on a costeffective basis or do not otherwise meet with success, the earnings of the Group could grow more slowly ordecline.

The risk of litigation is inherent in the operations of the Group.

In the ordinary course of the business, legal actions, claims against and by the Group and arbitrationsarise; the outcome of such legal proceedings could affect the financial performance of the Group. See‘‘General Information — Litigation’’.

The Group is exposed to the risk of changes in tax legislation and its interpretation and to increases inthe rate of corporate and other taxes in the jurisdictions in which the Group operates.

The activities of the Group are subject to tax at various rates around the world computed in accordancewith local legislation and practice. Action by governments to increase tax rates or to impose additional taxeswould reduce its profitability. Revisions to tax legislation or to its interpretation might also affect the resultsof the Group in the future.

10

Governmental policy and regulation may have an adverse effect on the results of the Group.

The businesses and earnings of the Group can be affected by the fiscal or other policies and otheractions of various governmental and regulatory authorities in the United Kingdom, the European Union, theUnited States and elsewhere.

There is continuing political and regulatory scrutiny of the operation of the retail banking and consumercredit industries in the United Kingdom and elsewhere. The nature and impact of future changes in policiesand regulatory action are not predictable and are beyond the control of the Group, but could have an adverseimpact on its businesses and earnings.

In the European Union, these regulatory actions included an inquiry into retail banking in all of the then25 member states by the European Commission’s Directorate General for Competition. The inquiry examinedretail banking in Europe generally. On January 31, 2007, the European Commission announced that barriersto competition in certain areas of retail banking, payment cards and payment systems in the European Unionhad been identified. The European Commission indicated that it will use its powers to address these barriersand will encourage national competition authorities to enforce European and national competition laws whereappropriate. Any action taken by the European Commission and national competition authorities could havean adverse impact on the Issuer’s payment cards and payment systems businesses and on the retail bankingactivities in the European Union countries in which it operates.

In the United Kingdom in September 2005, the Office of Fair Trading (‘‘OFT’’) received a super-complaint from the Citizens Advice Bureau relating to payment protection insurance, or PPI. As a result, theOFT commenced a market study on PPI in April 2006. In October 2006, the OFT announced the outcome ofthe market study and, on February 7, 2007, following a period of consultation, the OFT referred the PPImarket to the U.K. Competition Commission for an in-depth inquiry. This inquiry could continue for up totwo years. Also, in October 2006, the U.K. Financial Services Authority published the outcome of its broadindustry thematic review of PPI sales practices in which it concluded that some institutions fail to treatcustomers fairly.

In April 2006, the OFT commenced a review of the undertakings given following the conclusion of theCompetition Commission Inquiry in 2002 into the supply of banking services to small and mediumenterprises (‘‘SMEs’’).

The OFT has carried out investigations into Visa and MasterCard credit card interchange rates. Thedecision by the OFT in the MasterCard interchange case was set aside by the Competition Appeals Tribunalin June 2006. The OFT’s investigations in the Visa interchange case and a second MasterCard interchangecase are ongoing. The outcome is not known, but these investigations may have an impact on the consumercredit industry in general and, therefore in this sector of the Group’s business. On February 9, 2007, the OFTannounced that it was expanding its investigation into interchange rates to include debit cards.

On September 7, 2006, the OFT announced that it had decided to undertake an investigation of theapplication of its statement on credit card fees to current account unauthorized overdraft fees. Theinvestigation was completed in March 2007. On March 29, 2007, the OFT announced its decision to conducta formal in-depth investigation into the fairness of bank current account charges. On April 26, 2007, the OFTannounced a formal market study into personal current accounts in the United Kingdom. The study will focuson the impact of free-if-in-credit current accounts on competition and whether they deliver value toconsumers. The OFT expects to complete the market study by the end of 2007. In common with other banksin the United Kingdom, the Group has received claims from customers in respect of current accountadministrative charges. The financial performance of the Group could be adversely affected if, by legalprocess or regulatory action, such charges are determined to be, in whole or in part, penalties or unfair.

On January 26, 2007, the U.K. Financial Services Authority issued a Statement of Good Practice relatingto Mortgage Exit Administration Fees. On March 1, 2007, the Group adopted a policy of charging allcustomers the fee applicable at the time the customers took out the mortgage. In addition, any customers whohad previously been charged a higher fee than was applicable at the time they took out the mortgage and who

11

complained were refunded the difference in fees. This approach was one of the options recommended by theU.K. Financial Services Authority.

On April 26, 2007, the Office of Rail Regulation referred the leasing of rolling stock for franchisedpassenger services and the supply of related maintenance services in Great Britain to the U.K. CompetitionCommission for an inquiry lasting up to two years. The Group includes the Angel Trains group, a rollingstock leasing business operating in this market.

On May 15, 2007, the Competition Commission published its final report into the supply of personalcurrent account banking services in Northern Ireland. It is anticipated that a statutory instrumentimplementing the remedies set out in the report will be made in October 2007. The Group includes UlsterBank, which is active in the Northern Ireland current account market.

Other areas where changes could have an adverse impact include:

) the monetary, interest rate and other policies of central banks and regulatory authorities;

) general changes in government or regulatory policy or changes in regulatory regimes that maysignificantly influence investor decisions in particular markets in which the Issuer operates or mayincrease the costs of doing business in those markets;

) other general changes in the regulatory requirements, such as prudential rules relating to the capitaladequacy framework;

) changes in competition and pricing environments;

) further developments in the financial reporting environment;

) expropriation, nationalization, confiscation of assets and changes in legislation relating to foreignownership; and

) other unfavorable political, military or diplomatic developments producing social instability or legaluncertainty which, in turn, may affect demand for the products and services of the Issuer.

Risks Related to the Transaction

The consummation of the Offer is subject to the satisfaction or waiver of certain Offer conditions, all ofwhich, except for the minimum acceptance condition and the government and regulatory approvalsconditions, must be either satisfied or waived prior to the expiration of the Offer period. There can beno assurance that the Offer conditions will be satisfied or waived and that the Issuer will complete theacquisition of the ABN AMRO Businesses.

The consummation of the Offer is subject to the satisfaction or waiver of certain Offer conditions, all ofwhich, except for the minimum acceptance condition and the government and regulatory approvals conditions,must be either satisfied or waived prior to the expiration of the Offer period (as such Offer period may beextended in accordance with applicable law and regulation). These conditions include (i) acceptance of theOffer by the holders of at least 80% of the ABN AMRO ordinary shares, calculated on a fully diluted basis,(ii) the completion of the sale of LaSalle Bank Corporation (‘‘La Salle’’) and the retention of the proceedstherefrom within the ABN AMRO Group, (iii) the absence of a material adverse change in respect of thebusiness, cash flow, financial or trading position, assets, profits, operational performance, capitalization,prospects or activities of either the ABN AMRO Group, RFS Holdings or any of the Consortium Banks,(iv) the absence of a material adverse change in national or international capital markets, financial, political oreconomic conditions or currency exchange rates or exchange controls, (v) the absence of material litigation orother proceedings, (vi) the absence of injunctions or other restrictions on the consummation of the Offer,(vii) the granting of all necessary regulatory approvals and (viii) the declaration by the European Commissionthat the concentrations resulting from the Transaction are compatible with the competition and antitrust rulesof the common market (each Offer condition, an ‘‘Offer Condition’’ and, collectively, the ‘‘OfferConditions’’). There can be no assurance that any or all of the Offer Conditions will be satisfied or waived.In addition, the Offer is subject to a competing offer by Barclays plc (‘‘Barclays’’). There can be no

12

assurance that the Offer will be consummated and the acquisition of the ABN AMRO Businesses will becompleted.

Obtaining required regulatory approvals may delay completion of the Transaction, and compliance withconditions and obligations imposed in connection with regulatory approvals could adversely affect thebusinesses of the Group and the businesses of ABN AMRO.

The Transaction will require various approvals or consents from, among others, the Dutch Minister ofFinance (Minister van Financien) and the Dutch Central Bank, as the case may be, the U.K. FinancialServices Authority, the Bank of Spain, the European Commission and various other antitrust authoritiesoutside the European Union, other bank regulatory, securities, insurance and other regulatory authoritiesworldwide. RFS Holdings and the Consortium Banks have made all necessary filings for the approval of thechange of control of ABN AMRO with their home regulators, in so far as these are required, and have madesubstantially all other applications for regulatory change of control approval. Approval has been requestedfrom, amongst others, the FSA, the Dutch Minister of Finance (Minister van Financien), the SpanishSecurities Market Commission (Comision Nacional del Mercado de Valores), and the Belgian Banking,Finance and Insurance Commission (Commission Bancaire, Financiere et des Assurances). In a number ofjurisdictions, including the Netherlands and the United Kingdom, such approvals have already been granted.Other than approvals by competition and antitrust authorities, obtaining regulatory approval for thereorganisation (as opposed to the acquisition) of ABN AMRO is not a condition to the Offer. Accordingly,formal consent from bank regulators for the subsequent proposed restructuring has not yet been applied for inmost jurisdiction where regulatory consent is required. The governmental entities from which these approvalsare required, including the Dutch Central Bank, may refuse to grant such approval, or, may impose conditionson, or require divestitures or other changes in connection with, the completion of the Transaction. Theseconditions or changes could have the effect of delaying completion of the Transaction, reducing theanticipated benefits of the Transaction or imposing additional costs on the Issuer or limiting its revenuesfollowing completion of the Transaction, any of which might have a material adverse effect on the Group’sbusiness, financial condition or prospects after completion of the Transaction. In order to obtain theseregulatory approvals, the Consortium Banks may have to divest, or commit to divesting, certain of thebusinesses of ABN AMRO and/or the Consortium Banks to third parties. In addition, the Issuer may berequired to make other commitments to regulatory authorities. These divestitures and other commitments, ifany, may have an adverse effect on its business, results of operations, financial condition or prospects afterthe completion of the Transaction.

Following completion of the Offer and insofar as not already obtained, regulatory approvals for thereorganization of the ABN AMRO Group will be sought from the relevant regulators once the ConsortiumBanks have obtained the necessary information to be able to prepare and complete the approval applications.While the Consortium Banks will be aiming to obtain these regulatory approvals as soon as practicablefollowing completion of the Offer, the period from completion of the Offer to receipt of such approvals forthe reorganisation will be largely dependent on the time required to obtain the necessary information tosubmit the applications for approval, the duration of the relevant regulatory review process and effects of anyconditions imposed on the reorganization by any regulator. There could therefore be a delay in completingthe reorganization, reducing the anticipated benefits of the Transaction or imposing additional costs on us orlimiting our revenues following completion of the Transaction, any of which might have a material adverseeffect on our business, results of operations, financial condition or prospects after completion of theTransaction.

Certain jurisdictions claim jurisdiction under their competition or antitrust laws in respect of acquisitionsor mergers that have the potential to affect their domestic marketplace. A number of these jurisdictions mayclaim to have jurisdiction to review the Transaction. Such investigations or proceedings may be initiated and,if initiated, may have an adverse effect on its business, results of operations, financial condition or prospectsafter the completion of the Transaction.

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The information relating to ABN AMRO contained in this document is derived primarily from publiclyavailable information, which the Issuer has been unable independently to verify. As a result, the Issuer’sestimates of the impact of the Transaction on the Pro Forma Financial Information incorporated byreference in this Offering Memorandum may be incorrect.

The information about ABN AMRO included in this Offering Memorandum (other than the Pro FormaFinancial Information) is derived from information made publicly available by ABN AMRO, includingperiodic and other reports which ABN AMRO has filed with or furnished to the SEC. The Pro FormaFinancial Information has been prepared on the basis of such publicly available information and certainlimited information provided to the Issuer by ABN AMRO. While the Issuer has no knowledge that wouldindicate that any statements included in this Offering Memorandum based upon information contained in suchreports filed with or furnished to the SEC are inaccurate, incomplete or untrue, the Issuer is not involved inthe preparation of such reports and, therefore, the Issuer cannot verify the accuracy, completeness or truth ofthe information obtained from such reports or any failure by ABN AMRO to disclose events that may haveoccurred, but that are unknown to the Issuer, that may affect the significance or accuracy of the informationcontained in such reports. In addition, the Issuer did not have the information necessary to verifyindependently certain adjustments and assumptions, and therefore did not verify such adjustments andassumptions, with respect to ABN AMRO’s financial information in preparing the Pro Forma FinancialInformation incorporated by reference in this Offering Memorandum. Any financial information regardingABN AMRO that may be detrimental to the Issuer (including, after the completion of the Transaction, theABN AMRO Businesses) and that has not been publicly disclosed by ABN AMRO, or errors in theConsortium Banks’ estimates due to the lack of cooperation from ABN AMRO, may have an adverse effecton the benefits the Group expects to achieve in the Transaction.

The uncertainties about the effects of the Offer and any competing offers could materially and adverselyaffect the business and operations of ABN AMRO.

Uncertainty about the effects of the Offer and any competing offers on employees, partners, regulatorsand customers may materially and adversely affect the business and operations of ABN AMRO. Theseuncertainties could cause customers, business partners and other parties that have business relationships withABN AMRO to defer the consummation of other transactions or other decisions concerning ABN AMRO’sbusiness, or to seek to change existing business relationships with ABN AMRO. In addition, employeeretention at ABN AMRO may be challenging until the Offer is completed.

The Group may fail to realize the business growth opportunities, revenue benefits, cost savings and otherbenefits anticipated from, or may incur unanticipated costs associated with, the Transaction and theresults of operations, financial condition of the Group and the price of the securities of the Issuer maysuffer.

There is no assurance that the acquisition of the ABN AMRO Businesses by the Issuer will achieve thebusiness growth opportunities, revenue benefits, cost savings and other benefits the Issuer anticipates. TheIssuer believes the Offer consideration is justified in part by the business growth opportunities, revenuebenefits, cost savings and other benefits it expects to achieve by combining its operations with the ABNAMRO Businesses. However, these expected business growth opportunities, revenue benefits, cost savings andother benefits may not develop and other assumptions upon which the Consortium Banks determined theOffer consideration may prove to be incorrect, as, among other things, such assumptions were based onpublicly available information.

In particular, the reorganization plan currently contemplated may have to be modified as a result ofemployee consultations and approvals, which may delay its implementation. The Group may also facechallenges with the following: obtaining the required approvals of various regulatory agencies, any of whichcould refuse or impose conditions or restrictions on its approval; retaining key employees; redeployingresources in different areas of operations to improve efficiency; minimizing the diversion of managementattention from ongoing business concerns; and addressing possible differences between the Group’s businessculture, processes, controls, procedures and systems and those of the ABN AMRO Businesses that the Group

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will acquire. In addition, because the Consortium Banks have had access only to publicly availableinformation regarding ABN AMRO’s tax situation and structure, unanticipated substantial tax costs may beincurred in the implementation of the reorganization plan.

The complex nature of the reorganization plan and the level of cooperation required among theConsortium Bank could have adverse consequences for the Transaction and the Issuer’s ability to realisebenefits therefrom.

Although the Consortium and Shareholders’ Agreement provides a mechanism for assets to be re-allocated or transferred between the Consortium Banks where it is established that any asset is held by orwill be held by the wrong Consortium Bank, disputes may otherwise arise in implementing the Consortiumand Shareholders’ Agreement. Such disputes would be resolved in accordance with the dispute resolutionprocesses set out in the Consortium and Shareholders’ Agreement. While these processes have been designedto resolve any disagreements swiftly, such disputes could result in delay to implementation of thereorganization.

Under any of these circumstances, the business growth opportunities, revenue benefits, cost savings andother benefits anticipated by the Issuer to result from the reorganization may not be achieved as expected, orat all, or may be delayed. To the extent that the Group incurs higher integration costs or achieve lowerrevenue benefits or fewer cost savings than expected, the results of operations and financial condition of theGroup and the price of the Issuer’s securities may suffer.

The Group may become subject to unknown liabilities of ABN AMRO, which may have an adverse effecton its financial condition and results of operations.

In making the Offer and determining its terms and conditions, the Consortium Banks used publiclyavailable information relating to ABN AMRO, including periodic and other reports for ABN AMRO, filedwith or furnished to the SEC on Form 20-F and Form 6-K. This information has not been subject tocomment or verification by ABN AMRO, the Consortium Banks or their respective directors. In addition, theConsortium Banks were able to carry out only a limited due diligence review in respect of the business ofABN AMRO. As a result, after the completion of the Offer, the Group may be subject to unknown liabilitiesof ABN AMRO, which may have an adverse effect on its financial condition and results of operations.

Consummation of the Offer may result in adverse tax consequences resulting from a change ofownership of ABN AMRO.

The Consortium Banks have had access only to publicly available information concerning ABN AMRO’stax situation. It is possible that the consummation of the Offer may result in adverse tax consequences arisingfrom a change of ownership of ABN AMRO and its subsidiaries. The tax consequences of a change ofownership of a corporation can lead to an inability to carry-over certain tax relief and other tax benefits,including, but not limited to, tax losses and tax credits. Moreover, a change of ownership may result in othertax costs not normally associated with the ordinary course of business. Such other tax costs include, but arenot limited to, stamp duties, land transfer taxes, franchise taxes and other levies. In addition, consummationof the Offer will result in the Issuer becoming, through RFS Holdings, the holding company of ABN AMROand certain of its subsidiaries. There are differences between the U.K. and Dutch tax regimes for holdingcompanies. These differences could result in additional tax being paid in the United Kingdom in respect ofthe profits of the relevant businesses of ABN AMRO as a result of their acquisition by a U.K. residentcompany.

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Change of control provisions in ABN AMRO’s agreements may be triggered upon the completion of theOffer, upon RFS Holdings’ acquisition of ABN AMRO or upon the completion of the reorganizationand may lead to adverse consequences for the Group, including the loss of significant contractual rightsand benefits, the termination of joint venture and/or licensing agreements or the requirement to repayoutstanding indebtedness.

ABN AMRO may be a party to joint ventures, licenses and other agreements and instruments thatcontain change of control provisions that will be triggered upon the completion of the Offer, uponRFS Holdings’ acquisition of ABN AMRO or upon completion of the reorganization of ABN AMRO as partof the Transaction. ABN AMRO has not provided the Consortium Banks with copies of any of theagreements to which it is party, and these agreements are not generally publicly available. Agreements withchange of control provisions typically provide for or permit the termination of the agreement upon theoccurrence of a change of control of one of the parties or, in the case of debt instruments, require repaymentof all outstanding indebtedness. If, upon review of these agreements after completion of the Offer, theConsortium Banks determine that such provisions can be waived by the relevant counterparties, theConsortium Banks will consider whether to seek these waivers. In the absence of these waivers, the operationof the change of control provisions, if any, could result in the loss of material contractual rights and benefits,the termination of joint venture agreements and licensing agreements or the requirement to repay outstandingindebtedness.

In addition, employment agreements with members of ABN AMRO senior management and otherABN AMRO employees may contain change of control provisions providing for compensation to be paid inthe event the employment of these employees is terminated, either by ABN AMRO or by those employees,following the completion of the Offer, RFS Holdings’ acquisition of ABN AMRO or completion of thereorganization. Such employment agreements may also contain change of control provisions providing forcompensation to be paid following the occurrence of such events even if the employment is not terminated.The Group has taken into account potential payments arising on the operation of change of controlprovisions, including compensation arising on change of control provisions in employment agreements butsuch payments may exceed its expectations.

Risks Related to the Capital Securities.

The Issuer may elect to defer any Coupon Payment in its absolute discretion and no interest shallaccrue on any deferred coupons.

Payments in respect of the principal of, and interest on, Capital Securities will be conditional upon theIssuer being solvent at the time of payment or the issue of the relevant Ordinary Shares, as the case may be,and the Issuer shall have no liability to pay any such amount to the extent that the Issuer is insolvent orwould become insolvent as a result of making such payment.

In addition, such non-payment shall not prevent or restrict the declaration and payment of dividends onany of the Parity Securities of the Issuer or the setting aside of sums for the payment of such dividends.

Any Deferred Coupon Payment may be satisfied at any time at the Issuer’s election, provided that theIssuer must satisfy such Deferred Coupon Payment on the earlier of the (i) redemption of the CapitalSecurities at the option of the Issuer; and (ii) redemption, substitution or variation of the terms of the CapitalSecurities for tax reasons, due to a Capital Disqualification Event or in accordance with ‘‘Description of theCapital Securities — Redemption — Substitution or Variation Instead of Redemption’’ and ‘‘Description ofthe Capital Securities — Redemption — Substitution for Substituted Preference Shares’’.

Although the Issuer may only opt to defer, and not to cancel, payment of such Deferred InterestPayments, investors should be aware that they may not receive amounts in respect of interest in respect of theCapital Securities on the scheduled payment date and, if so deferred, it is uncertain when the payment ofsuch amounts will be satisfied.

Prospective investors are advised that the terms of issue of other series of the Issuer’s non-cumulativepreference shares, and the terms and conditions of certain of the other securities issued by it from time to

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time, may in certain circumstances (including following non-payment of any dividend or other distributionotherwise payable on such shares or securities) require the Issuer not to pay in full or at all, for the period orperiods specified in the relevant terms of issue or terms and conditions, the dividends or other distributionsotherwise stated to be payable on certain of the Issuer’s other securities, including distributions on the CapitalSecurities.

Non-payment of interest in the circumstances described above will not constitute an event of defaultunder the Trust Deed or the Capital Securities and neither the Issuer nor the Holders of the Capital Securitieswill be entitled to take any action in respect of any such non-payment.

The Issuer must (in respect of any Deferred Coupon Payment and/or any Accrued Payment) or may (inrespect of any Coupon Payment) satisfy its obligations to Holders by issuing Ordinary Shares.

Investors will receive payments made in respect of Capital Securities in cash. However, (i) in respect ofany Deferred Interest Payment and/or any Accrued Payment, the Issuer must, and (ii) in respect of anyInterest Payment, the Issuer may, satisfy its obligation to make any payment (which term does not includeany payment of principal) to holders by issuing its Ordinary Shares to the Trustee or its agent or through thetransfer of existing Ordinary Shares. In such event, such Ordinary Shares shall be sold for a cash amountwhich the Agent will pay to the holders in respect of the relevant ACSM Payment.

The Issuer will undertake to use all reasonable endeavors to obtain and maintain certain corporateauthorizations required for the operation of the ACSM. However, if, at the time when any Deferred InterestPayment falls to be satisfied by means of the ACSM, the Issuer does not have available and/or the board ofdirectors of the Issuer do not have the necessary authority to allot in favor of the Trustee or its agent (freefrom any pre-emption rights), a sufficient number of Ordinary Shares to satisfy the relevant ACSM Payments,then the Issuer will not be able to operate the ACSM.

If a sufficient number of Ordinary Shares is not available, then the payment obligation in respect of theCoupon Payment shall be suspended to the extent of such insufficiency, and no interest on such paymentobligation shall accrue, until such time as a sufficient number of Ordinary Shares is available to satisfy thesuspended payment obligation. The Capital Securities may not be redeemed, substituted or varied unless anduntil all Deferred Coupon Payments have been satisfied in full (through the operation of the ACSM whereapplicable) on or prior to the date set for the relevant redemption substitution or variation.

No Capital Securities may be redeemed, substituted or varied unless all Deferred Interest Payments, ifany, are satisfied through the operation of the ACSM on or prior to the date set for the relevant redemption,substitution or variation. Accordingly, if, in relation to any Capital Securities, the Issuer does not have asufficient number of Ordinary Shares available in connection with the payment of any Deferred InterestPayments by operation of the ACSM at the relevant time, the Issuer may not redeem, substitute or vary suchCapital Securities until such time as a sufficient number of Ordinary Shares are so available.

The Issuer cannot be certain that the public market for its Ordinary Shares at any given time will enableit to raise sufficient proceeds to pay any Deferred Interest Payment.

The Capital Securities have no final maturity date and are only redeemable or may only be redeemed,substituted, varied or purchased in accordance with specified provisions.

The Issuer is under no obligation to redeem the Capital Securities at any time and the Holders of theCapital Securities have no right to call for their redemption. The Capital Securities are perpetual securitieswhich will form part of the regulatory capital of the Issuer. They have no final maturity date and may onlybe redeemed, substituted, varied or purchased in accordance with specified provisions. Although the Issuermay redeem the Capital Securities in certain circumstances (including (i) at its option on the First Reset Dateor on any Coupon Payment Date thereafter, (ii) at any time following the occurrence of a CapitalDisqualification Event, or (iii) under the circumstances described under ‘‘Description of the CapitalSecurities — Redemption — Redemption due to Taxation’’), there are limitations in its ability to do so.

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Therefore, potential investors in the Capital Securities may be required to bear the financial risk of aninvestment in such Capital Securities for an indefinite period of time.

The obligations of the Issuer under the Capital Securities rank junior as to payments to all liabilities tocreditors of the Issuer (including, without limitation, depositors, general creditors and subordinated debtholders) and claims of holders of senior ranking securities.

The obligations of the Issuer under the Capital Securities rank junior as to payments to claims of holdersof senior ranking securities. The Issuer is not prohibited from issuing, guaranteeing or otherwise incurringfurther debt ranking pari passu with, or senior to, its obligations under the Capital Securities.

Although the Capital Securities may pay a higher rate of interest than comparable securities which arenot as subordinated, there is a substantial risk that an investor in such Capital Securities will lose all or someof his investment should the Issuer become insolvent.

The Issuer may substitute or vary the Capital Securities in certain circumstances.

If the Issuer becomes entitled to redeem the Capital Securities for taxation reasons or due to theoccurrence of a Capital Disqualification Event, the Issuer may instead of giving notice to redeem, substitute atany time all of the relevant Capital Securities for, or vary the terms of the relevant Capital Securities so thatthey remain, Qualifying Tier 1 Securities or become Qualifying Upper Tier 2 Securities. The Issuer may alsoopt to substitute or vary the Capital Securities if the ACSM is suspended and may also opt to substitute theCapital Securities with preference shares if a Capital Breach Event has occurred and is continuing. Holders ofthe Capital Securities may be adversely affected by any such substitution or variation.

Although the Issuer will pay any stamp duty reserve taxes, capital duties, stamp duties or similar taxespayable in the United Kingdom arising on the allotment and issue of the Substituted Preference Shares, theIssuer will not be obliged to pay, and each holder surrendering a Certificate and a duly completedSubstitution Confirmation to a Paying Agent or Transfer Agent must pay, (i) any other taxes, stamp dutyreserve taxes and stamp duties arising in connection with the relevant substitution and (ii) all, if any, taxesarising by reference to any disposal or deemed disposal of any Capital Securities in connection with therelevant substitution. Prospective investors should therefore be aware that there will not be any cash proceedsof such redemption available to them to fund any tax liability that they may incur in connection with suchsubstitution.

If the Capital Securities are substituted with preference shares, the terms of such shares shall in allmaterial respects provide the holders with at least the same economic rights and benefits as are attached tothe Capital Securities save for certain exceptions. Those exceptions include: (i) the ACSM feature; (ii) therewill be no obligation to pay additional amounts; and (iii) the preference shares shall not contain a resetfeature with respect to the dividend rate. Investors should be aware that in certain circumstances, the amountspayable by the Issuer in respect of dividends under the preference shares could be less than the amounts thatwould have been payable by the Issuer in respect of interest under the Capital Securities had the substitutionnot been effected.

The Issuer may substitute the Capital Securities in whole, but not in part, with Substituted PreferenceShares at any time a Capital Breach Event has occurred, and in certain other circumstances, withoutany requirement for consent or approval of the holders of the Capital Securities.

At any time a Capital Breach Event has occurred and is continuing, the Issuer may substitute the CapitalSecurities in whole, but not in part, with Substituted Preference Shares. In issuing the Substituted PreferenceShares in substitution for the Capital Securities, the Issuer will have discretion to determine whether theSubstituted Preference Shares provide in all material respects the holders thereof with at least the sameeconomic rights and benefits (including those relating to non-cumulative distributions and ranking) as areattached to the Capital Securities and will be under no obligation to seek the views or consult with theholders of such Capital Securities or other third parties. Holders of the Capital Securities may be adverselyaffected by any such substitution.

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There may be additional adverse effects arising from the substitution of the Capital Securities.

Although the Issuer will pay any stamp duty reserve taxes, capital duties, stamp duties or similar taxespayable in the United Kingdom arising on the allotment and issue of the Substituted Preference Shares, theIssuer will not be obliged to pay, and each holder surrendering a Certificate and a duly completed SubstitutionConfirmation to a Paying Agent or Transfer Agent must pay, (i) any other taxes, stamp duty reserve taxes andstamp duties arising in connection with the relevant substitution and (ii) all, if any, taxes arising by reference toany disposal or deemed disposal of any Capital Securities in connection with the relevant substitution.Prospective investors should therefore be aware that there will not be any cash proceeds of such redemptionavailable to them to fund any tax liability that they may incur in connection with such substitution.

The United States federal income tax consequences of varying the terms of the Capital Securities orsubstituting new securities for the Capital Securities are uncertain.

If the Issuer varies the terms of the Capital Securities or substitutes the Capital Securities with newsecurities or non-cumulative preference shares as described above, the United States federal income taxconsequences of such variation or substitution are uncertain because such consequences will depend on theterms and conditions that are varied or on all the terms and conditions of the substituted securities. In general,such a variation or substitution will likely be a taxable exchange for United States federal income tax purposes,unless a specific exception applies. In the event that such a variation or substitution does constitute a taxableexchange, a U.S. Holder would recognize gain or loss and have to include amounts in taxable income forUnited States federal income tax purposes on such a variation or substitution and pay tax thereon, even thoughno cash will actually be distributed to holders pursuant to the variation or substitution. It is not possible todescribe the United States federal income tax consequences to holders of receiving, holding or disposing of thealtered securities or the substituted securities until the terms and conditions of such securities are established.Prospective holders should consult with their own tax advisor about the potential tax consequences tothem of a variation or substitution and of receiving, holding, and disposing of such securities.

In the event of suspension of the ACSM, the terms and conditions of the Capital Securities may beamended and such securities may be substituted, varied or redeemed.

If, following any take-over offer or any reorganisation, restructuring or scheme of arrangement, the Issuerceases to be the Ultimate Owner, then the operation of the ACSM shall be suspended. In such event, unless aPermitted Restructuring Arrangement is put in place within six months of the occurrence of a PermittedRestructuring, an independent investment bank or financial institution appointed by the Issuer shall determinewhat amendments (if any) to the Terms and Conditions of the Capital Securities (the ‘‘Conditions’’) areappropriate to be made by the Issuer and the Trustee in order to preserve substantially the economic effect ofa holding of the Capital Securities and to replicate the ACSM in the context of the capital structure of thenew Ultimate Owner. If the investment bank or financial institution is unable to determine appropriateamendments, as notified to the Issuer and the Trustee, each Capital Security will (subject to the non-objectionof, or the obtaining of consent of, the U.K. Financial Services Authority) at the option of the Issuer either besubstituted for, or have its terms varied so that it becomes, in either case with the assistance of the Trustee,alternative Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities. If, notwithstanding the above,the Trustee does not assist as provided above, the U.K. Financial Services Authority objects or (if consent isrequired) does not consent to such substitution or variation or it is otherwise not practicable for the CapitalSecurities to be so substituted or varied, the Issuer may elect to redeem the Capital Securities, all as moreparticularly described in ‘‘Description of the Capital Securities’’.

If the Capital Securities are to be so redeemed, there can be no assurance that Holders will be able toreinvest the amounts received upon redemption at a rate that will provide the same rate of return as theirinvestment in the Capital Securities.

There is no limitation on the Issuer issuing senior or pari passu securities.

There is no restriction on the amount of securities or other liabilities which the Issuer may issue or incurand which rank senior to, or pari passu with, the Capital Securities. In the event that the Issuer is wound-up,liquidated or dissolved, its assets would be available to pay obligations under the Capital Securities only after

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all payments have been made on any such liabilities and claims ranking senior to the Capital Securities. Theissue of any such securities or the incurrence of any such other liabilities may reduce the amount (if any)recoverable by Holders on the winding up of the Issuer and/or may increase the likelihood of a deferral ofinterest on the Capital Securities as described above.

If, in the opinion of the Issuer, the market for its Ordinary Shares has been disrupted, it will havediscretion to defer any payments under the Alternative Coupon Satisfaction Mechanism until such timeas such event, in the opinion of the Issuer, no longer exists.

If there exists, in the opinion of the Issuer, an event that disrupts the market for its Ordinary Shares,and/or the price or value thereof has deteriorated substantially, on or after the 15th business day precedingany ACSM Payment Date, then the Issuer may give a notice as soon as possible after such event has arisenor occurred, whereupon the relevant ACSM Payment may be deferred until such time as such event, in theopinion of the Issuer, no longer exists. Any such deferred ACSM Payment will be satisfied as soon aspracticable following such time as such event no longer exists. Interest shall not accrue on such deferredACSM Payment, unless, as a consequence of the existence of the relevant event, the Issuer does not satisfythe relevant ACSM Payment for a period of 14 days or more after the due date therefor, in which caseinterest shall accrue on such deferred ACSM Payment from (and including) the date on which the relevantACSM Payment was due to be made to (but excluding) the date on which such ACSM Payment is made. It isin the discretion of the Issuer to form an opinion that such event disrupting the market for its OrdinaryShares exists, and/or that there has been a substantial deterioration in the price and/or value of its OrdinaryShares, and the Issuer shall not be obliged to seek the views of, or consult with, the holders of the CapitalSecurities prior to forming any such opinion.

Investors have limited remedies in the event of non-payment by the Issuer.

The Issuer may elect to defer any Coupon Payment in its absolute discretion. When a payment ofinterest is so deferred, no interest will accrue on any such Deferred Coupon Payment, except in the limitedcircumstances provided under ‘‘Description of the Capital Securities — Alternative Coupon SatisfactionMechanism — Market Disruption’’.

The sole remedy against the Issuer available to the Trustee or any holder of the Capital Securities forrecovery of amounts owing in respect of any payment of principal in respect of the Capital Securities will bethe institution of proceedings for the winding-up of the Issuer and/or proving in any winding-up of the Issuer.

An active market for the Capital Securities may fail to develop or may not be sustainable.

Prior to the offering, there has been no trading market for the Capital Securities. The Issuer cannotassure you that an active or liquid market will develop or be sustainable for the Capital Securities or anyother securities into which they are varied or substituted in accordance with the terms and conditions of theCapital Securities. Therefore, investors may not be able to sell their Capital Securities (or any other securitiesinto which they are so substituted or varied) easily or at prices that will provide them with a yieldcomparable to similar investments that have a developed secondary market. Illiquidity may have a materialadverse effect on the market value of the Capital Securities (or any other securities into which they are sosubstituted or varied).

Credit ratings may not reflect all risks associated with an investment in the Capital Securities.

The Capital Securities are expected, on issue, to be rated ‘‘Aa3’’ by Moody’s, ‘‘A’’ by Standard &Poor’s and ‘‘AA’’ by Fitch. The ratings may not reflect the potential impact of all risks related to structure,market, the completion of the Transaction, additional factors discussed above and other factors that may affectthe Capital Securities, including the effect of the Transaction on the Issuer after its completion. A rating isnot a recommendation to buy, sell or hold securities and may be subject to suspension, reduction orwithdrawal at any time by the assigning rating agency.

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USE OF PROCEEDS

The Issuer will use the net proceeds from the sale of the Capital Securities, estimated to beapproximately $1,583.5 million after the deduction of estimated fees and expenses, to fund in part the cashportion of the Offer attributable to RBSG, to strengthen the Group’s capital base and for general corporatepurposes. The Issuer may issue other securities, including other capital securities, in connection withfinancing the portion of the Offer which is attributable to the Issuer.

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CAPITALIZATION OF THE GROUP

The following table shows the Group’s authorized and allotted, called-up and fully paid share capital asat June 30, 2007.

Allotted, Called-Up and Fully Paid Authorized

£m £m

Ordinary shares of £0.25 each******************************* 2,364 2,879

Non-voting deferred shares of £0.01 each ********************* 27 323

Additional value shares of £0.01 each ************************ — 27

Preference shares ***************************************** 2 528

The authorized ordinary share capital of the Group as at June 30, 2007 was £2,879 million, consisting of11,514 million ordinary shares of £0.25 each.

The authorized preference share capital of the Group as at June 30, 2007 was £528 million, consisting of419.5 million non-cumulative preference shares of $0.01 each, 3.9 million non-cumulative convertiblepreference shares of $0.01 each, 66 million non-cumulative preference shares of 40.01 each, 3 million non-cumulative convertible preference shares of 40.01 each, 900 million non-cumulative convertible preferenceshares of £0.25 each, 1 million non-cumulative convertible preference shares of £0.01 each, 0.9 millioncumulative preference shares of £1 each and 300 million non-cumulative preference shares of £1 each.

The allotted, called-up and fully paid preference share capital of the Group as at June 30, 2007 was£2 million, consisting of 244 million non-cumulative preference shares of $0.01 each, 1 million non-cumulative convertible preference shares of $0.01 each, 2.5 million non-cumulative preference shares of 40.01each, 0.2 million non-cumulative convertible preference shares of £0.01 each and 0.9 million cumulativepreference shares of £1 each.

A9.11.3.3The following table shows the unaudited consolidated shareholders’ equity and indebtedness of theGroup as at June 30, 2007 in accordance with International Financial Reporting Standards (‘‘IFRS’’).

As atJune 30,

2007£m

Shareholders’ equityOrdinary shares*********************************************************** 2,364

Non-voting deferred shares ************************************************* 27

Preference shares ********************************************************* —

2,391

Retained income and other reserves ****************************************** 39,153

Total shareholders’ equity ************************************************* 41,544

Group indebtednessSubordinated liabilities***************************************************** 27,079

Debt securities in issue***************************************************** 95,519

Total indebtedness******************************************************** 122,598

Total capitalization and indebtedness *************************************** 164,142

Under IFRS, certain preference shares are classified as debt and are included in subordinated liabilitiesin the table above.

As at June 30, 2007, the Group had total liabilities and equity of £1,011 billion, including deposits bybanks of £139 billion and customer accounts of £419 billion.

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All of the indebtedness described above or below, except for approximately £31.3 billion of debtsecurities in issue, is unsecured. None of the indebtedness described above or below is guaranteed.

As at June 30, 2007, the Group had contingent liabilities including guarantees arising in the normalcourse of business totaling £20,629 million, consisting of guarantees and assets pledged as collateral securityof £10,996 million and other contingent liabilities of £9,633 million.

On July 6, 2007, RBS plc redeemed the $350 million and $500 million floating rate subordinated notes,which were included in the Group’s subordinated liabilities in the preceding capitalization table.

On July 17, 2007 RBS plc redeemed the 4130 million floating rate subordinated notes, which wereincluded in the Group’s subordinated liabilities in the preceding capitalization table.

On September 26, 2007, the Issuer offered 15,000 non-cumulative dollar preference shares, Series U,with an aggregate liquidation preference of $1,500 million, which are expected to be issued on October 4,2007.

On September 26, 2007, the Issuer offered 26,000 non-cumulative euro preference shares, Series 3, withan aggregate liquidation preference of 41,300 million, which are expected to be issued on October 4, 2007.

On September 26, 2007, the Issuer offered 750,000 non-cumulative sterling preference shares, Series 1,with an aggregate liquidation preference of £750 million, which are expected to be issued on October 4,2007.

On September 26, 2007, the Issuer offered C$600 million in aggregate principal amount of tier 1 notes,which are expected to be issued on October 4, 2007.

On September 27, 2007, the Issuer will issue 64,000,000 non-cumulative dollar preference shares,Series T, with an aggregate liquidation preference of $1,600 million.

Save as disclosed above, there has been no significant change in the contingent liabilities (includingguarantees), total capitalization and indebtedness of the Group since June 30, 2007.

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THE ABN AMRO OFFER

A9.4.1.5Overview of the Transaction

The Offer

On July 20, 2007, RFS Holdings, a company jointly owned by the Consortium Banks and controlled byRBSG, commenced the Offer, pursuant to which it will exchange for each ABN AMRO ordinary share andeach ABN AMRO ADS validly tendered (i) 435.60 in cash and (ii) 0.296 newly issued RBSG ordinary shares.

As at September 20, 2007, the total value of the Offer consideration was 469.8 billion, based on theclosing price of £5.21 for the RBSG ordinary shares on the London Stock Exchange on that date and anexchange rate of 41.00 per £0.6995 published in the Financial Times on September 21, 2007. Under theOffer, the Issuer will contribute its consortium proportion of the consideration paid to ABN AMROshareholders and ABN AMRO ADS holders of 426 billion. The consideration for the ABN AMROBusinesses net of the sale of LaSalle will be 415 billion. The reduction comprises $21 billion in proceedsfrom the sale of LaSalle less inter-company balances of $6 billion as set out in the Bank of AmericaAgreement.

The Offer is subject to certain conditions customary for transactions of this type, including a minimumacceptance condition of 80% of ABN AMRO ordinary shares and the sale of LaSalle to Bank of AmericaCorporation, with the proceeds from such sale on completion being held by the ABN AMRO Group.Completion of the acquisition of ABN AMRO, should the Offer be successful, is expected to occur in thefourth quarter of 2007.

The Restructuring

In due course following completion of the Offer, RFS Holdings expects to implement an orderlyseparation of the business units of ABN AMRO whereby the Issuer is to acquire the following ABN AMRObusiness units as defined in ABN AMRO’s Annual Report on Form 20-F for the year ended December 31,2006, filed with the SEC on April 2, 2007 (the ‘‘ABN AMRO 2006 Annual Report’’) (the ‘‘ABN AMROBusinesses’’):

) Continuing businesses of Business Unit North America following the sale of LaSalle to Bank ofAmerica Corporation;

) Business Unit Global Clients and wholesale clients in the Netherlands (including former Dutchwholesale clients) and Latin America (excluding Brazil);

) Business Unit Asia (excluding Saudi Hollandi); and

) Business Unit Europe (excluding Antonveneta).

Certain other assets will continue to be shared by the Consortium Banks (the ‘‘Shared Assets’’).

The Consortium and Shareholders’ Agreement

The arrangements between Fortis, RBSG, Santander and RFS Holdings in relation to the Transaction aregoverned by the Consortium and Shareholders’ Agreement, which was entered into on May 28, 2007, wassupplemented on September 17, 2007, and may be further amended or supplemented from time to time. Thearrangements contemplated by the Consortium and Shareholders’ Agreement include:

) the funding of RFS Holdings in connection with the Offer;

) the governance of RFS Holdings both before and after the acquisition of ABN AMRO;

) each of the Consortium Banks’ equity interests in RFS Holdings;

) the transfer of certain business units of ABN AMRO, assets and liabilities to the Consortium Banks(or their group members) after the acquisition of ABN AMRO by RFS Holdings;

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) the management and disposal of any businesses, assets and liabilities of ABN AMRO not intended tobe transferred to the Consortium Banks;

) allocation of core Tier 1 capital;

) further funding obligations of the Consortium Banks after the acquisition of ABN AMRO wherefunding is required by regulatory authorities in connection with the business units of ABN AMRO;and

) allocation of taxes and conduct of tax affairs.

Pursuant to the Consortium and Shareholders’ Agreement, the Consortium Banks have agreed tosubscribe for shares in RFS Holdings of a sufficient amount to fund the consideration due under the Offer.This funding commitment is split among the Consortium Banks as follows:

) Fortis: 33.8%,

) RBSG: 38.3%, and

) Santander: 27.9%.

Approximately 6% of RFS Holdings’ commitment will be satisfied by the issue of RBSG ordinaryshares in connection with the Offer. Upon settlement of the Offer, the Consortium Banks will haveshareholdings in RFS Holdings that are equal to their proportionate funding commitments.

Chronology of Key Events Relating to the Offer

On May 29, 2007, the Consortium Banks confirmed the terms of a proposed offer for ABN AMRO,which terms reflected the uncertainty regarding the sale of La Salle to Bank of America.

On July 16, 2007, following a ruling of the Dutch Supreme Court overturning an injunction preventingthe sale of La Salle to Bank of America without a shareholder vote, the Consortium Banks issued anannouncement confirming their intention to proceed with a revised proposed offer.

On July 18, 2007, ABN AMRO issued a press release acknowledging receipt of the Consortium Banks’revised proposed offer. In the press release, ABN AMRO confirmed it would discuss the revised proposedoffer with the Consortium Banks, and that, under the terms of a merger protocol dated April 23, 2007between Barclays and ABN AMRO, it would also discuss with Barclays its offer and the implications of theConsortium Banks’ revised proposed offer. ABN AMRO also confirmed that it would assess the proposedoffers in a fair and transparent manner and that it had no intention of making any major asset disposals atthat time.

On July 20, 2007, RFS Holdings commenced the Offer on the terms described above.

On July 30, 2007, ABN AMRO issued an offer update in which it announced that it was not in aposition to recommend either the Offer or Barclays’ offer for ABN AMRO and that it would continue toengage with both parties with the aim of continuing to ensure a level playing field.

On August 13, 2007, the Consortium Banks issued a press release announcing that their aggregateshareholding in ABN AMRO had been increased to 3.25% of voting rights through market purchases madebetween August 10, 2007 and August 13, 2007 of a total of 40.76 million ABN AMRO ordinary shares.

On September 17, 2007, the Dutch Minister of Finance, in conjunction with the Dutch Central Bank,granted the Consortium Banks the ‘‘Declarations of No Objection’’ which they require in respect of the Offer.

ABN AMRO Businesses to be Acquired by RBSG

The Plans and Proposals of the Issuer for the ABN AMRO Businesses

The information in respect of the ABN AMRO Businesses set out below is based on publicly availableinformation, including periodic and other reports which ABN AMRO has filed with or furnished to the SEC.

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For the purposes of this Offering Memorandum, ABN AMRO’s Global Wholesale Businesses consist ofBusiness Unit Global Clients, the wholesale clients in Business Unit Europe (excluding Antonveneta), thewholesale clients in Business Unit Asia, the continuing businesses of Business Unit North America, andwholesale clients in the Netherlands and Latin America (excluding Brazil); and ABN AMRO’s InternationalRetail Businesses consist of the retail activities in Business Unit Asia and Business Unit Europe (excludingAntonveneta).

ABN AMRO’s Global Wholesale Businesses

ABN AMRO has a large wholesale banking business with a global footprint and corporate bankingoperations in 53 countries. In addition to established positions with large numbers of customer relationshipsin Europe and the United States, ABN AMRO is present in emerging markets through offices in 11 countriesin Asia, five countries in Eastern Europe and seven countries in Latin America.

ABN AMRO is one of a small number of banks with the global reach and product capability to beeffective in international cash management, payments and trade finance. Through these transactional bankingproducts, ABN AMRO has been able to establish large numbers of corporate and institutional customerrelationships globally. However, the Issuer believes that many of these relationships are relativelyunderdeveloped, reflecting ABN AMRO’s insufficient strength in many of the financing and risk managementproducts which are most relevant and complementary for these customers.

In addition to its international activities with large corporate and institutional customers, ABN AMROhas extensive relationships with mid-corporate customers in Continental Europe, Asia and the Middle East.

ABN AMRO’s Global Wholesale Businesses, which the Issuer will acquire, are those that constitutedABN AMRO’s Wholesale Clients Business Unit, or WCS, in 2005 (including the continuing businesses ofBusiness Unit North America following the sale of LaSalle, and including the Netherlands, but excludingBrazil (other than Global Clients customers)) and the product capabilities serving wholesale clients within itsGlobal Markets and Transaction Banking Product Business Units. In 2006, WCS customers were transferredto the regional Business Units, except for the largest customers which were maintained in ABN AMRO’sGlobal Clients Business Unit. In 2007, Global Clients customers have also been allocated to the regionalBusiness Units. The Issuer estimates that ABN AMRO’s Global Wholesale Businesses generated income of45,677 million and profit before tax of 4630 million in 2006, on an IFRS basis.

Strategic Rationale

The Issuer believes that there is a strong strategic fit between its Global Banking & Markets business(‘‘GBM’’) and ABN AMRO’s Global Wholesale Businesses. GBM has considerable strength across a broadrange of financing and risk management products and in 2006 had what the Issuer believes to be an industryleading cost to income ratio of 40%, reflecting deep client relationships and strong income per customermetrics. However, while GBM has been expanding its international reach in recent years, it still has limitedpresence outside major financial centers. The acquisition of ABN AMRO’s global branch network shouldenable GBM to accelerate this expansion relative to its current strategy, under which the establishment of aglobal branch network and customer base would take a significant period and would require significantinvestment.

ABN AMRO’s considerable reach, through its global branch network, supports its strength intransactional products such as international cash management and trade finance. ABN AMRO is also strongin faster growth, but more specialized, areas including equity derivatives and emerging markets. However, theIssuer believes that ABN AMRO’s lack of depth and scale in some important products has led to relativelyweak income per customer and per employee, resulting in a high estimated cost to income ratio for its GlobalWholesale Businesses of 89% in 2006.

The Issuer’s relationship driven model and focus on deepening customer relationships enable it togenerate high levels of income from customers. GBM believes that this revenue generation is significantlyabove the level achieved by ABN AMRO from its Global Clients franchise. For these equivalent customer

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groups, GBM estimates that it generated more than 50% higher income per customer than ABN AMRO andmore than 150% higher income per front office employee than ABN AMRO.

The Issuer expects that it will be able to deepen customer relationships and increase revenues percustomer and per employee across ABN AMRO’s extensive base of large and mid-corporate customers. Toachieve this, GBM will apply its relationship driven model in which relationship managers are enabled andincentivized to deliver the bank’s full range of products and services from debt capital markets to cashmanagement. The model of the Issuer focuses on the overall profitability of customer relationships andencourages a collaborative approach between relationship and product teams. The model is supported by clearclient and revenue accountabilities, transparent incentives for collaboration, a focus on higher value addedincome streams and a simple organization structure which encourages the development of cross productcustomer solutions.

In addition to the application of the relationship management model of the Issuer, GBM expects to beable to create additional value from ABN AMRO’s customer franchise through leveraging its strengths in theproduct areas that are both most relevant to large corporate and institutional customers and which offer thehighest value revenue streams, for example in structured finance, risk management and securitization. GBMbelieves that it brings the requisite scale and strength in these key product areas that ABN AMRO currentlylacks.

The Issuer expects that the combined business will have product leadership across a broad range ofcorporate banking products, benefiting from the complementary and overlapping product strengths of GBMand ABN AMRO. Based on 2006 data (the sources for which are included in the table below), the combinedbusiness will rank third in all bonds and loans globally, first in global securitizations, global project financeand all international bonds, second in emerging markets syndicated credits, third in foreign exchange and fifthin international cash management. The Issuer also expects it to be a leading player in the global interest ratederivatives market, where GBM has had particular success in the distribution of sophisticated riskmanagement products to its large and mid-corporate customers.

2006Combined

GBM +Ranking by Product (1) GBM ABN AMRO ABN AMRO (2)

GBM StrengthsGlobal All Bonds and Loans ************************** #6 #17 #3

Foreign Exchange *********************************** #4 #12 #3

Global Securitizations ******************************** #2 #18 #1

European Leveraged Loans **************************** #2 #16 #1

Global Project Finance ******************************* #1 #5 #1

EMEA Syndicated Loans ***************************** #1 #9 #1

ABN AMRO StrengthsEuro Denominated Bonds ***************************** #8 #4 #1

International Covered Bonds*************************** #18 #1 #1

Emerging Markets Syndicated Credits ******************* #31 #2 #2

International Cash Management ************************ #28 #6 #5

GBM + ABN AMRO StrengthsAll International Bonds ******************************* #8 #10 #1

Asia-Pacific Syndicated Loans ************************* #13 #15 #5

U.S. Syndicated Loans ******************************* #8 #18 #7

Notes:

(1) Data derived from Dealogic, Thomson Financial and Euromoney Polls.

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(2) Combined estimates based on publicly available 2006 data from Dealogic, Thomson Financial andEuromoney Polls.

The Issuer believes that the combined business will be well diversified by geography across the UnitedKingdom, the rest of Europe, the United States and Asia-Pacific, with a small contribution from LatinAmerica. Within these regions, the Issuer anticipates that the combined business will have considerable localpresence through which to distribute its strong and broad product offering.

In Europe, including the United Kingdom, the Issuer expects that the combined business will consolidateits position as the leading wholesale and fixed income bank. GBM will apply its relationship model andproduct strengths to deepen ABN AMRO’s extensive franchise in Continental Europe with large corporatesand financial institutions, while ABN AMRO’s international cash management, payments and trade financeproducts will enable GBM to enhance its customer relationships. ABN AMRO’s local presence is expected toenable GBM to extend from the largest corporates and financial institutions to the middle market, and toextend geographically into fast growing markets in Eastern Europe and the Middle East. The combination ofthe two banks’ structured investor product capabilities and distribution platforms is anticipated to create asignificantly stronger business with good prospects for growth in an expanding market.

In North America, GBM has been implementing a strategy with the objective of becoming a top fivecorporate bank. The Issuer believes that the combination with ABN AMRO’s Global Wholesale Businesseswill enable GBM to accelerate the implementation of this strategy. The combined product strengths, includingthe capital markets expertise of RBS Greenwich Capital, should enable the combined group to generateincreased revenues from the existing GBM and ABN AMRO client bases. The Issuer believes the businesswill be positioned to build on the combined industry sector strengths of GBM and ABN AMRO in consumerproducts, retail, healthcare, industrials, energy and utilities, and intend to leverage their complementarystrengths in real estate financing to create a leading business in this area. In addition to the significantopportunity to grow the large corporate and institutional franchise in the United States, the combined businessis expected to be able to deliver a full range of financial and risk management solutions to mid-corporatecustomers.

In Asia, the Issuer believes that the combined GBM and ABN AMRO wholesale businesses will havethe capacity to build a significant regional corporate bank. As in the United States and Europe, the combinedbusiness will seek to increase the depth of ABN AMRO’s current customer franchise by applying GBM’sbusiness model. ABN AMRO’s existing local presence and infrastructure in key markets with strong growthwill enable GBM to accelerate significantly its plans for developing business with customers in India, SouthKorea and Taiwan. In addition, there is a significant growth opportunity to develop ABN AMRO’s emergingmarkets and equity derivatives products for GBM’s customers globally.

In Latin America, ABN AMRO has established a presence and customer relationships. The Issuerexpects the combined business to deepen these relationships, in particular by leveraging GBM’s strengths innatural resources and project finance. GBM has had significant success in developing customer relationshipsin Iberia, and believes that a presence and capabilities in Latin America will enable it to support thesecustomers’ activities in the region.

The Issuer estimates that the combined business will be the third largest corporate and institutionalbanking and markets business globally by fixed income revenues (revenues from all areas except M&Aadvisory, cash equity and asset management businesses). Based on internal research, the Issuer estimates thatGBM will rank first in the United Kingdom and Continental Europe, fifth in the United States and fifth inAsia-Pacific (excluding Japan) by client relationships.

Business Plan

The management team of GBM has developed a clear and detailed roadmap for the integration of ABNAMRO’s Global Wholesale Businesses. GBM will follow the Group’s established integration principles:minimizing disruption to customers and customer facing activities, retaining the best talent from each

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organization through a fair appointment process based on merit and competencies, creating single globalplatforms and creating the capability for future growth while maintaining leading efficiency ratios.

The integration of GBM and ABN AMRO’s Global Wholesale Businesses will be led by a managementteam including many who were actively involved in the integration of National Westminster Bank Plc.

During the first 45 days after completion of the Offer, GBM will work with the management of ABNAMRO to verify and expand the information received and assumptions made on the basis of the limited duediligence access granted before completion of the Offer. By day 45, the Issuer intends to have validated abaseline plan for the achievement of synergies. This plan will form the basis for consultation with employeebodies and regulators.

GBM will review ABN AMRO’s activities in markets where it does not currently operate and intends tocontinue ABN AMRO’s progress in aligning the cash equities business to support its enlarged and growingactivities in equity derivatives.

Transaction Benefits

GBM believes that it will be able to generate significantly higher revenues from ABN AMRO’s customerfranchise by leveraging the combined businesses’ enhanced product strengths and by applying the provenmanagement capabilities of the Issuer. The Issuer believes that it will also be able to achieve substantial costsavings through de-duplication of infrastructure and support activities. GBM believes that it will be able toreduce the cost to income ratio of ABN AMRO’s Global Wholesale Businesses from 89% in 2006 to under65% in the third year after completion of the Offer.

GBM expects to deliver transaction benefits which will increase GBM’s profit before tax by41,718 million in the third year after completion of the Offer. Of this total, GBM estimates that cost savingswill amount to 41,237 million and that net revenue benefits (after associated costs and impairment losses, andallowing for attrition) will increase profit before tax by 4481 million.

GBM will focus on deepening customer relationships and increasing revenues per customer and peremployee across ABN AMRO’s large and mid-corporate customer base. To achieve this, GBM will apply itsrelationship driven model and the techniques which have enabled it to deliver strong revenue per customerand revenue per employee metrics and a cost to income ratio of 40% in 2006. At the same time, the Issueranticipates having stronger capabilities in international cash management and trade finance, equity derivativesand emerging markets to offer to its customers.

There is some overlap between the customer franchises of the Issuer and those of ABN AMRO,particularly in the United Kingdom. However, due to the complementary product propositions of the twobusinesses, revenue losses are expected to be limited, but conservative allowances for these potential revenuelosses have been made.

As set forth in the table below, the expected net revenue benefits of 4481 million in the third year aftercompletion of the Offer represent 8% of ABN AMRO’s relevant 2006 revenues.

Estimated NetRevenue Benefits

per Annumby End of Number of

2010 Initiatives(euro millions)

Global Banking******************************************** 61 7

Global Markets ******************************************** 292 12

Transaction Banking **************************************** 128 11

Overall Estimated Impact on Profit Before Tax**************** 481 30

The combination of GBM and ABN AMRO’s Global Wholesale Businesses is expected to enablesubstantial cost savings to be achieved, as the Issuer implements a single business architecture. Cost savings

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will be achieved by de-duplication of information technology platforms and supporting infrastructure. Theexisting information technology platform of the Issuer will be used for the majority of products andfunctions, but it is expected that the information technology platform supporting ABN AMRO’s cashmanagement and trade finance business, as a core strength of that global business, will be retained.

Further cost savings are expected to be achieved by streamlining combined functions across operations,finance, risk, human resources and other support areas, and through procurement and property efficiencies.The Issuer also expects that cost savings will be achieved by bringing in-house certain operations which ABNAMRO has outsourced to external providers.

Additional cost savings are expected to be achieved by the elimination of overlaps in front office tradingand support functions, as trading activities are consolidated into regional centers, while minimizing disruptionto customer facing activities.

The expected cost savings resulting from these initiatives amount to 41,237 million in the third year aftercompletion of the Offer, representing 24% of ABN AMRO’s relevant 2006 expenses. The four principal areasof rationalization and efficiency savings are set out below:

EstimatedCost Savingsper Annumby End of Number of

2010 Initiatives(euro millions)

Front Office ********************************************************** 352 10

Information Technology and Operations *********************************** 611 27

Functional Support **************************************************** 166 16

Procurement and Property*********************************************** 108 5

Total Estimated Cost Savings ****************************************** 1,237 58

After allocating the support cost savings to the main business groupings, approximately 4887 million ofsavings arise from global corporate and institutional businesses and 4350 million from mid corporate andcommercial businesses and transaction banking services.

ABN AMRO’s International Retail Businesses in Asia, the Middle East and Europe

ABN AMRO has an extensive network of branches in Asia and the Middle East, principally to supportits international cash management, payments and trade finance businesses for commercial customers. Many ofthese branches are also active in retail banking, although generally only on a limited scale.

ABN AMRO has retail activities in nine markets in Asia and the Middle East(1):

) East Asia: China, Hong Kong, Singapore, Indonesia, Malaysia, Taiwan

) South Asia: India, Pakistan

) Middle East: United Arab Emirates

The most significant presence is in India, where ABN AMRO has 27 branches, and United ArabEmirates, with 17 locations. The branches in India are in major conurbations across the country and includesix branches in New Delhi and three in Mumbai. In the United Arab Emirates the network is focused on keylocations in Abu Dhabi and Dubai.

ABN AMRO also has a presence in Mainland China, with 11 branches, and Taiwan, with five branches.In Pakistan, ABN AMRO has 12 branches (excluding Prime Bank, which will be included in the Shared

(1) Excluding ABN AMRO’s 40% stake in Saudi Hollandi which, although reported in Business Unit Asia, willbe included in the Shared Assets.

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Assets). ABN AMRO also has retail businesses in Spain, Romania and Kazakhstan and stockbrokingbusinesses in India, Australia and New Zealand.

The principal product lines currently offered by ABN AMRO in Asia and the Middle East are massmarket retail banking, affluent banking, under the Van Gogh brand, and credit cards. ABN AMRO has about3.5 million retail customers in the region, including about 100,000 Van Gogh customers and approximately3 million credit cards, which are mainly in Taiwan and India, with smaller portfolios in Singapore, Indonesia,Hong Kong and United Arab Emirates.

The Issuer believes that there are attractive opportunities for growth, building on ABN AMRO’sestablished infrastructure to support retail activities in countries with large populations and high growth rates.However, the Issuer notes that the retail businesses in Asia, the Middle East and Europe are thinly spreadacross many countries. The Issuer estimates that ABN AMRO’s retail businesses in Asia, the Middle East andEurope together generated income of 4607 million and profit before tax of 488 million in 2006, on an IFRSbasis. Because of limited scale, some of these retail businesses may have relatively high operating costs andcustomer acquisition costs, and so lack competitive advantage.

After completion of the Offer, the Issuer will analyze the retail activities country by country. The Issuerexpects to focus on growing significant retail businesses in selected ABN AMRO countries. Factors affectingthe selection of countries will include competitive advantage and scalability of the existing operations,economic growth rates and the competitive and regulatory environment for financial services. The Issuer alsoexpects to focus on affluent banking and credit cards, products where the Issuer is strong in the UnitedKingdom and has significant activities outside the United Kingdom, and products likely to appeal to growingnumbers of affluent customers in these high growth economies. The existing infrastructure supporting currentaccounts provides the possibility of a broader product offering.

The Issuer will seek to exit retail businesses not having critical mass or credible growth prospects. TheIssuer has not at this stage included any specific initiatives and transaction benefits in its overall estimates ofrevenue benefits and cost savings.

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DESCRIPTION OF THE GROUP

A9.4.1.1The Group

A9.4.1.2

A9.4.1.3

A9.4.1.4

A.9.6.1

A9.5.1.2

RBSG is a public limited company incorporated in Scotland with registration number SC045551. RBSGwas incorporated under Scots law on March 25, 1968 under the name ‘‘National and Commercial BankingGroup Limited’’ and its name was changed to ‘‘The Royal Bank of Scotland Group Limited’’ by SpecialResolution passed on July 4, 1979. By Resolution of the Directors passed on January 28, 1982, pursuant tosection 8 of the Companies Act, 1980, the name of RBSG was changed to ‘‘The Royal Bank of ScotlandGroup public limited company’’. RBSG (together with its subsidiaries, the ‘‘Group’’) is the holding companyof one of the world’s largest banking and financial services groups, based on a market capitalization of£59.9 billion as at June 30, 2007. The Group’s operations are conducted principally through RBS and itssubsidiaries, including National Westminster Bank Plc (‘‘NatWest’’), other than the general insurance business(which is primarily conducted through Direct Line Group and Churchill Insurance). RBS is a public limitedcompany incorporated in Scotland with registration number SC090312, having been incorporated under Scotslaw on October 31, 1984. Both RBS and NatWest are major U.K. clearing banks whose origins go back over275 years. The Group has a large and diversified customer base and provides a wide range of products andservices to personal, commercial and large corporate and institution customers. The Group’s registered officeis 36 St. Andrew Square, Edinburgh EH2 2YB, Scotland and its principal place of business isRBS Gogarburn, PO Box 100, Edinburgh EH12 1HQ, Scotland, telephone +44 131 626 0000.

The Group had total assets of £1,011.3 billion and shareholders’ equity of £41.5 billion at June 30,2007. The Group is strongly capitalized with a total capital ratio of 12.5% and tier 1 capital ratio of 7.4% asat June 30, 2007.

Organizational structure and business overview

A9.5.1.1

The Group’s activities are organized in the following business divisions: Corporate Markets (comprisingGlobal Banking & Markets and U.K. Corporate Banking), Retail Markets (comprising Retail and WealthManagement), Ulster Bank, Citizens, RBS Insurance and Manufacturing. A description of each of thedivisions is given below.

Corporate Markets

Corporate Markets is focused on the provision of debt and risk management services to medium andlarge businesses and financial institutions in the U.K. and around the world. Its activities are organized intotwo businesses, Global Banking & Markets and U.K. Corporate Banking, in order to enhance the focus of theGroup on the distinct needs of these two customer segments.

Global Banking & Markets is a banking partner to major corporations and financial institutions aroundthe world, providing an extensive range of debt financing, risk management and investment services to itscustomers.

U.K. Corporate Banking is a provider of banking, finance and risk management services to U.K.corporate customers. Through its network of relationship managers across the country it distributes the fullrange of Corporate Markets’ products and services to companies.

Retail Markets

Retail Markets leads the co-ordination and delivery of the multi-brand retail strategy across the productrange of the Group, and comprises Retail and Wealth Management.

Retail comprises both The Royal Bank of Scotland and NatWest retail brands. It offers a full range ofbanking products and related financial services to the personal, premium and small business markets (SMEs)through a network of branches and ATMs in the United Kingdom, as well as through telephone and internetbanking. Retail issues a comprehensive range of credit and charge cards and other financial products through

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The Royal Bank of Scotland, NatWest and other brands, including MINT, First Active U.K. and TescoPersonal Finance.

Wealth Management provides private banking and investment services to its global clients throughCoutts Group, Adam & Company, The Royal Bank of Scotland International and NatWest Offshore.

Ulster Bank, including First Active, provides a comprehensive range of retail and wholesale financialservices in the Republic of Ireland and Northern Ireland. Retail Banking has a network of branchesthroughout Ireland and operates in the personal, commercial and wealth management sectors. CorporateMarkets provides a wide range of services in the corporate and institutional markets.

Citizens is engaged in retail and corporate banking activities through its branch network in 13 states inthe United States and through non-branch offices in other states. Citizens Financial Group includes the sevenCitizens Banks, Charter One, RBS National Bank, the U.S. credit card business of the Group, RBS Lynk, theU.S. merchant acquiring business of the Group, and Kroger Personal Finance, the credit card joint venture ofthe Issuer with a U.S. supermarket group.

RBS Insurance sells and underwrites retail and SME insurance over the telephone and internet, as wellas through brokers and partnerships. Direct Line, Churchill and Privilege sell general insurance productsdirect to the customer. Through its International Division, RBS Insurance sells general insurance, mainlymotor, in Spain, Germany and Italy. The Intermediary and Broker Division sells general insurance productsthrough 2,500 independent brokers.

Manufacturing supports the customer-facing businesses and provides operational technology, customersupport in telephony, account management, lending and money transmission, global purchasing, property andother services.

Principal subsidiary undertakings

A9.10.1RBSG’s shares are widely held and, to the best of its knowledge, RBSG is not directly or indirectlycontrolled by anyone.

RBS is wholly-owned by RBSG and supervised by the Financial Services Authority as a bank.

RBSG’s direct principal operating subsidiaries are RBS and RBS Insurance Group Limited. Theprincipal subsidiary undertakings of RBS are shown below. Their capital consists of ordinary and preferenceshares, which are unlisted with the exception of certain preference shares issued by NatWest.

All of the subsidiary undertakings are owned directly or indirectly through intermediate holdingcompanies and are wholly-owned. All of the subsidiaries shown below are included in the consolidatedfinancial statements of RBSG and RBS and have an accounting reference date of December 31.

Citizens Financial Group, Inc.Coutts & CoGreenwich Capital Markets, Inc.National Westminster Bank PlcUlster Bank Limited

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DIRECTORS

The directors and the Company Secretary of the Issuer, their functions within the Group and theirprincipal outside activities (if any) of significance are:

Principal outside activity (if any) ofName Functions within the Group significance to the Group

Chairman

Sir Thomas Fulton Wilson Chairman Formerly Chief Executive,McKillop AstraZeneca PLC.

Executive Directors

Sir Frederick Anderson Goodwin Group Chief Executive —

John Alistair Nigel Cameron Chief Executive, Corporate —Markets

Lawrence Kingsbaker Fish Chairman, Citizens Financial —Group, Inc.

Mark Andrew Fisher Chief Executive, Manufacturing —

Gordon Francis Pell Chief Executive, Retail Markets —

Guy Robert Whittaker Group Finance Director —

Non-Executive Directors

Colin Alexander Mason Buchan — Formerly Head of Equities, UBSWarburg. He is currentlyChairman of UBS SecuritiesCanada Inc and Vice Chairman ofStandard Life Investments(Holdings) Limited.

James McGill Currie — Formerly a Director General at theEuropean Commission. He iscurrently Director of TotalUpstream UK Limited and aninternational adviser to Eversheds.

William Michael Friedrich — Executive Director and DeputyChief Executive, BG Group plc.

Archibald Sinclair Hunter — Chairman, Macfarlane Group plcand a director of Edinburgh USTracker Trust plc.

Charles John Koch — Formerly Chairman, President andChief Executive Officer of CharterOne Financial, Inc.

Janis Carol Kong — Formerly Executive Chairman,Heathrow Airport and director ofBAA plc. Currently a non-executive director of Kingfisherplc and Portmeirion Group plc.

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Principal outside activity (if any) ofName Functions within the Group significance to the Group

Joseph Patrick MacHale — Formerly Chief Executive, JPMorgan Europe, Middle East andAfrica Region. Currently thesenior independent director andChairman of the audit committeeof Morgan Crucible plc, and anon-executive director andchairman of the remunerationcommittee of Brit insuranceHoldings plc.

Sir Steve Arthur Robson — Formerly second PermanentSecretary of HM Treasury. Non-executive director of JP MorganCazenove Holdings, Xstrata Plcand Partnerships UK plc.

Robert Avisson Scott — Formerly Group Chief Executive,CGNU plc. He is currentlyChairman of Yell Group plc andnon-executive director of SwissReinsurance Company (Zurich)and Jardine Lloyd ThompsonGroup plc.

Peter Denis Sutherland — Chairman, Goldman SachsInternational and BP p.l.c.

Company Secretary

Miller Roy McLean Group Secretary and General —Counsel

A9.9.2There are no potential conflicts of interest between the duties to the Issuer of the directors of the Issueror the Company Secretary and their other principal activities as listed above or any of their private interests.

A9.9.1The business address for all the directors and the Company Secretary of the Issuer is:

The Royal Bank of Scotland Group plcRBS GogarburnPO Box 1000EdinburghEH12 1HQScotland.

A9.9.1For a full description of the management of the Issuer, see ‘‘Directors, Senior Management andEmployees’’ in the Annual Report on Form 20-F, which is incorporated by reference herein as describedunder ‘‘Documents Incorporated by Reference’’.

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A13.4.2

A13.4.7

DESCRIPTION OF THE CAPITAL SECURITIES

The following description is a summary of the material terms and conditions of the Capital Securities. Itdoes not, however, restate the Capital Securities in their entirety and where reference is made to particularprovisions of the Trust Deed, such provisions, including the definitions of certain terms, are qualified in theirentirety by reference to all of the provisions of the Capital Securities and the Trust Deed. You should read theTrust Deed because it contains additional information and because the Trust Deed and the Capital Securitiesand not this description defines your rights as a holder of the Capital Securities. A copy of the form of theTrust Deed may be obtained by requesting it from the corporate trust offices of the Trustee in London,England (specified in the first paragraph below) and from the Issuer at the address indicated under ‘‘GeneralInformation’’.

A13.4.12

A13.4.11

A13.5.2

A13.4.4

The issue of the $1,600,000,000 Fixed Rate/Floating Rate Preferred Capital Securities (which expressionshall, unless the context otherwise requires, include any further instruments issued as provided under‘‘— Further Issues’’ and forming a single series with the Capital Securities) of the Issuer was authorized by aresolution of the Board of Directors of the Issuer passed on September 16, 2007 and will be furtherauthorized by a resolution of a duly authorized executive committee of the Board of Directors of the Issuer tobe passed on or before the Issue Date (defined below). The Capital Securities are constituted by a trust deed(the ‘‘Trust Deed’’) to be dated on or before the Issue Date between the Issuer and BNY Corporate TrusteeServices Limited (the ‘‘Trustee’’, which expression shall include all persons for the time being the trustee ortrustees under the Trust Deed) as trustee for the Holders. This description of the Capital Securities (the‘‘Description’’) include summaries of, and are subject to, the detailed provisions of the Trust Deed. Copies of(i) the Trust Deed; (ii) the paying agency agreement (the ‘‘Paying Agency Agreement’’) to be dated on orbefore the Issue Date relating to the Capital Securities between the Issuer, The Bank of New York as theinitial principal paying agent (the ‘‘Principal Paying Agent’’, which expression shall include any successorthereto), the other initial paying agents named therein (together with the Principal Paying Agent, the ‘‘PayingAgents’’, which expression shall include the Paying Agents for the time being), The Bank of New York asregistrar (the ‘‘Registrar’’, which expression shall include any successor thereto), the transfer agents namedtherein (the ‘‘Transfer Agents’’, which expression shall include any successors thereto and the Registrar) andthe Trustee; and (iii) the Calculation Agency Agreement (to the extent entered into pursuant to the provisionsunder ‘‘— Agents’’) are available for inspection during usual business hours at the principal office of theTrustee (presently at One Canada Square, London E14 5AL, United Kingdom) and at the specified offices ofeach of the Paying Agents. The Holders are entitled to the benefit of and, are bound by, all the provisions ofthe Trust Deed, and, to the extent applicable to them, the Paying Agency Agreement and the CalculationAgency Agreement (to the extent entered into pursuant to the provisions under ‘‘— Agents’’).

Form, Denomination, Title and Transfer

Form and Denomination

The Capital Securities are issued in registered form in the Authorized Denominations without couponsattached. A certificate (each a ‘‘Certificate’’) will be issued to each Holder in respect of its registered holdingof Capital Securities. Each Certificate will be numbered serially with an identifying number which will berecorded on the relevant Certificate and in the Register.

Title

Title to the Capital Securities will pass by transfer and registration in the Register. Each Holder will(except as otherwise required by law or as ordered by a court of competent jurisdiction) be treated as itsabsolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trustor any interest in it or its theft or loss or anything written on it, or the theft or loss of the Certificate issuedin respect of it) and no person will be liable for so treating the Holder. The Issuer will cause to be kept atthe specified offices of the Registrar outside England and Wales, or in such country as shall be permitted bythe Companies Act, and in accordance with the terms of the Paying Agency Agreement a register (the‘‘Register’’) on which shall be entered the names and addresses of the Holders and the particulars of the

36

Capital Securities held by them and of all transfers and redemptions of Capital Securities. Each Holder shallbe entitled to receive only one Certificate in respect of its entire holding.

Transfer

Subject to the terms of the Paying Agency Agreement and to the provisions of ‘‘Closed Periods’’ and‘‘Regulations’’ under ‘‘— Form, Denomination, Title and Transfer,’’ each Capital Security may be transferredin whole or in part upon the surrender of the relevant Certificate representing the Capital Security to betransferred (together with the form of transfer in respect thereof duly completed and executed and stamped(where applicable)) at the specified office of the Registrar or the specified office of any other Transfer Agent.In the case of a transfer of part only of a Capital Security, a new Certificate in respect of the balance nottransferred will be issued and delivered to the transferor as provided under ‘‘— Form, Denomination, Titleand Transfer — Delivery of New Certificates’’.

No transfer of a Certificate will be valid unless and until entered on the Register. A Capital Securitymay be registered only in the name of, and transferred only to, a named person (or persons, not exceedingfour in number) or a nominee. See ‘‘Book-entry, Transfer Restrictions and Summary of Provisions Relating tothe Capital Securities while in Global Form’’ section for more information on restrictions to transfer.

Delivery of New Certificates

Each new Certificate to be issued upon transfer of a Capital Security will, within three business days ofreceipt by the Registrar or, as the case may be, any other relevant Transfer Agent of the form of transfer dulycompleted and executed, be mailed by uninsured mail at the risk of the Holder entitled to the CapitalSecurities (but free of charge to the Holder) to the address specified in the form of transfer. The form oftransfer is available at the specified offices of the Transfer Agents.

Formalities Free of Charge

The transfer of a Capital Security will be effected without charge by or on behalf of the Issuer or theTransfer Agents subject to (i) the person making such application for transfer paying or procuring thepayment of (or the giving of such indemnity as the Issuer or the relevant Transfer Agent may require inrespect of) any taxes, duties or other governmental charges which may be imposed in relation to suchtransfer; and (ii) the Registrar being satisfied with the documents of title and/or the identity of the personmaking the application.

Closed Periods

No Holder may require the transfer of any Capital Security (or part thereof) during the period of 15 daysending on (and including) the due date for any payment of principal of that Capital Security or seven daysending on (and including) any Record Date in respect of a Coupon Payment Date.

Regulations

All transfers of Capital Securities and entries on the Register will be made subject to the regulationsconcerning transfer of Capital Securities scheduled to the Paying Agency Agreement. The regulations may bechanged by the Issuer with the prior written approval of the Trustee and the Registrar. A copy of the currentregulations will be mailed (free of charge) by the Registrar to any Holder upon request and is available at thespecified offices of the Transfer Agents.

A13.4.6Status and Subordination

Status

The Capital Securities constitute unsecured and, as provided under ‘‘Subordination’’ below, subordinatedobligations of the Issuer and rank pari passu without any preference among themselves.

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Subordination

(i) Condition of Payment: The rights and claims of the Trustee and the Holders in respect of theprincipal of and interest on (including Coupon Amounts to be payable in cash or by way of theissuance of Ordinary Shares as provided under ‘‘— Alternative Coupon Satisfaction Mechanism’’)the Capital Securities are subordinated to the claims of Senior Creditors and, accordingly,payments in respect of the principal of and interest on the Capital Securities are, in addition to theright of the Issuer to defer Coupon Payments in accordance with ‘‘— Coupon Payments —Deferral of Coupons,’’ conditional upon the Issuer being solvent at the time of payment by theIssuer (or, as the case may be, at the time of issue of such Ordinary Shares) and, subject to theprovisions of subsection (ii) below, the Issuer shall have no liability to pay any amount in respectof the principal of and interest on the Capital Securities (including Coupon Amounts to be payablein cash or by way of the issuance of Ordinary Shares as provided under ‘‘— Alternative CouponSatisfaction Mechanism’’) to the extent that the Issuer is insolvent or would become insolvent as aresult of making such payment. For the purposes of this subsection (i), the Issuer shall be solventif (1) it is able to pay its debts as they fall due; and (2) its Assets exceed its Liabilities to SeniorCreditors. A report as to the solvency of the Issuer made by two authorized signatories of theIssuer or, in certain circumstances as provided in the Trust Deed, the Auditors or, if the Issuer inwinding up, its liquidator or, if in administration, its administrator shall, in the absence of manifesterror, be treated and accepted by the Issuer, the Trustee and the Holders as correct and sufficientevidence of such solvency.

The Issuer shall (except where subsection (ii) below applies) satisfy any Deferred Coupon Paymentwhich arises as a result of this subsection (i) in the manner, and at the time, referred to under‘‘— Coupon Payments — Deferral of Coupons’’.

(ii) Winding-up: If, at any time, the Issuer is in Winding Up or in a Qualifying Administration, thereshall be payable by the Issuer in respect of the principal of and interest on each Capital Security(in lieu of any other payment by the Issuer) such amount, (if any), as would have been payable tothe relevant Holder if, on the day prior to the commencement (as defined in the Trust Deed) of theWinding Up of the Issuer or the notice by the administrator, as the case may be, and thereafter,such Holder and/or the Trustee were the holder of one of a class of Notional Preference Shares onthe assumption that the amount that such Holder was entitled to receive in respect of eachNotional Preference Share on a return of assets in such Winding Up or in a QualifyingAdministration were an amount equal to the principal amount of the relevant Capital Security andany other Payments together with, to the extent not otherwise included within the foregoing, anyDeferred Coupon Payment which arises as a result of sub-paragraph (i) of this section.

A13.4.8

(iii) Set-off: Subject to applicable law, neither the Holders nor the Trustee may exercise or claim anyright of set off in respect of any amount in respect of the principal of and interest on the CapitalSecurities owed to it by the Issuer and each Holder shall, by virtue of his subscription, purchase orholding of any Capital Security, be deemed to have waived all such rights of set-off. To the extentthat any set-off takes place, whether by operation of law or otherwise, between: (x) any amount inrespect of the principal of and interest on the Capital Securities owed by the Issuer to a Holder;and (y) any amount owed to the Issuer by such Holder, such Holder will immediately transfer suchamount which is set off to the Issuer or, in the event of its winding up or administration (as thecase may be), the liquidator, administrator or other relevant insolvency official of the Issuer, to beheld on trust for the Senior Creditors.

Coupon Payments

Coupon Payment Dates

The Capital Securities bear interest at the Coupon Rate from (and including) the Issue Date and theamount of such interest will (subject to subsections (i) and (ii) of ‘‘— Status and Subordination —Subordination,’’ ‘‘— Coupon Payments — Deferral of Coupons,’’ ‘‘— Alternative Coupon Satisfaction

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Mechanism’’ and ‘‘— Payments — Suspension’’) be payable on each Coupon Payment Date. Each CapitalSecurity will cease to bear interest from the due date for redemption unless, after surrender of the relevantCertificate, payment and performance of all amounts and obligations due in respect of the Capital Securitiesis not properly and duly made, in which event interest shall continue to accrue, and shall be payable, inaccordance with the provisions under ‘‘— Coupon Payments’’ (both before and after judgment) as provided inthe Trust Deed.

Coupon Rate

(i) The Coupon Rate in respect of the period from (and including) the Issue Date to (but excluding)the First Reset Date is 6.990% per annum.

(ii) The Coupon Rate in respect of each Reset Period shall be the aggregate of 2.67%, per annum and:

a) the offered rate (rounded, if necessary, up to the nearest one hundred thousandth of apercentage point (0.000005% being rounded upwards)) for three-month deposits inU.S. dollars as at 11.00 a.m. (London time) on the Coupon Determination Date in questionas appears on the display designated as page ‘‘LIBOR 01’’ on the Reuters Monitor MoneyRates Service (or such other page or service as may replace it for the purpose of displayingsuch information) as determined by the Principal Paying Agent; or

b) if such offered rate does not appear, the arithmetic mean (rounded, if necessary, up to thenearest one hundred thousandth of a percentage point (0.000005% being rounded upwards))of offered quotations to prime banks in the London interbank market for three-monthdeposits in U.S. dollars as at 11.00 a.m. (London time) on the Coupon Determination Datein question obtained by the Principal Paying Agent from the principal London office of theReference Banks, provided at least two of the Reference Banks provide the Principal PayingAgent with such offered quotations; and

c) if, on any Coupon Determination Date to which the provisions of (b) above apply, one onlyor none of the Reference Banks provides the Principal Paying Agent with such a quotation,the arithmetic mean (rounded, if necessary, up to the nearest one hundred thousandth of apercentage point (0.000005% being rounded upwards)) of the U.S. dollar lending rates whichmajor banks in the London interbank market selected by the Principal Paying Agent arequoting at approximately 11.00 a.m. (London time) on the relevant Coupon DeterminationDate to leading banks in London for a period of three months,

except that, if the banks so selected by the Principal Paying Agent under (c) above are not quotingas mentioned above, the Coupon Rate shall be either (i) the Coupon Rate in effect for the lastpreceding Coupon Period to which one of the preceding sub-paragraphs of this section (ii) shallhave applied or (ii) if none, 7.990% per annum.

Determination and Publication of Coupon Rate and Coupon Amount

The Principal Paying Agent will, upon determining the Coupon Rate pursuant to subsection (b) under‘‘— Coupon Payments — Coupon Rate,’’ calculate the Coupon Amount in respect of each $1,000 principalamount of the Capital Securities and cause the Coupon Rate and each Coupon Amount payable in respect ofa Coupon Period to be notified to the Trustee, the Issuer, the other Paying Agents and any stock exchange onwhich the Capital Securities are for the time being listed and to be notified to the Holders as soon as possibleafter their determination but in no event later than the fourth business day thereafter.

Each Coupon Amount in respect of any Coupon Period ending prior to the First Reset Date shall becalculated by applying the Coupon Rate to the principal amount of the relevant Capital Security and (in thecase of a semi-annual Coupon Period) dividing the result by two and, in respect of any period of less thanone year (save for a semi-annual Coupon Period), such Coupon Amount shall be calculated on the basis of a360-day year consisting of 12 months of 30 days each and, in the case of an incomplete month, the numberof days elapsed, and the resulting figure rounded to the nearest cent (half a cent being rounded up).

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Each Coupon Amount in respect of any Coupon Period commencing on or after the First Reset Dateshall be calculated by applying the Coupon Rate to the principal amount of the relevant Capital Security andmultiplying the result by the Day Count Fraction and rounding the resulting figure to the nearest cent (half acent being rounded up).

Determination or Calculation by Trustee

If the Principal Paying Agent does not at any time for any reason so determine the Coupon Rate orcalculate each Coupon Amount in accordance with subsection (b) under ‘‘— Coupon Payments — CouponRate’’ and ‘‘— Coupon Payments — Determination and Publication of Coupon Rate and Coupon Amount,’’the Trustee or an agent on its behalf shall do so and such determination or calculation shall be deemed tohave been made by the Principal Paying Agent. In doing so, the Trustee or its agent shall apply the foregoingprovisions under ‘‘— Coupon Payments,’’ with any necessary consequential amendments, to the extent that, inits opinion, it or its agent can do so, and in all other respects it shall do so in such manner as it shall deemfair and reasonable in all the circumstances. All determinations or calculations made or obtained for thepurposes of the provisions of section by the Trustee or its agent, shall (in the absence of willful default, badfaith or manifest error) be binding on the Issuer, the Paying Agents, the Transfer Agents and all Holders and(in the absence of willful default or bad faith) no liability to the Issuer or the Holders shall attach to theTrustee in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant tosuch provisions.

Reference Banks

Unless the Capital Securities are to be redeemed on the First Reset Date, the Issuer will (with the priorwritten approval of the Trustee) not later than 20 business days before the First Reset Date appoint fourleading financial institutions engaged in the London interbank market to act as Reference Banks and willprocure that, so long as any Capital Security is outstanding, there shall thereafter at all times be fourReference Banks. If any such institution (acting through its relevant office) is unable to continue to act as aReference Bank, the Issuer shall (with the prior written approval of the Trustee) appoint some other leadingfinancial institution engaged in the London interbank market (acting through its principal London office) toact as such in its place.

Deferral of Coupons

The Issuer may elect to defer any Coupon Payment in its absolute discretion, subject to and inaccordance with the provisions under this section. If the Issuer elects to defer a Coupon Payment, it shall givenot less than 30 days’ notice of such election to the Trustee, the Registrar, the Principal Paying Agent, theCalculation Agent (to the extent appointed pursuant to provisions set forth in ‘‘— Agents’’) and the Holdersin accordance with the provisions under ‘‘— Notices’’. The Issuer shall (except where subsection (ii) under‘‘— Status and Subordination — Subordination’’ applies) satisfy any such Deferred Coupon Payments, andany Deferred Coupon Payments which arise as a result of the failure to satisfy the conditions to payment setout under subsection (i) under ‘‘— Status and Subordination — Subordination,’’ only by operation of theprocedures set out in ‘‘— Alternative Coupon Satisfaction Mechanism’’. Such Deferred Coupon Paymentsmay be satisfied by the Issuer in the manner aforesaid at any time upon the expiry of not less than 16 days’notice (the ‘‘Optional Deferred Coupon Settlement Date’’) to such effect given by the Issuer to the Trustee,the Registrar, the Principal Paying Agent, the Calculation Agent (to the extent appointed pursuant toprovisions set forth in ‘‘— Agents’’) and the Holders in accordance with the provisions under ‘‘— Notices’’and in any event the Issuer must (subject to the provisions under ‘‘— Payments — Suspension’’) satisfy anyDeferred Coupon Payments in the manner aforesaid on the first of the following to occur: (i) redemption ofthe Capital Securities in accordance with ‘‘— Redemption — Issuer’s Call Option;’’ (ii) redemption,substitution or variation of the terms of the Capital Securities in accordance with ‘‘Redemption due toTaxation,’’ ‘‘Redemption for Capital Disqualification Event’’ or ‘‘Substitution or Variation instead ofRedemption,’’ each under the heading ‘‘— Redemption,’’ (the date on which any such redemption,substitution or variation referred to in (i) or (ii) above occurs being the ‘‘Termination Date’’); or

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(iii) substitution of the Capital Securities pursuant to ‘‘— Redemption — Substitution for SubstitutedPreference Shares’’.

If, on any Coupon Payment Date, all Coupon Payments in respect of the Capital Securities which wouldotherwise have been due on such date shall not have been paid as a result of either the exercise by the Issuerof its discretion pursuant to this section or the operation of sub-section (i) of ‘‘— Status and Subordination —Subordination’’, then from the date on which payment was originally, or but for the non-satisfaction of sub-section (1) of ‘‘— Status and Subordination — Subordination’’ would have been, due until (x) the date onwhich the Issuer next pays in full the Coupon Payment due and payable on a Coupon Payment Date on alloutstanding Capital Securities (or an amount equal to the same has been duly set aside or provided for in fullfor the benefit of the Holders in a manner satisfactory to the Trustee) or, if earlier, (y) any Optional DeferredCoupon Settlement Date upon which the Issuer satisfies in full all Outstanding Coupon Payments, the Issuershall not and shall procure that no member of the Group shall (i) declare or pay a distribution or dividend onany Junior Securities (other than a final dividend declared, made or paid by the relevant company before theIssuer gives notice that such Coupon Payment is to be deferred and other than distributions or dividends paidby a member of the Group which is wholly owned by another member of the Group); or (ii) redeem,purchase or otherwise acquire for any consideration any Junior Securities or Parity Securities.

Notwithstanding any other provision in this Description or the Trust Deed, the deferral of any CouponPayment by virtue of this section or subsection (i) under ‘‘— Status and Subordination — Subordination’’shall not constitute a default for any purpose (including, without limitation, subsection (i) under ‘‘— Non-Payment when Due’’) on the part of the Issuer. Any Coupon Payment so deferred shall not, except in thecircumstances provided in ‘‘— Alternative Coupon Satisfaction Mechanism — Market Disruption,’’ bearinterest.

Alternative Coupon Satisfaction Mechanism

Alternative Coupon Satisfaction Mechanism

Each ACSM Payment, when due to be satisfied in accordance with this Description, will (except asprovided under ‘‘— Payments — Suspension’’) be satisfied by the Issuer in full only through the issue and/ortransfer of Ordinary Shares to the Trustee or its agent in accordance with the provisions under this‘‘— Alternative Coupon Satisfaction Mechanism’’. The Issuer shall appoint a Calculation Agent (if it has notalready done so) and notify the Trustee, the Principal Agent and the Calculation Agent not less than16 business days prior to the relevant ACSM Payment Date that an ACSM Payment is to be satisfied on suchACSM Payment Date. All other payments due must, subject to subsection (i) under ‘‘— Status andSubordination — Subordination’’ and ‘‘— Coupon Payments — Deferral of Coupons,’’ be satisfied inaccordance with ‘‘Coupon Payment Dates,’’ ‘‘Coupon Rates,’’ ‘‘Determination and Publication of CouponRate and Coupon Amount,’’ ‘‘Determination or Calculation by Trustee,’’ and ‘‘Reference Banks’’ under theheading ‘‘— Coupon Payments’’.

Issue of Ordinary Shares

If any ACSM Payment is to be satisfied through the issue of Ordinary Shares as required by theprovisions of this ‘‘— Alternative Coupon Satisfaction Mechanism,’’ then:

(i) by or before the close of business on the seventh business day prior to the relevant ACSMPayment Date, the Issuer will issue and/or transfer to the Trustee (or, if so agreed between theIssuer and the Trustee, to an agent of the Trustee) such number of Ordinary Shares (the ‘‘PaymentOrdinary Shares’’) as, in the determination of the Calculation Agent, will have a market value asnear as practicable to, but not less than, the relevant ACSM Payment to be satisfied in accordancewith this ‘‘— Alternative Coupon Satisfaction Mechanism;’’ and

(ii) the Trustee has agreed to use reasonable endeavors to effect the transfer or instruct its agent toeffect the transfer of such Payment Ordinary Shares to or to the order of the Calculation Agent assoon as practicable (subject to any necessary consents being obtained) and in any case by not later

41

than the close of business in London on the sixth business day prior to the relevant ACSMPayment Date and the Calculation Agent shall be required to agree in the Calculation AgencyAgreement to use reasonable endeavors to procure purchasers for such Payment Ordinary Shares.The Calculation Agent shall further be required to agree in the Calculation Agency Agreement toconvert, as agent of the Trustee, the proceeds of such sale into U.S. dollars at prevailing marketexchange rates and deliver such converted proceeds of such sale to, or hold such convertedproceeds of such sale to the order of, the Trustee, who shall pay or procure that its agent pays orshall instruct the Calculation Agent to pay such proceeds as it holds in respect of the relevantPayment on its due date to the Principal Paying Agent for application in accordance with theprovisions under ‘‘— Alternative Coupon Satisfaction Mechanism — Issue Satisfies Payment’’.

The Trustee shall not be liable to anyone for any loss occasioned by the transfer or sale of the PaymentOrdinary Shares or the conversion of the proceeds of such sale as aforesaid, in each case by or on behalf ofthe Trustee, or any delay or failure in effecting such transfer or sale of the Payment Ordinary Shares orconversion of the proceeds (as the case may be) under this Description.

If the proceeds of the sale of the Payment Ordinary Shares will not, in the opinion of the CalculationAgent despite the arrangements described above, result in a sum at least equal to the relevant ACSM Paymentbeing available to satisfy the necessary ACSM Payment in full on its due date, the Issuer, the Trustee and theCalculation Agent shall take such steps as are reasonably necessary to ensure, so far as practicable, thatthrough issuing additional Ordinary Shares on one or more further occasions (also ‘‘Payment OrdinaryShares’’) and allotting them in favor of the Trustee or its agent and following, mutatis mutandis, theprocedures referred to above (and exchanged into U.S. dollars), a sum as near as practicable to, and at leastequal to, the relevant ACSM Payment will be available to satisfy the relevant ACSM Payment in full on itsdue date. If, despite the operation of the above provisions, a shortfall exists on the business day preceding theintended ACSM Payment Date, the Issuer shall, for a period of five years from such date, continue to use allreasonable endeavors to settle any ACSM Payment in accordance with the provisions under ‘‘— AlternativeCoupon Satisfaction Mechanism’’ and may in accordance with the provisions of any Calculation AgencyAgreement, and subject to having the relevant corporate authorizations in place, continue to issue and allotthe relevant number of Payment Ordinary Shares until the Trustee shall have received funds on behalf of theIssuer equal to the full amount of such shortfall. The foregoing is subject to the proviso that, if a shortfallexists on the business day preceding the intended Termination Date, no part of the ACSM Payment shall bedue until such time as the Issuer is able to pay a sum at least equal to the ACSM Payment in full inaccordance with the procedures set out under ‘‘— Alternative Coupon Satisfaction Mechanism’’ on theTermination Date.

Issue Satisfies Payment

Where the Issuer is required to satisfy an ACSM Payment hereunder by the issue and/or transfer ofPayment Ordinary Shares to the Trustee (or its agent) and issues and/or sells such Payment Ordinary Shares,such issue and/or transfer shall satisfy the relevant ACSM Payment or, as the case may be, the relevant partof such ACSM Payment, if done in accordance with the provisions under ‘‘— Alternative Coupon SatisfactionMechanism’’. The proceeds of sale of Payment Ordinary Shares shall be paid by the Principal Paying Agentto the Holders in respect of the relevant ACSM Payment.

Insufficiency

The Issuer shall not be entitled to exercise its option provided under ‘‘Issuer’s Call Option,’’‘‘Redemption due to Taxation,’’ ‘‘Redemption for Capital Disqualification Event,’’ ‘‘Substitution or Variationinstead of Redemption’’ or ‘‘Substitution for Substituted Preference Shares,’’ each under the heading‘‘— Redemption,’’ to redeem, substitute or vary the terms of the Capital Securities until such time as theIssuer has available for, and the directors of the Issuer have the corresponding authority to, issue such numberof Payment Ordinary Shares as is required to be issued in accordance with ‘‘— Alternative CouponSatisfaction Mechanism’’ for the purposes of satisfying in full in accordance with ‘‘— Alternative Coupon

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Satisfaction Mechanism’’ any ACSM Payment required to be satisfied in connection with such redemption,substitution or variation of the terms of the Capital Securities.

Market Disruption

Notwithstanding the provisions under ‘‘— Alternative Coupon Satisfaction Mechanism — Issue ofOrdinary Shares,’’ if there exists, in the opinion of the Issuer, a Market Disruption Event with respect toPayment Ordinary Shares on or after the 15th business day preceding any ACSM Payment Date, then theIssuer may give a notice to the Trustee, the Registrar, the Principal Paying Agent, the Calculation Agent (tothe extent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and the Holders in the mannerprovided under ‘‘— Notices’’ as soon as possible after the Market Disruption Event has arisen or occurred,whereupon the relevant ACSM Payment may be deferred until such time as the Market Disruption Event, inthe opinion of the Issuer, no longer exists.

Any such deferred ACSM Payment will be satisfied as soon as practicable following such time as theMarket Disruption Event no longer exists. Interest shall not accrue on such deferred ACSM Payment, unless,as a consequence of the existence of the relevant Market Disruption Event, the Issuer does not satisfy therelevant ACSM Payment for a period of 14 days or more after the due date therefor, in which case interestshall accrue on such deferred ACSM Payment from (and including) the date on which the relevant ACSMPayment was due to be made to (but excluding) the date on which such ACSM Payment is made. Any suchinterest shall accrue at a rate determined in accordance with the provisions under ‘‘— Coupon Payments’’ andshall be satisfied only in accordance with the provisions under ‘‘— Alternative Coupon SatisfactionMechanism,’’ as soon as reasonably practicable after the relevant deferred ACSM Payment is made. Noliability shall attach to the Trustee or its agent if, as a result of a Market Disruption Event or any other eventoutside the control of the Trustee or its agent, the Trustee or its agent is unable to comply with the provisionsunder ‘‘— Alternative Coupon Satisfaction Mechanism — Issue of Ordinary Shares’’.

Listing

The Issuer shall ensure (to the extent possible) that, at the time when any Ordinary Shares are issuedand/or transferred as provided under ‘‘— Alternative Coupon Satisfaction Mechanism,’’ such Ordinary Sharesare admitted to the Official List and are admitted to trading on the Market (or, if the London Stock Exchangeis not a Recognized Stock Exchange at that time, such other stock exchange as is a Recognized StockExchange at that time).

A13.4.9Redemption

No Fixed Redemption Date

The Capital Securities have no final maturity date and are only redeemable or may only be redeemed,substituted, varied or purchased (subject to the provisions under ‘‘— Status and Subordination’’ and withoutprejudice to the provisions under ‘‘— Non-Payment when Due’’) in accordance with the following provisionsunder ‘‘— Redemption’’ or in the circumstances provided for under ‘‘— Payments — Suspension’’.

Issuer’s Call Option

Subject to the provisions of subsection (i) under ‘‘— Status and Subordination — Subordination’’ and‘‘— Redemption — Conditions to Redemption, Substitution or Variation,’’ the Issuer may, by giving not lessthan 30 nor more than 60 days’ notice to the Trustee, the Registrar, the Principal Paying Agent, theCalculation Agent (to the extent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and theHolders in the manner provided under ‘‘— Notices,’’ which notice shall be irrevocable and shall specify thedate fixed for redemption, elect to redeem all, but not some only, of the Capital Securities on any Reset Dateat their principal amount together with any Outstanding Payments (such redemption amounts to be payable incash as provided under ‘‘— Payments,’’ save for any Deferred Coupon Payments which will be satisfied bythe operation of the provisions under ‘‘— Alternative Coupon Satisfaction Mechanism’’ and any other amountin respect of interest which may at the option of the Issuer be satisfied by the operation of the provisions

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under ‘‘— Alternative Coupon Satisfaction Mechanism’’). Upon expiry of such notice, the Issuer shall bebound to redeem the Capital Securities in accordance with this section.

Redemption due to Taxation

Subject to the provisions of (i) under ‘‘— Status and Subordination — Subordination’’ and ‘‘— Redemp-tion — Conditions to Redemption, Substitution or Variation,’’ the Issuer may, by giving not less than 30 normore than 60 days’ notice to the Trustee, the Registrar, the Principal Paying Agent, the Calculation Agent (tothe extent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and the Holders in the mannerprovided under ‘‘— Notices,’’ which notice shall be irrevocable and shall specify the date fixed forredemption, elect to redeem all, but not some only, of the Capital Securities at their principal amount togetherwith any Outstanding Payments (such redemption amounts to be payable in cash as provided under‘‘— Payments,’’ save for any Deferred Coupon Payments which will be satisfied by the operation of theprovisions under ‘‘— Alternative Coupon Satisfaction Mechanism’’ and any other amount in respect ofinterest which may at the option of the Issuer be satisfied by the operation of the provisions under‘‘— Alternative Coupon Satisfaction Mechanism’’) at any time prior to the First Reset Date, if the Issuersatisfies the Trustee immediately prior to the giving of such notice that:

(i) it has or will or would, but for redemption, become obliged to pay additional amounts as providedor referred to under ‘‘— Taxation’’;

(ii) any Coupon Payment would be a ‘‘distribution’’ for United Kingdom tax purposes;

(iii) in respect of the Issuer’s obligation to make any Coupon Payment on the next following CouponPayment Date, the Issuer would not to any material extent be entitled to have any attributable lossor non-trading deficit set against the profits of companies with which it is grouped for applicableUnited Kingdom tax purposes (whether under the group relief system current as at the date of thisOffering Memorandum or any similar system or systems having like effect as may from time totime exist); or

(iv) in respect of the Issuer’s obligation to make any Coupon Payment on the next following CouponPayment Date, the Issuer would otherwise suffer adverse tax consequences,

in each such case, as a result of any change in, or amendment to, the laws or regulation of the UnitedKingdom or any political subdivision or any authority thereof or therein having power to tax, or anychange in the application or official interpretation of such laws or regulations, which change oramendment becomes effective on or after the date of this Offering Memorandum and cannot be avoidedby the Issuer taking reasonable steps available to it (each a ‘‘Tax Event’’), provided that no such noticeof redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would beobliged to pay such additional amounts as referred to in paragraph (i) above, would be treated as makingdistributions as referred to in paragraph (ii) above, would not be entitled to have the loss or non-tradingdeficit set against the profits as referred to in paragraph (iii) above or would suffer adverse taxconsequences as referred to in paragraph (iv) above were a payment in respect of the Capital Securitiesthen due and in connection therewith a certificate signed by two authorized signatories of the Issuer tothe effect that a Tax Event has occurred shall be delivered to the Trustee prior to the delivery of therelevant notice of redemption by the Issuer and the Trustee shall be entitled to accept the certificate assufficient evidence of such occurrence in which event it shall be conclusive and binding on the Holders.Upon expiry of such notice, the Issuer shall be bound to redeem the Capital Securities in accordancewith this section.

Redemption for Capital Disqualification Event

Subject to the provisions under subsection (i) under ‘‘— Status and Subordination — Subordination’’ and‘‘— Redemption — Conditions to Redemption, Substitution or Variation,’’ the Issuer may by giving not lessthan 30 nor more than 60 days’ notice to the Trustee, the Registrar, the Principal Paying Agent, theCalculation Agent (to the extent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and the

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Holders in the manner provided under ‘‘— Notices,’’ which notice shall be irrevocable and shall specify thedate fixed for redemption, elect to redeem all, but not some only, of the Capital Securities at their principalamount together with any Outstanding Payments (such redemption amounts to be payable in cash as providedunder ‘‘— Payments,’’ save for any Deferred Coupon Payments which will be satisfied by the operation ofthe provisions under ‘‘— Alternative Coupon Satisfaction Mechanism’’ and any other amount in respect ofinterest which may at the option of the Issuer be satisfied by the operation of the provisions under‘‘— Alternative Coupon Satisfaction Mechanism’’) at any time prior to the First Reset Date, if a CapitalDisqualification Event has occurred and is continuing (and in connection therewith a certificate signed by twoauthorized signatories of the Issuer to the effect that a Capital Disqualification Event has occurred and iscontinuing shall be delivered to the Trustee prior to the delivery of the relevant notice of redemption by theIssuer and the Trustee shall be entitled to accept the certificate as sufficient evidence of such occurrence inwhich event it shall be conclusive and binding on the Holders). Upon expiry of such notice, the Issuer shallbe bound to redeem the Capital Securities in accordance with this section.

Substitution or Variation instead of Redemption

If an event or circumstance giving rise to a right of the Issuer to redeem the Capital Securities under‘‘Redemption due to Taxation’’ or ‘‘Redemption for Capital Disqualification Event’’ above has occurred and iscontinuing, then the Issuer may instead of giving notice to redeem, subject to the provisions of subsection(i) under ‘‘— Status and Subordination — Subordination’’ and ‘‘— Redemption — Conditions to Redemption,Substitution or Variation’’ (but without any requirement for the consent or approval of the Holders) andhaving given not less than 30 nor more than 60 days’ notice to the Trustee, the Registrar, the PrincipalPaying Agent, the Calculation Agent (to the extent appointed pursuant to the provisions set forth under‘‘— Agents’’) and the Holders in the manner described under ‘‘— Notices’’ (which notice shall beirrevocable), substitute at any time all (but not some only) of the Capital Securities for, or vary the terms ofthe Capital Securities so that they remain, Qualifying Tier 1 Securities or become Qualifying Upper Tier 2Securities, and the Trustee shall (subject to the following provisions of this paragraph and subject to thereceipt by it of a certificate signed by two authorized signatories of the Issuer certifying that the securities tobe offered in substitution for the Capital Securities, or the securities into which the Capital Securities will bevaried, are Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities (as the case may be)) agree tosuch substitution or variation.

If the Capital Securities are to be substituted for preference shares, the provisions specified under‘‘— Redemption — Substitution for Substituted Preference Shares’’ will apply mutatis mutandis to suchsubstitution.

In connection therewith, all Deferred Coupon Payments (if any) will be satisfied by the operation of theprovisions under ‘‘— Alternative Coupon Satisfaction Mechanism’’. The Trustee shall (at the expense of theIssuer) use its reasonable endeavors to participate in or assist the Issuer with the substitution of the CapitalSecurities for, or the variation of the terms of the Capital Securities so that they become, alternativeQualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities (as the case may be), provided that theTrustee shall not be obliged to participate in, or assist with, any such substitution or variation if the terms ofthe proposed alternative Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities (as the case maybe) or the participation in or assistance with such substitution or variation would impose, in the Trustee’sopinion, more onerous obligations upon it or reduce its protections. If, notwithstanding the above, the Trusteedoes not participate or assist as provided above, the Issuer may, subject as provided herein, redeem theCapital Securities as provided above.

Upon expiry of such notice, the Issuer shall vary the terms of or substitute the Capital Securities inaccordance with this section, as the case may be.

In connection with any substitution or variation in accordance with this section, the Issuer shall complywith the rules of any stock exchange on which the Capital Securities are for the time being listed or admittedto trading.

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Purchases

The Issuer may (subject to the prior consent of, or notification to (and no objection being raised by), theFSA, in each case solely to the extent then required) at any time purchase beneficially or procure others topurchase beneficially for its account Capital Securities in the open market, by tender or by private treaty.Capital Securities purchased or otherwise acquired by the Issuer shall be surrendered to the Registrar forcancellation.

Cancellation

All Capital Securities which are redeemed or purchased or otherwise acquired as aforesaid andsurrendered to the Registrar for cancellation will forthwith be cancelled and thereafter may not be re-issuedor resold.

Conditions to Redemption, Substitution or Variation

Capital Securities may only be redeemed, substituted or varied by the Issuer as provided under ‘‘Issuer’sCall Option,’’ ‘‘Redemption due to Taxation,’’ ‘‘Redemption for Capital Disqualification Event,’’ ‘‘Substitu-tion or Variation instead of Redemption,’’ or ‘‘Substitution for Substituted Preference Shares,’’ each under‘‘— Redemption,’’ or ‘‘— Payments — Suspension’’ provided that:

(i) the Issuer has notified the FSA of its intention to do so at least one month (or such other period,longer or shorter, as the FSA may then require or accept) prior to the date scheduled forredemption, substitution or variation and no objection thereto has been raised by the FSA or (ifrequired) the FSA has provided its consent thereto;

(ii) a certificate signed by two authorized signatories of the Issuer shall be delivered to the Trusteeprior to the delivery of the relevant notice of redemption, substitution or variation (as the case maybe) to the effect that the Issuer, both at the time when the notice of redemption, substitution orvariation is given and immediately following such redemption, substitution or variation, as the casemay be, is or will be (as the case may be) in compliance with its capital adequacy requirements asprovided in the Capital Regulations (except to the extent that the FSA no longer so requires), andthe Trustee shall be entitled to accept the certificate as sufficient evidence of such compliance inwhich event it shall be conclusive and binding on the Holders); and

(iii) except in the case of redemption provided for under ‘‘— Payments — Suspension,’’ the termsprovided under ‘‘— Alternative Coupon Satisfaction Mechanism — Insufficiency’’ have beensatisfied prior thereto and all Deferred Coupon Payments (if any) have been satisfied in full by theoperation of the provisions under ‘‘— Alternative Coupon Satisfaction Mechanism’’ and theCalculation Agency Agreement on or prior to the date thereof.

Substitution for Substituted Preference Shares

(i) At any time a Capital Breach Event has occurred and is continuing, the Issuer may, subject to theprovisions of subsection (i) under ‘‘— Status and Subordination — Subordination’’ and ‘‘— Re-demption — Conditions to Redemption, Substitution or Variation’’ (but without any requirement forthe consent or approval of the Holders) and having given not less than 30 nor more than 60 days’notice to the Trustee, the Registrar, the Principal Paying Agent, the Calculation Agent (to theextent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and the Holders in themanner provided under ‘‘— Notices’’ (which notice shall be irrevocable) of its intention to effect aPreference Share Substitution (‘‘Substitution Notice’’), cause the substitution in accordance withthis section of all, but not some only, of the Capital Securities for fully paid non-cumulativeperpetual preference shares issued directly by the Issuer (the ‘‘Substituted Preference Shares —’’)(such substitution being referred to herein as a ‘‘Preference Share Substitution’’) on the expiry ofsuch notice (the ‘‘Substitution Date’’).

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The Issuer may only effect a Preference Share Substitution if, prior to the delivery of the relevantSubstitution Notice, it has created (and is then maintaining) a sufficient number of authorized (butunissued) Substituted Preference Shares to effect the Preference Share Substitution in accordancewith this section and has obtained (and is then maintaining) the corporate authorizations necessaryto effect the substitution of the Capital Securities for the Substituted Preference Shares (including,but not limited to, the necessary resolutions of the shareholders of the Issuer to authorize thedirectors of the Issuer to issue and allot the Substituted Preference Shares).

The terms of the Substituted Preference Shares shall provide that (x) the Substituted PreferenceShares will have a First Reset Date (or as such term may otherwise be defined in the termsthereof) which falls on the same day as the First Reset Date of the Capital Securities; (y) that theIssuer has the right to choose whether or not to pay any dividend on the Substituted PreferenceShares; and (z) any dividend payable on the Substituted Preference Shares shall be non-cumulative(and accordingly there shall be no provision analogous to the ACSM incorporated in the terms ofthe Substituted Preference Shares), and otherwise shall in all material respects provide the holdersthereof with at least the same economic rights and benefits (including those relating to non-cumulative (except as aforesaid) distributions and ranking) as are attached to the Capital Securities(save that the terms of the Substituted Preference Shares shall neither include any obligation on theIssuer to pay additional amounts on terms analogous with the provisions under ‘‘— Taxation’’ norany right of the Issuer to redeem the Substituted Preference Shares on terms analogous with‘‘— Redemption — Redemption due to Taxation’’ and shall not contain a step up in the dividendrate) (such terms to be as reasonably determined by the Issuer, and in connection therewith acertificate signed by two authorized signatories of the Issuer to the effect that the terms of theSubstituted Preference Shares comply with the foregoing shall be delivered to the Trustee prior tothe Issuer being able to effect such Preference Share Substitution and the Trustee shall be entitledto accept the certificate as sufficient evidence of such compliance in which event it shall beconclusive and binding on the Holders).

(ii) In connection with any Preference Share Substitution in accordance with this section, all DeferredCoupon Payments and Accrued Payments (if any) will be satisfied on the Substitution Date by theoperation of the provisions under ‘‘— Alternative Coupon Satisfaction Mechanism’’.

(iii) The Substitution Notice shall attach, or refer to the availability of, a substitution confirmation (the‘‘Substitution Confirmation’’) which each Holder will be required to complete, and which shallrequire each Holder to provide to the Issuer such information as the Issuer may reasonably requireto be able to effect a Preference Share Substitution in accordance with this section (including, interalia, notification of each Holder’s instructions pursuant to the following subsection (iv)). The formof such Substitution Confirmation shall also be made available at the specified office of eachPaying Agent and Transfer Agent. To receive Substituted Preference Shares (or certificates issuedin respect thereof pursuant to sub-section (vi) of this section) in respect of its holding of theCapital Securities, each Holder must deliver to a Paying Agent or a Transfer Agent (as the casemay be) a duly completed Substitution Confirmation together with the Certificate held by it at leastfive business days prior to the Substitution Date. Any Preference Share Substitution shall beeffected subject in each case to any fiscal laws or other laws and regulations applicable thereto.Certificates (if any) for Substituted Preference Shares issued on a Preference Share Substitutionwill be dispatched by or on behalf of the Issuer by mail free of charge (but uninsured and at therisk of the person entitled thereto) within one month of the later of the Substitution Date andreceipt of a duly completed Substitution Confirmation. Holders will continue to be entitled toreceive payments in respect of the Capital Securities until the Substitution Date (provided that theSubstituted Preference Shares are available for issue as aforesaid from the Substitution Date andthe Issuer makes the payment referred to in subsection (ii) of ‘‘— Redemption — Substitution forSubstituted Preference Shares’’) and thereafter Holders will have no further rights, title or interestin or to their Capital Securities except to have them substituted in the manner described in thissection. Each Substituted Preference Share allotted will rank for any dividend from the Substitution

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Date and will, without prejudice to subsection (ii) of ‘‘— Redemption — Substitution forSubstituted Preference Shares,’’ have no entitlement to any Accrued Payment or any other paymenton the Capital Securities.

(iv) The Issuer shall, in accordance with the instructions of each Holder (as notified to the Issuer in theSubstitution Confirmation), either (I) deliver the relevant Substituted Preference Shares to acommon depositary on behalf of Euroclear Bank S.A./N.V. and Clearstream Banking, societeanonyme or (II) deposit the Substituted Preference Shares with an American depositary bank forthe purpose of issuing certificates representing and/or passing through to Holders the economiceffect of such Substituted Preference Shares (an ‘‘ADR Facility’’) and, in each case, procure thatno election is made in respect of the Substituted Preference Shares in accordance with section 97Aof the Finance Act 1986. Without prejudice to the foregoing, the Issuer will procure that transfersof the Substituted Preference Shares, or the relevant certificates in the case of SubstitutedPreference Shares deposited in an ADR Facility, shall be able to be effected between holdersthereof free of any stamp duty, stamp duty reserve tax or similar taxes arising on transfer of suchsecurities.

For the purposes of the foregoing, the Issuer shall be entitled to issue the Substituted PreferenceShares in two separate series which shall not be consolidated to form a single series.

(v) The Issuer will pay any stamp duty reserve taxes or capital duties or stamp duties or similar taxespayable in the United Kingdom arising on the allotment and issue of the Substituted PreferenceShares, including their delivery to a common depositary and/or deposit in an ADR Facility (andthe issue of the relevant certificates in respect thereof), in each case as referred to in sub-section(iv) of this section. None of the Issuer, the Trustee, the Paying Agents or the Transfer Agents willbe obliged to pay, and each Holder surrendering a Certificate and a duly completed SubstitutionConfirmation to a Paying Agent or Transfer Agent must pay, any other taxes, stamp duty reservetaxes and capital, stamp, issue and registration duties arising on the relevant Preference ShareSubstitution.

(vi) Prior to the publication of a Substitution Notice, the Issuer shall deliver to the Trustee a certificatesigned by two authorized signatories of the Issuer stating that a Capital Breach Event has occurredand is continuing as at the date of the certificate, and the Trustee shall be entitled to accept thecertificate as sufficient evidence of the occurrence and continuation of such Capital Breach Eventin which event it shall be conclusive and binding on the Holders.

(vii) Following delivery by the Issuer of a Substitution Notice, the Issuer shall use all reasonableendeavors to obtain and maintain a listing of the Substituted Preference Shares on a RecognizedStock Exchange.

(viii) In connection with any Preference Share Substitution, the Issuer shall comply with the rules of anystock exchange on which the Capital Securities are for the time being listed or admitted to trading.

(ix) The provisions of this section will apply mutatis mutandis to the provision under ‘‘— Redemp-tion — Substitution or Variation instead of Redemption’’ in the event that the Qualifying Tier 1Securities for which the Capital Securities may be substituted in accordance with the provisionsunder ‘‘— Redemption — Substitution or Variation instead of Redemption’’ comprise SubstitutedPreference Shares.

A13.4.8Payments

Method of Payment

(i) Payments of principal and interest due other than on a Coupon Payment Date in respect of theCapital Securities will be made by or on behalf of the Issuer against presentation and surrender ofthe relevant Certificate at the specified office of any of the Paying Agents (subject to subsection(iv) below). Such payments will be made, at the option of the payee, by U.S. dollar cheque drawn

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on, or by transfer to, a U.S. dollar registered account maintained by the payee with, a bank inNew York City.

(ii) Payments of Coupon Amounts in respect of the Capital Securities will be paid on the due date forpayment to the persons shown on the Register at the close of business on the relevant Record Datein respect of such payment. Payments of interest on each Capital Security will be made by transferto the registered account of the Holder or by U.S. dollar cheque drawn on a bank in New YorkCity mailed to the registered address of the Holder if it does not have a registered account.

(iii) The Issuer reserves the right, subject to the prior written approval of the Trustee at any time tovary or terminate the appointment of any Paying Agent and to appoint additional or other PayingAgents provided that it will at all times maintain (I) for so long as the Capital Securities areadmitted to the Official List and admitted to trading on the Market, a Paying Agent having aspecified office in London and (II) a Paying Agent with a specified office in a European Unionmember state (which may include the United Kingdom) that will not be obliged to withhold ordeduct tax pursuant to any law implementing European Council Directive 2003/48/EC or any otherDirective implementing the conclusions of the ECOFIN Council meeting of November 26-27,2000. Notice of any such termination or appointment and of any change in the specified offices ofthe Paying Agents will be given to the Holders in the manner provided under ‘‘— Notices’’.

(iv) For the purposes of those matters under ‘‘— Payments,’’ a Holder’s registered account means theU.S. dollar account maintained by or on behalf of it with a bank in New York City, details ofwhich appear on the Register at the close of business on the second business day before the duedate for payment, and a Holder’s registered address means its address appearing on the Register atthat time.

Payments on Payment Business Days

A Certificate may only be presented and surrendered (pursuant to sub-paragraph (i) under ‘‘— Method ofPayment’’) for payment on a day which is a Payment Business Day. No further interest or other payment willbe made as a consequence of the day on which the relevant Certificate may be presented and surrendered forpayment under this section falling after the due date.

Payment Initiation

Where payment is to be made by transfer to a registered account, payment instructions (for value on thedue date or, if that is not a Payment Business Day, for value on the immediately following Business Daywhich is a Payment Business Day) will be initiated and, where payment is to be made by cheque, the chequewill be mailed (uninsured and at the risk and, if mailed at the request of the Holder otherwise than byordinary mail, expense of the Holder) on the due date for payment (or, if it is not a Payment Business Day,the immediately following Business Day which is a Payment Business Day) or, in the case of a payment ofprincipal in respect of the Capital Securities, if later, on the Payment Business Day on which the relevantCertificate is surrendered at the specified office of an Agent.

Payments subject to Fiscal Laws

Without prejudice to the terms under ‘‘— Taxation,’’ all payments made in accordance with thisDescription shall be made subject to any fiscal or other laws and regulations applicable in the place ofpayment. No commissions or expenses shall be charged to the Holders in respect of such payments.

Delay in Payment

Holders will not be entitled to any interest or other payment for any delay after the due date in receivingthe amount due if the due date is not a Payment Business Day, if the Holder is late in surrendering itsCertificate (pursuant to sub-paragraph (i) under ‘‘— Method of Payment’’) or if a cheque mailed as providedunder ‘‘— Payments’’ arrives after the due date for payment.

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Suspension

If, following any take-over offer made under the City Code on Take-overs and Mergers or anyreorganization, restructuring or scheme of arrangement, the Issuer ceases to be the Ultimate Owner, then theIssuer shall as soon as practicable give notice to the Trustee, the Registrar, the Principal Paying Agent, theCalculation Agent (to the extent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and theHolders in the manner provided under ‘‘— Notices,’’ whereupon the operation of the ACSM shall besuspended (such event being a ‘‘Suspension’’). In such event, unless a Permitted Restructuring Arrangementshall be put in place within six months of the occurrence of a Permitted Restructuring (in which case theSuspension shall cease upon such Permitted Restructuring Arrangement being put in place), an independentinvestment bank or financial institution appointed by the Issuer (at the Issuer’s expense) and approved by theTrustee shall determine, subject to the requirements that: (i) the Issuer shall not be obliged to reduce its netassets; (ii) no amendment may be proposed or made which would alter the regulatory capital treatment of theCapital Securities for regulatory capital and solvency purposes unless the Issuer has given at least onemonth’s prior written notice to, and received no objection from, or obtained the consent of, the FSA (or suchother period of notice as the FSA may from time to time require or accept and, in any event, provided thatsuch notice and/or consent is required to be given); and (iii) no such amendment may be made which would,in the Trustee’s opinion, impose more onerous obligations on it or reduce its protections without its consent,what amendments (if any) to this Description, the Trust Deed and any other relevant documents areappropriate in order (aa) to preserve substantially the economic effect, for the Holders, of a holding of theCapital Securities prior to the Suspension; and (bb) to replicate the ACSM in the context of the capitalstructure of the new Ultimate Owner. Upon any such determination being reached and notified to the Trusteeand the Issuer by such investment bank or financial institution, the Trustee and the Issuer shall, pursuant tothe terms of the Trust Deed and without any requirement for the consent or the approval of the Holders,effect any necessary consequential changes to this Description and the Trust Deed and any other relevantdocuments, whereupon the satisfaction of any ACSM Payment (when due) by the method contemplated under‘‘— Alternative Coupon Satisfaction Mechanism’’ shall no longer be subject to the Suspension.

If, after using all reasonable endeavors, such investment bank or financial institution is unable toformulate such amendments, it shall so notify the Issuer, the previous Ultimate Owner (if not the Issuer), thenew Ultimate Owner, the Trustee, the Registrar, the Principal Paying Agent and the Calculation Agent (to theextent appointed pursuant to the provisions set forth under ‘‘ — Agents’’) and the Capital Securities shall(subject in each case to the Issuer giving at least one month’s prior written notice to, and receiving noobjection, or the obtaining of consent, from, the FSA (or such other period of notice as the FSA may fromtime to time require or accept and, in any event, provided that such notice is required to be given) and withthe prior agreement of the new Ultimate Owner) at the option of the Issuer (subject to the provisions ofsubsection (i) under ‘‘— Status and Subordination — Subordination’’ and ‘‘— Redemption — Conditions toRedemption, Substitution or Variation’’) either be substituted for, or have their terms varied so that theybecome, alternative Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities or be redeemed, ineach case as described below.

If the Capital Securities are to be substituted for, or have their terms varied so that they become,alternative Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities, the Issuer shall give not lessthan 30 nor more than 60 days’ notice to the Trustee, the Registrar, the Principal Paying Agent, theCalculation Agent (to the extent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and theHolders in the manner provided under ‘‘— Notices’’ (which notice shall be irrevocable) and all (but not someonly) of the Capital Securities will be substituted for, or have their terms varied so that they become,alternative Qualifying Tier 1 Securities or Qualifying Upper Tier 2 Securities, and the Trustee shall (subjectto the following provisions of this paragraph and subject to the receipt by it of the certificate of the twoauthorized signatories referred to in the definition of Qualifying Tier 1 Securities or (as the case may be)Qualifying Upper Tier 2 Securities and subject further to the receipt by it of the notification of the relevantinvestment bank or financial institution referred to above) agree to such substitution or variation. Inconnection therewith, all Deferred Coupon Payments (if any) will either (at the option of the Issuer) (x) becarried over such that the rights of the Holders with respect thereto are preserved in the new Qualifying

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Tier 1 Securities or Qualifying Upper Tier 2 Securities; or (y) be satisfied (unless otherwise agreed by theIssuer and the Trustee) by the issue of Ordinary Shares to the new Ultimate Owner in consideration forwhich the new Ultimate Owner shall issue Ultimate Owner Ordinary Shares so as to enable it to satisfy theamount of such Deferred Interest Payments in accordance, mutatis mutandis, with the provisions under ‘‘Issueof Ordinary Shares,’’ ‘‘Issue Satisfies Payment,’’ ‘‘Insufficiency’’ and ‘‘Market Disruption,’’ each under‘‘— Alternative Coupon Satisfaction Mechanism’’ (with references to the Payment Ordinary Shares beingconstrued as references to such Ultimate Owner Ordinary Shares which, when sold, provide a net cashamount (converted into U.S. dollars) of not less than the amount of such Deferred Coupon Payments whichfall to be satisfied by the Issuer). The Trustee shall (at the expense of the Issuer) use its reasonable endeavorsto participate in or assist the Issuer with the substitution of the Capital Securities for, or the variation of theterms of the Capital Securities so that they become, alternative Qualifying Tier 1 Securities or QualifyingUpper Tier 2 Securities, provided that the Trustee shall not be obliged to participate in or assist with anysuch substitution or variation if the terms of the proposed alternative Qualifying Tier 1 Securities orQualifying Upper Tier 2 Securities or the participation in or assistance with such substitution or variationwould impose, in the Trustee’s opinion, more onerous obligations upon it or reduce its protections. If,notwithstanding the above, the Trustee does not participate or assist as provided above, the FSA objects or (ifconsent is required) does not consent to such substitution or variation or it is otherwise not practicable for theCapital Securities to be substituted or varied as described above, the Issuer may, subject to the provisionsunder ‘‘— Redemption — Conditions to Redemption, Substitution or Variation,’’ elect to redeem the CapitalSecurities as provided under this section.

In connection with any substitution or variation provided for under this section, the Issuer shall complywith the rules of any stock exchange on which the Capital Securities are for the time being listed or admittedto trading.

If the Capital Securities are to be redeemed by the Issuer in accordance with this section, the Issuer shallgive notice thereof to the Trustee, the Registrar, the Principal Paying Agent, the Calculation Agent (to theextent appointed pursuant to the provisions set forth under ‘‘— Agents’’) and the Holders in the mannerprovided under ‘‘— Notices’’ (which notice shall be irrevocable and which shall expire as soon as practicableafter confirmation of no objection, or the obtaining of consent, from the FSA in each case to the extentrequired) and all (but not some only) of the Capital Securities will be redeemed at their principal amounttogether with any Outstanding Payments not later than the 60th business day following the giving of suchnotice by the Issuer to the Holders. Such redemption will, unless otherwise agreed by the Issuer and theTrustee, be effected by the issue of Ordinary Shares to the new Ultimate Owner in consideration for whichthe new Ultimate Owner shall issue Ultimate Owner Ordinary Shares so as to enable it to satisfy suchredemption amount in accordance, mutatis mutandis, with the provisions under ‘‘Issue of Ordinary Shares,’’‘‘Issue Satisfies Payment,’’ ‘‘Insufficiency’’ and ‘‘Market Disruption,’’ each under ‘‘— Alternative CouponSatisfaction Mechanism’’ (with references to the Payment Ordinary Shares being construed as references tosuch Ultimate Owner Ordinary Shares which, when sold, provide a net cash amount (converted into U.S.dollars) of not less than the redemption amount which falls to be satisfied by the Issuer).

Authorizations

The Issuer shall, subject to compliance with the requirements of the Companies Act, use all reasonableendeavors to obtain and maintain at all times all corporate authorizations and take any other corporate actionsrequired for the issue and allotment of such number of Ordinary Shares as it reasonably considers would berequired to be issued in order to enable the Issuer to make a payment satisfying the aggregate amount ofACSM Payments (if any) and the aggregate of the Coupon Payments due over the next 12-month period (orsuch longer period as, in the opinion of the Board of Directors of the Issuer, is prudent having regard toamounts which may become payable through the operation of the provisions under ‘‘— Alternative CouponSatisfaction Mechanism’’), provided that such reasonable endeavors shall be satisfied where the relevantcorporate authorization or action required is to be obtained or done by the passing of a resolution of theshareholders of the Issuer and the Board of Directors of the Issuer proposes the relevant resolution to its

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shareholders for approval at any general meeting of the Issuer and, if such proposal is rejected, the relevantresolution is proposed again at the next general meeting of the Issuer.

In the event of breach by the Issuer of this section, the Trustee may only require the Issuer to put beforethe next general meeting of the Issuer a resolution to remedy the breach and may take no other action againstthe Issuer in respect of any such breach.

The Trustee shall not be obliged to monitor compliance by the Issuer with this section and shall beentitled to assume, unless it has actual knowledge to the contrary, that the Issuer is complying with itsobligations under this section.

Any authorized but unissued Ordinary Shares which the Issuer is required to maintain shall bediscounted in determining whether the Issuer is complying with its obligations under this section.

Non-Payment when Due

Notwithstanding any of the provisions below, the right to institute winding up proceedings is limited tocircumstances where payment has become due. No principal, interest or any other amount will be due unlessthe condition to payment set out in subsection (i) of ‘‘— Status and Subordination — Subordination’’ issatisfied. Also, in the case of any Coupon Payment, such payment will not be due if the Issuer has elected todefer that payment pursuant to the provisions under ‘‘— Coupon Payments — Deferral of Coupons’’ or if thecircumstances referred to in any of ‘‘Insufficiency’’ or ‘‘Market Disruption’’ under ‘‘— Alternative CouponSatisfaction Mechanism’’ or ‘‘— Payments — Suspension’’ then apply.

(i) If default shall be made in the payment of any principal or any interest (which shall include anyCoupon Payment, Deferred Coupon Payment, Accrued Payment or any other amount in respect ofinterest) due on the Securities for a period of seven days or more after any date on which thepayment of principal is due or 14 days or more after any date on which the payment of interest isdue (as the case may be), the Trustee may, subject as provided below, at its discretion and withoutfurther notice, institute proceedings for the winding up of the Issuer and/or prove in any windingup of the Issuer, but may take no other action in respect of such default.

(ii) Without prejudice to subsection (i) above, if the Issuer breaches any of its obligations under theTrust Deed or this Description (other than any obligation in respect of the payment of principal orinterest) then the Trustee may, subject as provided below, at its discretion and without furthernotice, bring such proceedings as it may think fit to enforce the obligation in question providedthat the Issuer shall not, as a result of the bringing of any such proceedings, be obliged to pay anysum representing or measured by reference to principal or interest sooner than the same wouldotherwise have been payable by it.

(iii) The Trustee shall not be bound to take any of the actions referred to in subsections (i) or(ii) above to enforce the obligations of the Issuer in respect of the Capital Securities or any otheraction pursuant to or in connection with the Trust Deed or the Capital Securities unless (i) it shallhave been so directed by an Extraordinary Resolution (as defined in the Trust Deed) of theHolders or so requested in writing by the holders of at least one fifth in nominal amount of theCapital Securities then outstanding (as defined in the Trust Deed); and (ii) it shall have beenindemnified to its satisfaction.

(iv) No Holder shall be entitled to proceed directly against the Issuer unless the Trustee, havingbecome so bound to proceed, fails to do so within a reasonable period and such failure shall becontinuing and then only in the name of the Trustee and on giving an indemnity satisfactory to theTrustee, and only to the same extent (but not further or otherwise) that the Trustee would havebeen entitled to do so. No Holder shall be entitled to institute proceedings for the winding up ofthe Issuer or to prove in such winding up, except that if the Trustee, having become bound toproceed against the Issuer as aforesaid, fails to do so, or, being able to prove, fails to do so insuch a winding up (in each case, within a reasonable period) and such failure shall be continuing,then any Holder may, on giving an indemnity satisfactory to the Trustee, in the name of the

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Trustee (but not otherwise) himself institute proceedings for the winding up of the Issuer and/orprove in such winding up to the same extent (but not further or otherwise) that the Trustee wouldhave been entitled to do so.

(v) Save as otherwise provided herein and without prejudice to subsection (iv), only the Trustee maypursue the remedies available under the general law or under the Trust Deed to enforce the rightsof Holders and no Holder shall be entitled to take proceedings directly against the Issuer unlessthe Trustee, having become bound to proceed in accordance with the terms of the Trust Deed, failsto do so within a reasonable time and such failure is continuing.

(vi) No remedy against the Issuer, other than as referred to in this section, shall be available to theTrustee or any Holder (i) for the recovery of amounts owing in respect of or arising under theTrust Deed or the Capital Securities; or (ii) in respect of the breach of any other term or conditionor other obligation binding on the Issuer under or in respect of the Trust Deed or the CapitalSecurities.

Taxation

All payments by or on behalf of the Issuer of principal, Coupon Payments, Deferred Coupon Paymentsand Accrued Payments in respect of the Capital Securities shall be made without withholding of or deductionfor, or on any account of, any present or future tax, duty or charge of whatsoever nature imposed or levied byor on behalf of the United Kingdom or any authority thereof or therein having power to tax, unless thewithholding or deduction is required by law. In that event the Issuer shall pay (subject to subsection (i) under‘‘— Status and Subordination — Subordination’’) such additional amounts as will result (after suchwithholding or deduction) in the payment to Holders of the sums which would have been receivable (in theabsence of such withholding or deduction) from it in respect of the Capital Securities, except that no suchadditional amounts shall be payable in relation to any payment with respect to any Capital Security:

(i) held by or on behalf of any Holder who is liable to such tax, duty or charge in respect of suchCapital Security by reason of his having some connection with the United Kingdom other than themere holding of such Capital Security; and/or

(ii) in the United Kingdom; and/or

(iii) in circumstances where such withholding or deduction would not be required if the Holder or anyperson acting on his behalf had obtained and/or presented any form or certificate or had made adeclaration of non residence or similar claim for exemption upon the presentation or making ofwhich the holder would have been able to avoid such withholding or deduction; and/or

(iv) where (in the case of a payment of principal or interest on redemption) the relevant CapitalSecurity is surrendered for payment more than 30 days after the Relevant Date except to the extentthat the Holder thereof would have been entitled to such additional amounts if it had surrenderedthe same for payment at the expiry of such period of 30 days; and/or

(v) where such withholding or deduction is imposed on a payment to an individual and is required tobe made pursuant to European Council Directive 2003/48/EC or any law implementing orcomplying with, or introduced in order to conform to, such Directive; and/or

(vi) held by or on behalf of any Holder who would have been able to avoid such withholding ordeduction by arranging to receive the relevant payment through another Paying Agent in a MemberState of the European Union.

The ‘‘Relevant Date’’ in respect of any payment means the date on which such payment first becomesdue or (if the full amount of the moneys payable has not been duly received by the Principal Paying Agent orthe Trustee on or prior to such due date) the date on which, the full amount of such moneys having been soreceived, notice to that effect is given to the Holders in the manner provided under ‘‘— Notices’’.

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Prescription

A13.4.11The Capital Securities will become void unless presented for payment within a period of ten years (inthe case of principal) and five years (in the case of interest) after the Relevant Date (as defined under‘‘— Taxation’’) therefor.

Meetings of Holders, Modification, Waiver and Substitution

The Trust Deed contains provisions for convening meetings of Holders to consider any matter affectingtheir interests including the modification by Extraordinary Resolution of the terms and conditions of theCapital Securities or other provisions of the Trust Deed.

The quorum at any such meeting for passing an Extraordinary Resolution will be one or more personsholding or representing a clear majority in principal amount of the Capital Securities for the time beingoutstanding, or at any adjourned such meeting one or more persons being or representing Holders whateverthe principal amount of the Capital Securities so held or represented, except that at any meeting the businessof which includes the modification of certain of the terms and conditions of the Capital Securities (including,inter alia, the provisions regarding subordination referred to under ‘‘— Status and Subordination,’’ the termsconcerning currency and due dates for payment of principal or Coupon Payments in respect of the CapitalSecurities and reducing or cancelling the principal amount of any Capital Security or the Coupon Rate inrespect of such Capital Security) and certain other provisions of the Trust Deed, the quorum will be one ormore persons holding or representing not less than two-thirds, or at any adjourned such meeting not less thanone-third, in principal amount of the Capital Securities for the time being outstanding.

An Extraordinary Resolution passed at any meeting of Holders will be binding on all Holders, whetheror not they are present at the meeting.

Notwithstanding any other provision of, the Trustee may agree, without the consent of the Holders, toany modification (subject to certain exceptions) of, or to any waiver or authorization of any breach orproposed breach of, any of the terms and conditions of the Capital Securities or any other provisions of theTrust Deed which, in the opinion of the Trustee, is not materially prejudicial to the interests of the Holders orto any modification which is, in the opinion of the Trustee, of a formal, minor or technical nature or tocorrect a manifest error or to comply with the mandatory provisions of the law of the jurisdiction in whichthe Issuer is incorporated.

No modification to the terms and conditions of the Capital Securities or any other provisions of theTrust Deed shall be effected without the prior consent of, or notification to (and no objection being raisedby), the FSA.

Subject to the prior consent of, or notification to (and no objection being raised by), the FSA and suchother conditions as the Trustee may require and as provided in the Trust Deed, the Trustee may agree withthe Issuer, without the consent of the Holders, to the substitution on a subordinated basis equivalent to thatreferred to in the terms and conditions of the Capital Securities of the Holding Company or subsidiary of theIssuer or any successor in business of the Issuer (the ‘‘Substituted Issuer’’) in place of the Issuer (or anyprevious Substituted Issuer under this section) as principal debtor under the Trust Deed and the CapitalSecurities. Such agreement shall only be granted if, inter alia, the Trustee is satisfied that such substitution isnot materially prejudicial to the interests of the Holders.

In connection with any substitution or such exercise as aforesaid, no Holder shall be entitled to claim,whether from the Issuer, the Substituted Issuer or the Trustee or any other person, any indemnification orpayment in respect of any tax consequence of any such substitution or exercise upon any individual Holdersexcept to the extent already provided under ‘‘— Taxation’’ and/or any undertaking given in addition thereto orin substitution therefor pursuant to the Trust Deed.

Any such modification, waiver, authorization or substitution shall be binding on all Holders and, unlessthe Trustee agrees otherwise, any such modification or substitution shall be notified to the Holders in themanner provided under ‘‘— Notices’’ as soon as practicable thereafter.

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Replacement Certificates

If any Certificate is lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified officeof the Registrar or Principal Paying Agent (or any other place of which notice shall have been given in themanner described under ‘‘— Notices’’) upon payment by the claimant of the expenses incurred in connectiontherewith and on such terms as to evidence and indemnity as the Issuer may require (provided that therequirement is reasonable in light of prevailing market practice). Mutilated or defaced Certificates must besurrendered before any replacement will be issued.

The Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief fromresponsibility, including provisions relieving it from taking any action unless indemnified and/or secured to itssatisfaction. The Trustee is entitled to enter into business transactions with any member of the Group withoutaccounting for any profit resulting therefrom. The Trustee is entitled under the Trust Deed to rely on reportsand certificates delivered to it by the Auditors whether or not the same are subject to any limitation of theliability of the Auditors and whether by reference to a monetary cap or otherwise.

Notices

All notices to the Holders will be mailed to such Holders of record at their respective addresses in theRegister and shall be deemed to have been given on the weekday (being a day other than a Saturday, Sundayor public holiday) after the date of mailing.

Further Issues

The Issuer shall be at liberty from time to time without the consent of the Holders to create and issuefurther Capital Securities ranking pari passu in all respects (or in all respects save for the date from whichinterest thereon accrues and the amount of the first payment of interest on such further Capital Securities) andso that the same shall be consolidated and form a single series with the outstanding Capital Securities. Anysuch Capital Securities shall be constituted by a deed supplemental to the Trust Deed.

Agents

If a function expressed in these conditions to be performed by the Calculation Agent falls to beperformed, the Issuer will appoint and (for so long as any such function is required to be performed)maintain a Calculation Agent and enter into a Calculation Agency Agreement with the Calculation Agent andthe Trustee in respect thereof. The Issuer will procure that there shall at all times be a Registrar as long asany Capital Security is outstanding. If the Calculation Agent (following its appointment) or Registrar isunable or unwilling to act as such or if it fails to make a determination or calculation or otherwise fails toperform its duties under this Description or the relevant Calculation Agency Agreement or the Paying AgencyAgreement as appropriate, the Issuer shall appoint, on terms acceptable to the Trustee, an independentinvestment bank acceptable to the Trustee to act as such in its place. Neither the termination of theappointment of a Calculation Agent or the Registrar nor the resignation of either will be effective without asuccessor having been appointed.

All calculations and determinations made by the Calculation Agent in relation to the Capital Securitiesshall (save in the case of manifest error) be final and binding on the Issuer the Trustee, the Paying Agents,the Registrar, the Transfer Agents and the Holders.

None of the Issuer, the Trustee, the Paying Agents or the Transfer Agents shall have any responsibilityto any person for any errors or omissions in any calculation by the Calculation Agent.

Governing Law

The Trust Deed and the Capital Securities are governed by, and shall be construed in accordance with,the laws of England, except that the provisions under ‘‘— Status and Subordination’’ and the corresponding

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provisions of the Trust Deed relating to the subordination of the Capital Securities are governed by, and shallbe construed in accordance with, the laws of Scotland.

The Issuer has submitted to the jurisdiction of the English courts in the Trust Deed.

Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any term or condition of the Capital Securities under theContracts (Rights of Third Parties) Act 1999.

Definitions

In this Description:

‘‘Accrued Payment’’ means, as at any given time, where this Description provides that interest shallcontinue to accrue after a Coupon Payment Date in respect of a Capital Security, the amount of interestaccrued thereon at that time in accordance with the provisions under ‘‘— Coupon Payments’’ or‘‘— Alternative Coupon Satisfaction Mechanism — Market Disruption,’’ as the case may be;

‘‘ACSM Payment’’ means any Deferred Coupon Payment and/or any Accrued Payment pursuant to theprovision under ‘‘— Alternative Coupon Satisfaction Mechanism — Market Disruption’’ and any otherCoupon Payment in respect of which the Issuer has at its option notified the Trustee, the Principal PayingAgent and the Calculation Agent not less than 16 business days prior to the relevant Coupon Payment Datethat such Coupon Payment is to be satisfied in accordance with the provisions under ‘‘— Alternative CouponSatisfaction Mechanism’’ on such Coupon Payment Date (which date will thereby become an ACSM PaymentDate);

‘‘ACSM Payment Date’’ means the date on which an ACSM Payment is due to be satisfied pursuant tothis Description; provided that where the provisions of ‘‘— Alternative Coupon Satisfaction Mechanism —Market Disruption’’ cause an ACSM Payment to be deferred, references therein to ‘‘ACSM Payment Date’’shall be to the date on which such ACSM Payment would otherwise have been due to be satisfied had suchACSM Payment not been deferred pursuant to the provisions under ‘‘— Alternative Coupon SatisfactionMechanism — Market Disruption’’;

‘‘Alternative Coupon Satisfaction Mechanism’’ or ‘‘ACSM’’ means the mechanism described under‘‘— Alternative Coupon Satisfaction Mechanism’’;

‘‘Assets’’ means the total amount of the non-consolidated gross assets of the Issuer as shown by thelatest published audited balance sheet of the Issuer, but adjusted for contingencies and subsequent events insuch manner as two authorized signatories of the Issuer, the Auditors, or the liquidator or administrator, asthe case may be, may determine;

‘‘Auditors’’ has the meaning given to it in the Trust Deed;

‘‘Authorized Denominations’’ means a minimum denomination of $100,000 and integral multiples of$1,000 in excess thereof;

‘‘business day’’ means a day, other than a Saturday, Sunday or public holiday, on which commercialbanks and foreign exchange markets settle payments in London and New York, except that for the purposesof ‘‘— Form, Denomination, Title and Transfer,’’ ‘‘business day’’ shall mean a day, other than a Saturday,Sunday or public holiday, on which commercial banks and foreign exchange markets are open for generalbusiness in the city in which the specified office of the Registrar or other Transfer Agent with whom aCertificate is deposited in connection with a transfer or exchange, is located;

‘‘Calculation Agency Agreement’’ means any agreement entered into by the Issuer, the Trustee and theCalculation Agent, relating to the Capital Securities under which the Calculation Agent agrees to perform theduties required of it under this Description;

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‘‘Calculation Agent’’ means the independent investment bank of international repute, appointed on theterms of a Calculation Agency Agreement, selected by the Issuer and approved by the Trustee, such approvalnot to be unreasonably withheld, for the purposes of performing any of the functions expressed to beperformed by it under this Description;

‘‘Capital Breach Event’’ means the occurrence of a breach by the Issuer or the Group or any memberof the Group of the United Kingdom capital adequacy requirements, guidelines or measures or any otherregulatory capital requirements, guidelines or measures applicable to the Issuer or the Group or any memberof the Group, as the case may be (whether or not such requirements, guidelines or measures have the force oflaw and whether they are applied generally or specifically to the Issuer or the Group or any member of theGroup, as the case may be);

‘‘Capital Disqualification Event’’ is deemed to have occurred (i) if the FSA has confirmed to the Issuerthat the Capital Securities are no longer of a type eligible for inclusion in the Tier 1 Capital of the Issuer ona solo and/or consolidated basis or (ii) if at any time the Issuer or the Group is required under the CapitalRegulations to have Tier 1 Capital and the Issuer would be entitled pursuant to the provisions under‘‘— Redemption — Substitution for Substituted Preference Shares’’ to substitute the Capital Securities bySubstituted Preference Shares, the FSA has confirmed to the Issuer that such Substituted Preference Sharesare no longer of a type eligible for inclusion in the Tier 1 Capital of the Issuer on a solo and/or consolidatedbasis;

‘‘Capital Regulations’’ means, at any time, the regulations, requirements, guidelines and policiesrelating to capital adequacy then in effect of the FSA;

‘‘Capital Securities’’ has the meaning given to it in the preamble to this Description;

‘‘Certificate’’ has the meaning given to it under ‘‘— Form, Denomination, Title and Transfer — Formand Denomination’’;

‘‘Companies Act’’ means the United Kingdom Companies Act 1985 as the same may be amended fromtime to time and any provision, statute or statutory instrument replacing the same from time to time;

‘‘Coupon Amount’’ means the amount of interest payable for the relevant Coupon Period in accordancewith the provisions under ‘‘— Coupon Payments’’;

‘‘Coupon Determination Date’’ means, in relation to each Reset Date, the second business day prior tosuch Reset Date;

‘‘Coupon Payment’’ means, with respect to a Coupon Payment Date, the aggregate Coupon Amountsfor the Coupon Period ending on (but excluding) such Coupon Payment Date;

‘‘Coupon Payment Date’’ means (i) in respect of the period from (and including) the Issue Date to (andincluding) the First Reset Date, April 5 and October 5 in each year, starting on April 5, 2008; and (ii) afterthe First Reset Date, January 5, April 5, July 5 and October 5 in each year, starting January 5, 2018,provided that if any Coupon Payment Date after the First Reset Date would otherwise fall on a day which isnot a business day, it shall be postponed to the next day which is a business day, unless such day shall fallwithin the next calendar month whereupon such payment will be made on the preceding business day;

‘‘Coupon Period’’ means the period beginning on (and including) the Issue Date and ending on (butexcluding) the first Coupon Payment Date and each successive period beginning on (and including) a CouponPayment Date and ending on (but excluding) the next succeeding Coupon Payment Date;

‘‘Coupon Rate’’ has the meaning given to it in ‘‘— Coupon Payments — Coupon Rate’’;

‘‘Day Count Fraction’’ means in respect of each Coupon Period after the First Reset Date, the actualnumber of days elapsed divided by 360;

‘‘Deferred Coupon Payment’’ means (i) any Coupon Payment, or part thereof, which, pursuant to theprovisions under ‘‘— Coupon Payments — Deferral of Coupons,’’ the Issuer has elected to defer and which

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has not been satisfied and (ii) any Coupon Payment which, by reason of the condition to payment set outunder subsection (i) under ‘‘— Status and Subordination — Subordination,’’ has not been satisfied;

‘‘Description’’ has the meaning given to it in the preamble of this section;

‘‘Eligible Company’’ means a company incorporated in a member state of the European Union or in theUnited States of America by or on behalf of the Issuer whose ordinary shares are listed (i) on the OfficialList and are admitted to trading on the Market or (ii) on such other stock exchange as is a Recognized StockExchange at the time and as the Trustee may approve, such approval not to be unreasonably withheld ordelayed;

‘‘First Reset Date’’ means October 5, 2017;

‘‘FSA’’ means the Financial Services Authority or such other successor governmental authority in theUnited Kingdom (or, if the Issuer becomes domiciled in a jurisdiction other than the United Kingdom, insuch other jurisdiction) having primary supervisory authority with respect to the Issuer;

‘‘Group’’ means the Holding Company or Issuer and its subsidiaries;

‘‘Holder’’ means the person in whose name a Capital Security is registered in the Register (or in thecase of a joint holding, the first named thereof);

‘‘Holding Company’’ means the Issuer or otherwise the Ultimate Owner or, if at any relevant time thereshall be no such Ultimate Owner, then ‘‘Holding Company’’ shall mean the Issuer itself;

A13.4.13‘‘Issue Date’’ means October 4, 2007, being the date of initial issue of the Capital Securities;

‘‘Issuer’’ means The Royal Bank of Scotland Group plc;

‘‘Junior Securities’’ means the Ordinary Shares and any other securities of the Issuer or any othermember of the Group ranking or expressed to rank junior to the Capital Securities either issued directly bythe Issuer or, where issued by a member of the Group, where the terms of the securities benefit from aguarantee or support agreement entered into by the Issuer which ranks or is expressed to rank junior to theCapital Securities;

‘‘Liabilities’’ means the total amount of the non-consolidated gross liabilities of the Issuer as shown bythe latest published audited balance sheet of the Issuer, but adjusted for contingencies and subsequent eventsin such manner as two authorized signatories of the Issuer, the Auditors, or the liquidator or administrator, asthe case may be, may determine;

‘‘London Stock Exchange’’ means the London Stock Exchange plc;

‘‘Mandatory Securities’’ means any Parity Securities the terms of which do to provide for the Board ofDirections of the Issuer to be able to elect not to pay any dividend or other distribution in cash at itsdiscretion;

‘‘Market’’ means the London Stock Exchange’s Gilt-Edged and Fixed Interest Market;

‘‘Market Disruption Event’’ means (i) the occurrence or existence of any suspension of or limitationimposed on trading (by reason of movements in price exceeding limits permitted by any stock exchange onwhich the Ordinary Shares are for the time being listed) or on settlement procedures for transactions in theOrdinary Shares on any stock exchange on which the Ordinary Shares are for the time being listed if, in anysuch case, that suspension or limitation is, in the determination of the Calculation Agent, material in thecontext of the sale of the Ordinary Shares; (ii) in the opinion of the Issuer, there has been a substantialdeterioration in the price and/or value of the Ordinary Shares or circumstances are such as to prevent or to amaterial extent restrict the issue or delivery of the Payment Ordinary Shares; or (iii) where, pursuant to thisDescription, monies are required to be converted into U.S. dollars in respect of any Coupon Payment, theoccurrence of any event that makes it impracticable to effect such conversion;

‘‘New Holding Company’’ means an Eligible Company that becomes the Ultimate Owner following aPermitted Restructuring;

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‘‘Notional Preference Shares’’ means an actual or notional class of preference shares in the capital ofthe Issuer having an equal right to return of assets in the winding up or administration to, and so rankingpari passu with, the most senior class or classes of issued preference shares with non-cumulative dividends (ifany) in the capital of the Issuer from time to time and which have a preferential right to a return of assets inthe winding up or administration over, and so rank ahead of the holders of all other classes of issued sharesfor the time being in the capital of the Issuer but ranking junior to the claims of Senior Creditors and juniorto any notional class of preference shares in the capital of the Issuer by reference to which the amountpayable in respect of any Upper Tier 2 Securities in a winding up or administration of the Issuer isdetermined;

‘‘Official List’’ means the official list of the U.K. Listing Authority;

‘‘Optional Deferred Coupon Settlement Date’’ has the meaning given to it in ‘‘— CouponPayments — Deferral of Coupons’’;

‘‘Ordinary Shares’’ means ordinary shares in the capital of the Issuer;

‘‘Outstanding’’, in relation to any Coupon Payment, Deferred Coupon Payment or interest not fallingwithin the definition of Coupon Payment, means that such payment (i) has either become due and payable orwould have become due and payable except for the non-satisfaction on the relevant date of the condition topayment set out under subsection (i) under ‘‘— Status and Subordination — Subordination’’ or the deferral,postponement or suspension of such payment in accordance with the provisions under any of ‘‘— CouponPayments — Deferral of Coupons,’’ ‘‘Insufficiency’’ and ‘‘Market Disruption’’ under ‘‘— Alternative CouponSatisfaction Mechanism,’’ or ‘‘— Payments — Suspension’’; and (ii) in any such case has not been satisfiedand, in relation to any Accrued Payment, means any amount thereof which has not been satisfied whether ornot payment has become due;

‘‘Parity Securities’’ means (i) the most senior ranking class or classes of non-cumulative preferenceshares in the capital of the Issuer from time to time and (ii) any other securities of the Issuer or any othermember of the Group ranking or expressed to rank pari passu with the Capital Securities as regardsparticipation in profits either issued directly by the Issuer or, where issued by a member of the Group, wherethe terms of the securities benefit from a guarantee or support agreement entered into by the Issuer whichranks or is expressed to rank pari passu with the Capital Securities which in the case of (i) and (ii) abovecomply with the then current requirements of the FSA in relation to or are otherwise treated by the U.K.Financial Services Authority as Tier 1 Capital;

‘‘Paying Agency Agreement’’ has the meaning given to it in the preamble of this Description;

‘‘Paying Agents’’ has the meaning given to it in the preamble of this Description;

‘‘Payment’’ means any Coupon Payment, Deferred Coupon Payment or Accrued Payment;

‘‘Payment Business Day’’ means a day (other than a Saturday or Sunday) on which commercial banksare open for business in New York and, in the case of a presentation or surrender of a Certificate, in theplace of the specified office of the relevant Paying Agent to whom the same is presented or surrendered;

‘‘Payment Ordinary Shares’’ has the meaning given to it in ‘‘— Alternative Coupon SatisfactionMechanism — Issue of Ordinary Shares’’;

‘‘Permitted Restructuring’’ means the completion of (i) an offer made by or on behalf of an EligibleCompany to all (or as nearly as may be practicable all) shareholders of the Issuer (or, if the Issuer is not theUltimate Owner, the then Ultimate Owner) to acquire the whole (or as nearly as may be practicable thewhole) of the issued ordinary share capital of the Issuer (or, if the Issuer is not the Ultimate Owner, the thenUltimate Owner) other than that which is already held by or on behalf of such Eligible Company or (ii) areorganization or restructuring whether by way of a scheme of arrangement or otherwise pursuant to whichan Eligible Company acquires all (or as nearly as may be practicable all) of the issued ordinary share capitalof the Issuer (or, if the Issuer is not the Ultimate Owner, the then Ultimate Owner) other than that which isalready held by such Eligible Company or pursuant to which all (or as nearly as may be practicable all) of

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the issued ordinary share capital of the Issuer (or, if the Issuer is not the Ultimate Owner, the then UltimateOwner) not held by the New Holding Company is cancelled;

‘‘Permitted Restructuring Arrangement’’ means, in relation to a Permitted Restructuring, anarrangement whereby the following conditions are satisfied: (a) the execution of a trust deed supplemental tothe Trust Deed and/or such other documentation as may be necessary to ensure that (i) the ACSM asdescribed under ‘‘— Alternative Coupon Satisfaction Mechanism,’’ the Trust Deed and any CalculationAgency Agreement operates so that Ordinary Shares may be exchanged for Ultimate Owner Ordinary Sharesissued by the New Holding Company in such a manner that ensures that upon the sale of such UltimateOwner Ordinary Shares the holder of each Capital Security then outstanding will receive, in the event of apayment to be satisfied pursuant to the provisions under ‘‘— Alternative Coupon Satisfaction Mechanism,’’ anamount not less than that which would have been receivable had such a Permitted Restructuring not takenplace and (ii) the economic effect, for the Holders, of a holding of the Capital Securities prior to thePermitted Restructuring is substantially preserved; and (b) the Trustee is satisfied that the credit ratings thatwould be assigned to the Capital Securities by the Rating Agencies following any such PermittedRestructuring, shall not be lower than those assigned to the Capital Securities immediately prior to suchPermitted Restructuring taking place (if any) as confirmed by such Rating Agency in writing;

‘‘Preference Share Substitution’’ has the meaning given to it in subsection (i) under ‘‘— Redemp-tion — Substitution for Substituted Preference Shares’’;

‘‘Principal Paying Agent’’ has the meaning given to it in the preamble of this Description;

‘‘Qualifying Administration’’ means that an administrator has been appointed in respect of the Issuerand has given notice that he/she intends to declare and distribute a dividend;

‘‘Qualifying Tier 1 Securities’’ means securities whether debt, limited partnership interests, equity orotherwise issued directly or indirectly by the Issuer that comply with the following:

(i) such securities will have the same material terms as the terms of the Capital Securities, includingwithout limitation a First Reset Date (or as such term may otherwise be defined in the termsthereof) which falls on the same day as the First Reset Date of the Capital Securities;

(ii) are (a) listed on the Official List and admitted to trading on the Market; or (b) listed on such otherstock exchange as is a Recognized Stock Exchange at that time as selected by the Issuer andapproved by the Trustee, such approval not to be unreasonably withheld or delayed;

(iii) at the time of issue, payments made by the Issuer in respect of such Qualifying Tier 1 Securitiescan be made free from any withholding tax imposed by any taxing or other authority (whetherwithin or outside the United Kingdom) competent to impose, administer or collect any such tax;

(iv) such securities will comply with the then current requirements of the FSA in relation to Tier 1Capital; and

(v) such securities will preserve any existing rights under this Description to any Accrued Payment orany other accrued interest which has not been satisfied, except that such securities need not includeprovisions analogous to the provisions of section ‘‘Alternative Coupon Satisfaction Mechanism’’.

Notwithstanding anything to the contrary set forth above, the Qualifying Tier 1 Securities may be issuedwith terms more favorable to the holders thereof than the terms of the Capital Securities.

‘‘Qualifying Tier 2 Securities’’ means securities whether debt, limited partnership interests, equity orotherwise issued directly or indirectly by the Issuer that comply with the following:

(i) such securities will have the same material terms as the terms of the Capital Securities, includingwithout limitation a First Reset Date (or as such term may otherwise be defined in the termsthereof) which falls on the same day as the First Reset Date of the Capital Securities;

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(ii) are (a) listed on the Official List and admitted to trading on the Market; or (b) listed on such otherstock exchange as is a Recognized Stock Exchange at that time as selected by the Issuer andapproved by the Trustee, such approval not to be unreasonably withheld or delayed;

(iii) at the time of issue, payments made by the Issuer in respect of such Qualifying Tier 2 Securitiescan be made free from any withholding tax imposed by any taxing or other authority (whetherwithin or outside the United Kingdom) competent to impose, administer or collect any such tax;

(iv) such securities will comply with the then current requirements of the FSA in relation to UpperTier 2 Capital; and

(v) such securities will preserve any existing rights under this Description to any Accrued Payment orany other accrued interest which has not been satisfied, except that such securities need not includeprovisions analogous to the provisions of Condition 4.

Notwithstanding anything to the contrary set forth above, the Qualifying Tier 2 Securities may be issuedwith terms more favorable to the holders thereof than the terms of the Capital Securities.

‘‘Rating Agency’’ means Fitch Ratings Ltd., Moody’s Investors Service, Inc. or Standard & Poor’sRating Services, a division of The McGraw-Hill Companies Inc, or their respective successors;

‘‘Record Date’’ means, with respect to the payment of a Coupon Amount, the 15th day before the duedate for the payment of such Coupon Amount;

‘‘Recognized Stock Exchange’’ means a recognized stock exchange as defined in section 1005 of theIncome Tax Act 2007 as the same may be amended from time to time and any provision, statute or statutoryinstrument replacing the same from time to time;

‘‘Reference Banks’’ means the financial institutions appointed as such by the Issuer pursuant to theprovisions under ‘‘— Coupon Payments — Reference Banks’’;

‘‘Register’’ has the meaning given to it in ‘‘— Form, Denomination, Title and Transfer’’;

‘‘Registrar’’ has the meaning given to it in the preamble of this Description;

‘‘Relevant Date’’ has the meaning given to it in ‘‘— Taxation’’;

‘‘Reset Date’’ means the First Reset Date and, thereafter, each Coupon Payment Date;

‘‘Reset Period’’ means the period from (and including) a Reset Date to (but excluding) the nextsucceeding Reset Date;

‘‘Senior Creditors’’ means creditors of the Issuer (other than the Trustee and the Holders in respect ofthe principal of and interest on the Capital Securities) (a) who are unsubordinated creditors of the Issuer;(b) whose claims are, or are expressed to be, subordinated to the claims of unsubordinated creditors of theIssuer (whether only in the event of a winding up or administration of the Issuer or otherwise) but not furtheror otherwise; or (c) who are subordinated creditors of the Issuer (whether as aforesaid or otherwise) otherthan those whose claims rank, or are expressed to rank, pari passu with or junior to the claims of theTrustee, the Holders in respect of the principal of and interest on the Capital Securities and/or pari passuwith or junior to any claims ranking pari passu with the claims of the Holders in respect of the principal ofand interest on the Capital Securities;

‘‘subsidiary’’ has the meanings given to it in the Companies Act;

‘‘Substituted Issuer’’ has the meaning ascribed to it in ‘‘— Meetings of Holders, Modifications, Waiverand Substitution’’;

‘‘Substituted Preference Shares’’ has the meaning given to it in subsection (i) under ‘‘— Redemp-tion — Substitution for Substituted Preference Shares’’;

‘‘Substitution Confirmation’’ has the meaning given to it in subsection (iii) under ‘‘— Redemption —Substitution for Substituted Preference Shares’’;

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‘‘Substitution Date’’ has the meaning given to it in subsection (i) under ‘‘— Redemption — Substitutionfor Substituted Preference Shares’’;

‘‘Substitution Notice’’ has the meaning given to it in subsection (i) under ‘‘— Redemption —Substitution for Substituted Preference Shares’’;

‘‘Suspension’’ has the meaning ascribed to it in ‘‘— Payments — Suspension’’;

‘‘Termination Date’’ has the meaning given it in ‘‘— Coupon Payments — Deferral of Coupons’’;

‘‘Tier 1 Capital’’ has the respective meanings given to them from time to time by the FSA;

‘‘Transfer Agents’’ has the meaning given to it in the preamble of this Description;

‘‘Trust Deed’’ has the meaning given to it in the preamble of this Description;

‘‘Trustee’’ has the meaning given to it in the preamble of this Description;

‘‘U.K. Listing Authority’’ means the FSA in its capacity as competent authority under the FinancialServices and Markets Act 2000;

‘‘Ultimate Owner’’ means, at any given time, the ultimate holding company of the Group of companies;

‘‘Upper Tier 2 Capital’’ has the meaning given to it by the FSA from time to time;

‘‘Upper Tier 2 Securities’’ means the Issuer’s outstanding debt securities which constitute Upper Tier 2Capital (except for any such securities which are Parity Securities) and such other securities outstanding fromtime to time (except as aforesaid) which rank or are expressed to rank pari passu with such debt securities;and

‘‘Winding Up’’ means any winding up of the Issuer excluding a solvent winding up solely for thepurposes of a reconstruction, amalgamation, reorganization, merger or consolidation on terms previouslyapproved by the Trustee or by an Extraordinary Resolution (as defined in the Trust Deed) of the Holders.

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PLAN OF DISTRIBUTION

Under the terms and subject to the conditions of the purchase agreement dated September 26, 2007, eachInitial Purchaser named below has severally agreed to purchase from the Issuer and the Issuer has agreed tosell to such Initial Purchaser, the aggregate principal amount of Capital Securities set forth opposite the nameof such Initial Purchaser below.

PrincipalAmount of

Initial Purchaser Capital Securities

Merrill Lynch, Pierce, Fenner & SmithIncorporated*********************************************** $ 752,000,000

Greenwich Capital Markets, Inc. **************************************** $ 752,000,000

Banc of America Securities LLC **************************************** $ 32,000,000

Wachovia Capital Markets, LLC***************************************** $ 32,000,000

Goldman, Sachs & Co. ************************************************ $ 16,000,000

Lehman Brothers Inc. ************************************************* $ 16,000,000

Total ************************************************************* $1,600,000,000

The purchase agreement provides that the obligations of the Initial Purchasers to purchase the CapitalSecurities included in this offering are subject to approval of legal matters by counsel and to other conditions.The Initial Purchasers are obligated to take and pay for the total number of Capital Securities offered hereby,if any such Capital Securities are purchased.

The Issuer has been advised that the Initial Purchasers propose to resell the Capital Securities at theoffering price set forth on the cover page of this Offering Memorandum within the United States to QIBs inreliance on Rule 144A and outside the United States in reliance on Regulation S. See ‘‘Selling Restrictions’’and ‘‘Book Entry, Transfer Restrictions and Summary of Provisions Relating to the Capital Securities whilein Global Form’’.

In connection with the issue of the Capital Securities, Merrill Lynch, Pierce, Fenner & SmithIncorporated (‘‘Merrill Lynch’’) (the ‘‘Stabilizing Manager’’) (or persons acting on behalf of the StabilizingManager) may over-allot or effect transactions with a view to supporting the market price of the CapitalSecurities at a level higher than that which might otherwise prevail. However, there is no assurance that theStabilizing Manager (or persons acting on behalf of the Stabilizing Manager) will undertake stabilizationaction. Any stabilization action may begin on or after the date on which adequate public disclosure of thefinal terms of the offer of the Capital Securities is made and, if begun, may be ended at any time, but it mustend no later than the earlier of 30 days after the Issue Date and 60 days after the date of the allotment of theCapital Securities. Any stabilization action or over-allotment must be conducted by the Stabilizing Manager(or persons acting on behalf of any Stabilizing Manager) in accordance with all applicable laws and rules.

The Capital Securities will constitute a new class of securities with no established trading market.Application has been made to the U.K. Listing Authority for the Capital Securities to be admitted to theOfficial List of the U.K. Listing Authority and application has been made to the London Stock Exchange forthe Capital Securities to be admitted to trading on the London Stock Exchange’s Gilt-Edged and FixedInterest Market. However, the Issuer cannot assure you that the prices at which the Capital Securities will sellin the market after this offering will not be lower than the initial offering price or that an active tradingmarket in the Capital Securities will develop and continue after this offering. The Initial Purchasers haveadvised the Issuer that they currently intend to make a market in the Capital Securities. However, they are notobligated to do so and they may discontinue any market making activities with respect to the CapitalSecurities at any time without notice. In addition, market making activity will be subject to the limitsimposed by the Securities Act and the Securities Exchange Act of 1934 and may be limited by applicablelaws and regulations. Accordingly, the Issuer cannot assure you as to the liquidity of or the trading marketfor the Capital Securities.

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Until 40 days after the commencement of this offering, an offer or sale within the United States by anydealer (whether or not participating in this offering) of the Capital Securities initially sold pursuant toRegulation S may violate the registration requirements of the Securities Act if such offer or sale is madeother than in accordance with Rule 144A.

The Initial Purchasers or their affiliates have performed, and continue to perform, investment bankingand advisory services for the Issuer, its affiliates and its employees, from time to time for which they havereceived customary fees, commissions and expenses. The Initial Purchasers or their affiliates may, from timeto time, engage in transactions with and perform services for the Issuer, its affiliates and its employees, in theordinary course of their business.

Merrill Lynch has been appointed acquisition advisor to the Consortium Banks in their Offer for ABNAMRO. For a discussion of the Offer, please see ‘‘The ABN AMRO Offer’’. In addition, Merrill Lynchadvised the Issuer, and co-invested with it, in its 2005 strategic investment in Bank of China. GreenwichCapital Markets, Inc. is a wholly-owned indirect subsidiary of the Issuer.

The offering is being made in compliance with the requirements of Rule 2720 of the NationalAssociation of Securities Dealers, Inc. because Greenwich Capital Markets, Inc. and Citizens Securities, theIssuer’s wholly-owned indirect subsidiaries, may participate in offerings pursuant to Rule 144. GreenwichCapital Markets, Inc. is participating as a bookrunner in this offering. The maximum underwritingcompensation for offerings pursuant to Rule 144A will not exceed 8% of the offering proceeds.

In the purchase agreement, the Issuer has agreed to indemnify the Initial Purchasers against certainliabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments theInitial Purchasers may be required to make in respect thereof.

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TAXATION

United Kingdom Taxation

The comments below are for general information only and are based on current law and HM Revenue& Customs practice as at the date of this Offering Memorandum, all of which is subject to change, possiblywith retroactive effect. The comments below are limited in scope to United Kingdom withholding tax, stampduty and stamp duty reserve tax and do not address other U.K. tax issues relevant to acquiring, owning ordisposing of the Capital Securities. They relate only to the position of persons who are the beneficial owners oftheir Capital Securities and acquire their Capital Securities as initial investors in the Capital Securities. Thecomments below may not apply to certain classes of person such as dealers. Any holders who are in doubt asto their tax position in respect of the Capital Securities should consult their professional advisers. In the eventthat the Issuer has the right to redeem the Capital Securities due to certain changes in tax law or the occurrenceof a Capital Disqualification Event, the Issuer may vary the terms of the Capital Securities or substitutedifferent securities for the Capital Securities. In the event that a Capital Breach Event has occurred, the Issuermay substitute the Capital Securities with non-cumulative preference shares. This summary does not address theUK tax consequences of such a variation or substitution of the Capital Securities.

United Kingdom Withholding Tax

The Capital Securities issued will constitute ‘‘quoted Eurobonds’’ provided they are and continue to belisted on a recognized stock exchange, within the meaning of section 1005 Income Tax Act 2007. TheLondon Stock Exchange is a recognized stock exchange for these purposes. Securities will be treated as listedon the London Stock Exchange if they are included in the Official List by the U.K. Listing Authority and areadmitted to trading on the London Stock Exchange.

Whilst the Capital Securities are and continue to be quoted Eurobonds, payments of interest on theCapital Securities may be made without withholding or deduction for or on account of United Kingdom tax.

Persons in the United Kingdom (i) paying interest to or receiving interest on behalf of another personwho is an individual, or (ii) paying amounts due on redemption of any Capital Securities which constitutedeeply discounted securities as defined in Chapter 8 of Part 4 of the Income Tax (Trading and Other Income)Act 2005 to or receiving such amounts on behalf of another person who is an individual, may be required toprovide certain information to HM Revenue & Customs regarding the identity of the payee or person entitledto the interest and, in certain circumstances, such information may be exchanged with tax authorities in othercountries. However, in relation to amounts payable on the redemption of such Capital Securities HM Revenue& Customs published practice indicates that HM Revenue & Customs will not exercise its power to obtaininformation where such amounts are paid or received on or before April 5, 2008.

Stamp Duty and Stamp Duty Reserve Tax (‘‘SDRT’’)

No U.K. stamp duty or stamp duty reserve tax is payable on the issue of the Capital Securities or ontransfers of, or agreements to transfer, Capital Securities.

EU Directive on the Taxation of Savings Income

The EU has adopted a Directive regarding the taxation of savings income. The Directive requiresMember States to provide to the tax authorities of other Member States details of payments of interest andother similar income paid by a person to an individual or certain other persons in another Member State,except that Austria, Belgium and Luxembourg may instead impose a withholding system for a transitionalperiod unless during such period they elect otherwise.

United States Federal Income Tax Considerations

TO ENSURE COMPLIANCE WITH TREASURY DEPARTMENT CIRCULAR 230, INVESTORSARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THISOFFERING MEMORANDUM IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE

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USED, FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED UNDER THEINTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITHTHE PROMOTION OR MARKETING OF THIS OFFERING; AND (C) INVESTORS SHOULDSEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENTTAX ADVISOR.

The following is a general summary of certain material U.S. federal income tax consequences to U.S.Holders (as defined below) of owning and disposing of Capital Securities. This summary does not purport tobe a comprehensive description of all of the tax considerations that may be relevant to any particular holder,including tax considerations that arise from rules of general application or that are generally assumed to beknown by U.S. Holders. This summary does not discuss special rules that may apply to insurance companies,tax-exempt entities, pension funds, banks, financial institutions, regulated investment companies, trustsincluding real estate investment trusts, U.S. expatriates, persons subject to the alternative minimum tax,securities broker-dealers, traders in securities who elect to apply a mark-to-market method of accounting,persons holding Capital Securities as part of a straddle, hedging or conversion transaction, persons who own(directly, indirectly, or by attribution) 10% or more of the Issuer’s outstanding share capital or voting stock,persons whose functional currency is not the U.S. dollar, and persons that are not U.S. Holders (except to thelimited extent set forth below), among others. Those special rules are not discussed in this OfferingMemorandum.

Furthermore, this summary is based upon applicable U.S. law and practice, including the U.S. InternalRevenue Code of 1986, as amended (the ‘‘Internal Revenue Code’’), Treasury regulations, rulings, judicialdecisions and administrative pronouncements, all as in effect as of the date hereof, and all of which aresubject to change or differing interpretation, possibly with retroactive effect.

For purposes of this discussion, you will be a U.S. Holder if you are, for U.S. federal income taxpurposes, a beneficial owner of the Capital Securities who holds Capital Securities as capital assets and is(a) a citizen or individual resident of the United States; (b) a corporation (or other entity taxable as acorporation) created or organized in or under the laws of the United States or any state thereof, including theDistrict of Columbia; (c) an estate the income of which is subject to U.S. federal income taxation regardlessof its source; or (d) a trust, if a court within the United States is able to exercise primary supervision over theadministration of the trust, and if one or more U.S. persons have the authority to control all substantialdecisions of the trust.

If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income taxpurposes) holds Capital Securities, the tax treatment of a partner in the partnership generally will dependupon the status of the partner and the activities of the partnership. If you are a partner in a partnership thatholds Capital Securities, you are urged to consult your own tax advisor regarding the specific taxconsequences of owning and disposing of such Capital Securities.

Investors should consult their tax advisors concerning the U.K., U.S. federal, state or local incometax consequences of the ownership or disposition of Capital Securities in light of their particularsituations as well as any consequences arising under the laws of any other taxing jurisdiction.

Characterization of the Capital Securities

The Issuer intends to take the position that the Capital Securities are equity for U.S. federal income taxpurposes and the remainder of this summary assumes that the Capital Securities are so characterized. U.S.Holders should note that no rulings have been or will be sought from the Internal Revenue Service (the‘‘IRS’’) with respect to the classification of the Capital Securities, and no assurance can be given that the IRSor courts will not treat the Capital Securities as debt. If the Capital Securities were treated as debt, the taxconsequences to U.S. Holders of owning and disposing of the Capital Securities could differ significantlyfrom that described below. Prospective purchasers should consult their tax advisors regarding the classificationof the Capital Securities for these purposes.

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Coupon Payments

The gross amount of any coupon payments, without reduction for any U.K. tax withheld, generally willbe treated as dividends for U.S. federal income tax purposes to the extent paid out of the current oraccumulated earnings and profits of the Issuer, as determined for U.S. federal income tax purposes and willbe included in gross income on the date the coupon payment is actually or constructively received by theU.S. Holder. Dividends paid by the Issuer will not be eligible for the dividends received deduction that isgenerally allowed to corporations. Subject to applicable limitations that may vary depending upon a holder’sindividual circumstances, dividends paid to certain non-corporate U.S. Holders in taxable years beginningbefore January 1, 2011 will constitute ‘‘qualified dividend income’’ that will be taxable at a maximumpreferential tax rate of 15%. Non-corporate U.S. Holders should consult their own tax advisors to determinewhether they are subject to any special rules that limit their ability to be taxed at this favorable rate.

The U.S. Treasury has announced its intention to promulgate rules which will permit persons required tofile information returns to rely on certifications from a foreign issuer that dividends paid by such foreignissuer constitute qualified dividend income. As of the date of this Offering Memorandum, such rules have notbeen promulgated.

For U.S. foreign tax credit purposes, dividends the Issuer distributes will constitute non U.S.-sourceincome. Special rules apply in determining the amount of qualified dividend income taken into account forU.S. foreign tax credit limitation purposes.

On March 23, 2007, Ways and Means Select Revenue Measures Subcommittee Chairman Richard Nealintroduced a bill (H.R. 1672) into the U.S. House of Representatives that would cause certain dividends paidby foreign corporations to be ineligible for the 15% maximum preferential rate of taxation currentlyapplicable to dividends from U.S. and certain foreign corporations received by certain non-corporateshareholders in taxable years beginning before January 1, 2011. Under the bill, the preferential rate would notapply to certain dividends from foreign corporations, including in circumstances where (i) the dividendpayment is deductible in the foreign country, or (ii) the dividend is paid with respect to an instrument that isnot treated as stock in the foreign country. The bill would generally apply to dividends received after the dateof enactment. If enacted in its current form, the bill would likely cause the coupon payments on the CapitalSecurities to be ineligible for the preferential rate. It is unclear whether Congress will pass such a bill orwhether any such legislation would be signed into law. U.S. Holders should consult their own tax advisorswith respect to the consequences to them, if any, of enactment of the bill in its current form or of any otherfuture legislation that would limit the eligibility of coupon payments paid by the Issuer for the preferentialrate of taxation.

Sale or other Disposition

In general, upon the sale, redemption or other disposition of Capital Securities a U.S. Holder willrecognize capital gain or loss for U.S. federal income tax purposes (assuming, in the case of a redemption,that the U.S. Holder does not own, and is not deemed to own, any of the voting shares of the Issuer) in anamount equal to the difference between the amount realized for the Capital Securities (excluding any unpaidcoupon payments, which will generally be treated as dividend as described above) and a U.S. Holder’s taxbasis in the Capital Securities sold, redeemed or otherwise disposed of.

A U.S. Holder that owns or is deemed to own any voting shares of the Issuer should consult its own taxadvisor regarding the tax consequences of a redemption of the Capital Securities.

This gain or loss generally will be U.S. source gain or loss, and will be treated as long-term capital gainor loss if a U.S. Holder’s holding period for the Capital Securities exceeds one year at the time of sale orother disposition. If the U.S. Holder is an individual, any capital gain generally will be subject to U.S. federalincome tax at preferential rates if specified minimum holding periods are met. Capital gains of corporate U.S.Holders generally are taxable at the regular rates applicable to corporations. The deductibility of capital lossesis subject to significant limitations.

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The United States federal income tax consequences of varying the terms of the Capital Securities orsubstituting new securities for the Capital Securities are uncertain

If the Issuer becomes entitled to redeem the Capital Securities for taxation reasons or due to theoccurrence of a Capital Disqualification Event, the Issuer may instead of giving notice to redeem, substitute atany time all of the relevant Capital Securities for, or vary the terms of, the relevant Capital Securities so thatthey remain, Qualifying Tier 1 Securities or become Qualifying Upper Tier 2 Securities. The Issuer may alsoopt to substitute or vary the Capital Securities if the ACSM is suspended and may also opt to substitute theCapital Securities with non-cumulative preference shares if a Capital Breach Event has occurred and iscontinuing.

If the Issuer varies the terms of the Capital Securities or substitutes the Capital Securities with newsecurities or non-cumulative preference shares, the United States federal income tax consequences of suchvariation or substitution are uncertain because such consequences will depend on the terms and conditionsthat are varied or on all the terms and conditions of the substituted securities. In general, such a variation orsubstitution will likely be a taxable exchange for United States federal income tax purposes, unless a specificexception applies. In the event that such a variation or substitution does constitute a taxable exchange, a U.S.Holder would recognize gain or loss and have to include amounts in taxable income for United States federalincome tax purposes on such a variation or substitution and pay tax thereon, even though no cash willactually be distributed to holders pursuant to the variation or substitution. It is not possible to describe theUnited States federal income tax consequences to holders of receiving, holding or disposing of the alteredsecurities or the substituted securities until the terms and conditions of such securities are established.Prospective holders should consult with their own tax advisor about the potential tax consequences tothem of a variation or substitution and of receiving, holding, and disposing of such securities.

Information Reporting and Backup Withholding for U.S. Holders and non-U.S. Persons

Coupon payments and proceeds paid from the sale or other disposition of Capital Securities may besubject to information reporting to the IRS and possible U.S. federal backup withholding at a current rate of28%. Certain exempt recipients (such as corporations) are not subject to the information reporting or backupwithholding requirements. Backup withholding generally will not apply to a holder who furnishes a correcttaxpayer identification number or certificate of foreign status and makes any other required certification, orwho is otherwise exempt from backup withholding and when required, demonstrates such fact. U.S. personswho are required to establish their exempt status generally must provide IRS Form W-9 (Request forTaxpayer Identification Number and Certification).

Non-U.S. persons generally will not be subject to U.S. information reporting or backup withholding.However, these holders may be required to provide certification of non-U.S. status (generally on IRSForm W-8BEN) in connection with payments received in the United States or through certain U.S.-relatedfinancial intermediaries.

Backup withholding is not an additional tax. Amounts withheld as backup withholding may be creditedagainst a holder’s U.S. federal income tax liability. A holder may obtain a refund of any excess amountswithheld under the backup withholding rules by timely filing the appropriate claim for a refund with the IRSand furnishing any required information.

Certain ERISA Considerations

This disclosure was written in connection with the promotion and marketing of the Capital Securities bythe Issuer and the Initial Purchasers, and it cannot be used by any holder for the purpose of avoidingpenalties that may be asserted against the holder under the Internal Revenue Code. Prospective purchasers ofthe Capital Securities should consult their own tax advisors with respect to the application of the U.S. federalincome tax laws to their particular situations.

The Employee Retirement Income security Act of 1974, as amended (‘‘ERISA’’), imposes certainrequirements on employee benefit plans subject to Title I of ERISA and on entities that are deemed to hold

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the assets of such plans (‘‘ERISA Plans’’), and on those persons who are fiduciaries with respect to ERISAPlans. Investments by ERISA Plans are subject to ERISA’s general fiduciary requirements, including, but notlimited to, the requirement of investment prudence and diversification and the requirement that an ERISAPlan’s investments be made in accordance with the documents governing the ERISA Plan.

Section 406 of ERISA and Section 4975 of the Internal Revenue Code, prohibit certain transactionsinvolving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which aresubject to Section 4975 of the Internal Revenue Code, such as individual retirement accounts (together withERISA Plans, ‘‘Plans’’)) and certain persons (referred to as ‘‘parties in interest’’ or ‘‘disqualified persons’’)having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to thetransaction. A party in interest or disqualified person who engages in a prohibited transaction may be subjectto excise taxes and other penalties and liabilities under ERISA and the Internal Revenue Code.

Any Plan fiduciary that proposes to cause a Plan to purchase the Capital Securities should consult withits counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions ofERISA and Section 4975 of the Internal Revenue Code to such an investment, and to confirm that suchpurchase and holding will not constitute or result in a non-exempt prohibited transaction or any otherviolation of an applicable requirement of ERISA or the Code.

Foreign plans, governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (asdefined in Section 3(33) of ERISA) while not subject to the fiduciary responsibility provisions of ERISA orthe prohibited transaction provisions of ERISA and Section 4975 of the Internal Revenue Code, maynevertheless be subject to other federal, state, local or foreign laws or regulations that are substantially similarto the foregoing provisions of ERISA and the Internal Revenue Code (‘‘Similar Law’’). Fiduciaries of anysuch plans should consult with their counsel before purchasing the Capital Securities to determine the needfor, if necessary, and the availability of, and exemptive relief under any Similar Law.

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SELLING RESTRICTIONS

General

No action has been or will be taken in any jurisdiction that would permit a public offering of the CapitalSecurities, or the possession, circulation or distribution of this Offering Memorandum or any other materialrelating to the Issuer or the Capital Securities in any jurisdiction where action for that purpose is required.Each Initial Purchaser has agreed that it will not, directly or indirectly, offer or sell any of the CapitalSecurities offered in the offering or distribute or publish any offering material or advertisements in connectionwith the Capital Securities or the offering in or from any jurisdiction, except under circumstances that willresult in compliance with all applicable laws and regulations. Persons into whose possession this OfferingMemorandum comes are required to inform themselves about and comply with any applicable restrictions asto the offering and the distribution of this Offering Memorandum.

United States of America

The Capital Securities, the Ordinary Shares and any securities issued upon substitution of the CapitalSecurities have not been and will not be registered under the Securities Act and may not be offered or soldwithin the United States or to, or for the account or benefit of, U.S. persons except that the Capital Securitiesmay be offered or sold to (i) QIBs within the meaning of Rule 144A in reliance upon the exemption from theregistration requirements of the Securities Act provided by Rule 144A, and (ii) non-U.S. persons in offshoretransactions in reliance upon Regulation S. For a description of certain restrictions on resale or transfer, see‘‘Book Entry, Transfer Restrictions and Summary of Provisions relating to the Capital Securities while inGlobal Form’’ in this Offering Memorandum.

Each Initial Purchaser has agreed that, except as permitted by the purchase agreement, it will not offer,sell or deliver the Capital Securities (i) as part of their distribution at any time or (ii) otherwise until 40 daysafter the later of the commencement of the offering and the Issue Date within the United States or to, or forthe account or benefit of, U.S. persons and that it will have sent to each distributor, dealer or personreceiving a selling concession, fee or other remuneration that purchases Preferred Securities from it during thedistribution compliance period a confirmation or other notice setting forth the restrictions on offers and salesof the Capital Securities within the United States or to, or for the account or benefit of, U.S. persons. Termsused in this paragraph have the meanings given thereto by Regulation S.

In addition, until 40 days after the commencement of the offering, an offer or sale of Capital Securitieswithin the United States by any dealer that is not participating in the offering may violate the registrationrequirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144A.In making a purchase of the Capital Securities, each purchaser will be deemed to have made certainrepresentations and agreements as set forth under ‘‘Transfer Restrictions’’ in this Offering Memorandum.

United Kingdom

Each Initial Purchaser has represented, warranted and agreed that:

(i) it has only communicated or caused to be communicated and will only communicate or cause tobe communicated any invitation or inducement to engage in investment activity (within themeaning of section 21 of the FSMA) received by it in connection with the issue or sale of anyCapital Securities in circumstances in which section 21(1) of FSMA does not apply; and

(ii) it has complied and will comply with all applicable provisions of the FSMA with respect toanything done by it in relation to the Capital Securities in, from or otherwise involving the UnitedKingdom.

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A13.4.14BOOK ENTRY, TRANSFER RESTRICTIONS AND SUMMARY OF PROVISIONS RELATING TOTHE CAPITAL SECURITIES WHILE IN GLOBAL FORM

General

Capital Securities sold to QIBs in reliance on Rule 144A under the Securities Act will be represented byinterests in one or more restricted Global Certificates in registered form without interest coupons attached (the‘‘Restricted Global Certificate’’). The Restricted Global Certificate will be deposited upon issuance with TheBank of New York, New York branch, as custodian for DTC, and registered in the name of Cede & Co., asnominee of DTC. Capital Securities sold to non-U.S. persons in reliance on Regulation S under the SecuritiesAct will be represented by interests in an unrestricted Global Certificate in registered form without interestcoupons attached (the ‘‘Regulation S Global Certificate’’, and together with the Restricted Global Certificate,the ‘‘Global Certificates’’). The Regulation S Global Certificates will be deposited, on the Issue Date, with acommon depositary and registered in the name of the nominee of the common depositary for the accounts ofEuroclear and Clearstream, Luxembourg.

Ownership of interests in the Restricted Global Certificate (‘‘Rule 144A Book-Entry Interests’’) and inthe Regulation S Global Certificate (the ‘‘Regulation S Book-Entry Interests’’ and, together with theRule 144A Book-Entry Interests, the ‘‘Book-Entry Interests’’) will be limited to persons that have accountswith DTC, Euroclear and/or Clearstream, Luxembourg or persons that hold interests through such participants.DTC, Euroclear and Clearstream, Luxembourg will hold interests in the Global Certificates on behalf of theirparticipants through customers’ securities accounts in their respective names on the books of their respectivedepositaries. Except under the limited circumstances described below, Book-Entry Interests will not be held indefinitive certificated form.

Book-Entry Interests will be shown on, and transfers thereof will only be effected through, recordsmaintained in book-entry form by DTC, Euroclear and Clearstream, Luxembourg and their participants. Thelaws of some jurisdictions, including certain states of the United States, may require that certain purchasers ofsecurities take physical delivery of such securities in definitive certificated form. The foregoing limitationsmay impair the ability to own, transfer or pledge Book-Entry Interests. In addition, while the CapitalSecurities are in global form, holders of Book-Entry Interests will not be considered the owners or ‘‘holders’’of Capital Securities for any purpose.

So long as the Capital Securities are held in global form, DTC, Euroclear and/or Clearstream,Luxembourg, as applicable (or their respective nominees), will be considered the sole holders of GlobalCertificates for all purposes under the Trust Deed. In addition, participants must rely on the procedures ofDTC, Euroclear and/or Clearstream, Luxembourg, and indirect participants must rely on the procedures ofDTC, Euroclear, Clearstream, Luxembourg and the participants through which they own Book-Entry interests,to transfer their interests or to exercise any rights of holders under the Trust Deed.

Neither the Issuer nor the Trustee will have any responsibility, or be liable, for any aspect of the recordsrelating to the Book-Entry Interests.

Transfer Restrictions

None of the Capital Securities, the Ordinary Shares or any securities issuable upon substitution of theCapital Securities offered hereby have been registered under the Securities Act, or any state securities laws,and, unless so registered, may not be offered or sold except pursuant to an exemption from, or in atransaction not subject to, the registration requirements of the Securities Act and applicable state securitieslaws. Accordingly, the Capital Securities offered hereby are being offered and sold only to qualifiedinstitutional buyers (as defined in Rule 144A under the Securities Act) in reliance on Rule 144A under theSecurities Act and in offshore transactions in reliance on Regulation S under the Securities Act.

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Regulation S Capital Securities

Each purchaser of Capital Securities outside the United States pursuant to Regulation S and eachsubsequent purchaser of such Capital Securities in resales prior to the expiration of the distributioncompliance period (as defined in Regulation S) by accepting delivery of this Offering Memorandum and theCapital Securities, will be deemed to have represented, agreed and acknowledged that:

(i) it is acquiring the Capital Securities in an offshore transaction within the meaning of Regulation Sand it is, or at the time Capital Securities are purchased will be, the beneficial owner of suchCapital Securities and (a) it is not a U.S. person and it is located outside the United States (withinthe meaning of Regulation S) and (b) it is not an affiliate of the Issuer or a person acting onbehalf of such an affiliate; and

(ii) it understands that such Capital Securities have not been and will not be registered under theSecurities Act and that, prior to the expiration of the distribution compliance period, it will notoffer, sell, pledge or otherwise transfer such Capital Securities except (a) in accordance withRule 144A under the Securities Act to a person that it and any person acting on its behalfreasonably believe is a qualified institutional buyer within the meaning of Rule 144A (‘‘QIB’’)purchasing for its own account or the account of a QIB, (b) in an offshore transaction inaccordance with Rule 903 or Rule 904 of Regulation S or (c) to the Issuer, in each case inaccordance with any applicable securities laws of any State of the United States; and

(iii) it understands that the Issuer, the registrar in respect of the Capital Securities (the ‘‘Registrar’’),the transfer agent (the ‘‘Transfer Agent’’), the Initial Purchasers and their affiliates, and others willrely upon the truth and accuracy of the foregoing acknowledgements, representations andagreements.

On or prior to the 40th day after the Issue Date, Capital Securities represented by an interest in theRegulation S Global Certificate may be transferred to a person who wishes to hold such Capital Securities inthe form of an interest in the Restricted Global Certificate only upon receipt by the Registrar (or any otherAgent which shall forward such certification to the Registrar) of a written certification from the transferor (inthe form set out in Schedule 2 Part 2 (Form of Restricted Global Certificate) of the Trust Deed) to the effectthat such transfer is being made to a person whom the transferor reasonably believes is a QIB, in atransaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws ofany state of the United States. After such 40th day, such certification requirements will no longer apply tosuch transfers, but such transfers will continue to be subject to the transfer restrictions contained in the legendappearing on the face of such Global Certificate, as described below under ‘‘Exchange of Interests in theGlobal Certificates for Definitive Certificates’’.

Capital Securities represented by an interest in the Restricted Global Certificate may also be transferredto a person who wishes to hold such Capital Securities in the form of an interest in the Regulation S GlobalCertificate, but only upon receipt by the Registrar (or any other Agent which shall forward such certificationto the Registrar) of a written certification from the transferor (in the form set out in Schedule 2 Part 1 (Formof Regulation S Global Certificate) of the Trust Deed) to the effect that such transfer is being made inaccordance with Regulation S under the Securities Act.

Any interest in the Regulation S Global Certificate that is transferred to a person who takes delivery inthe form of an interest in the Restricted Global Certificate will, upon transfer, cease to be an interest in theRegulation S Global Certificate and become an interest in the Restricted Global Certificate and, accordingly,will thereafter be subject to all transfer restrictions and other procedures applicable to an interest in theRestricted Global Certificate.

The Capital Securities are being offered and sold in the United States only to QIBs within the meaningof and in reliance on Rule 144A.

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Restricted Capital Securities

Each purchaser of Capital Securities within the United States pursuant to Rule 144A, by acceptingdelivery of this Offering Memorandum, will be deemed to have represented, agreed and acknowledged asfollows (terms used in the following paragraphs that are defined in Rule 144A have the respective meaningsgiven to them in Rule 144A):

(i) the purchaser (a) is a QIB within the meaning of Rule 144A, (b) is acquiring the Capital Securitiesfor its own account or for the account of a QIB and (c) is aware, and each beneficial owner ofsuch Capital Securities has been advised that the sale of the Capital Securities to it is being madein reliance on Rule 144A;

(ii) the purchaser understands that the Capital Securities are being offered only in a transaction notinvolving any public offering in the United States within the meaning of the Securities Act andthat the Capital Securities and others have not been and will not be registered under the SecuritiesAct and may not be reoffered, resold, pledged or otherwise transferred except in accordance withthe legend set forth below; and

(iii) the purchaser understands that the Restricted Global Certificate and any Restricted DefinitiveCertificates (as defined below) will bear a legend to the following effect, unless the Issuerdetermines otherwise in accordance with applicable law:

NEITHER THE CAPITAL SECURITIES REPRESENTED BY THIS CERTIFICATE NOR ANYORDINARY SHARES NOR ANY SECURITIES ISSUABLE ON SUBSTITUTION OR REDEMPTIONTHEREOF HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED(THE ‘‘U.S. SECURITIES ACT’’) OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANYSTATE OR OTHER JURISDICTION OF THE UNITED STATES AND ACCORDINGLY MAY NOT BEOFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) (1) WITHIN THEUNITED STATES TO A PERSON WHOM THE SELLER AND ANY PERSON ACTING ON ITS BEHALFREASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER (‘‘QIB’’) WITHIN THEMEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AQIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, UNDER THE U.S.SECURITIES ACT (2) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION INACCORDANCE WITH RULE 903 OR RULE 904 OF REGULATION S, (3) PURSUANT TO ANEXEMPTION FROM REGISTRATION UNDER THE U.S SECURITIES ACT PROVIDED BY RULE 144THEREUNDER (IF AVAILABLE) OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATE-MENT FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION, AND (B) IN EACHCASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THEUNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THEEXEMPTION PROVIDED BY RULE 144 FOR RESALE OF INTERESTS IN SUCH SECURITIES. THEHOLDER UNDERSTANDS THAT ITS ABILITY, AND THE ABILITY OF ANY SUBSEQUENT HOLDERTO REOFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE CAPITAL SECURITIESPURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE U.S. SECURITIES ACTPROVIDED BY RULE 144 THEREUNDER, OR BY VIRTUE OF THE FACT THAT THE CAPITALSECURITY WAS PREVIOUSLY SOLD IN AN OFFSHORE TRANSACTION IN RELIANCE ONREGULATION S THEREUNDER, MAY BE LIMITED AS A RESULT OF MARKETMAKING IN THECAPITAL SECURITIES BY AFFILIATES OF THE ROYAL BANK OF SCOTLAND GROUP PLC.

(iv) It understands that the Issuer, the Registrar, the Transfer Agent, the Initial Purchasers and theiraffiliates, and others will rely upon the truth and accuracy of the foregoing acknowledgements,representations and agreements. If it is acquiring any Capital Securities for the account of one ormore QIBs it represents that it has sole investment discretion with respect to each such accountand that it has full power to make the foregoing acknowledgements, representations andagreements on behalf of each such account.

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Upon the transfer, exchange or replacement of the Restricted Global Certificate or a restricted CapitalSecurity in definitive form (a ‘‘Restricted Definitive Certificate’’) bearing the above legend, or upon specificrequest for removal of the legend, the Issuer will deliver only the Restricted Global Certificate or one or moreRestricted Definitive Certificates that bear such legend or will refuse to remove such legend, unless there isdelivered to the Issuer, the Registrar and the Transfer Agent such satisfactory evidence (which may include alegal opinion) as may reasonably be required by the Issuer that neither the legend nor the restrictions ontransfer set forth therein are required to ensure compliance with the provisions of the Securities Act.

Any interest in the Restricted Global Certificate that is transferred to a person who takes delivery in theform of an interest in the Regulation S Global Certificate will, upon transfer, cease to be an interest in theRestricted Global Certificate and become an interest in the Regulation S Global Certificate and, accordingly,will thereafter be subject to all transfer restrictions and other procedures applicable to an interest in theRegulation S Global Certificate.

Prospective purchasers are hereby notified that sellers of the Capital Securities may be relying on theexemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.

Exchange of Interests in the Global Certificates for Definitive Certificates

The Global Certificates will be exchangeable, free of charge to the holder, in whole but not in part, forDefinitive Certificates only if:

(i) a Restricted Global Certificate is held by or on behalf of DTC, and DTC notifies the Issuer that itis no longer willing or able to discharge properly its responsibilities as depositary with respect tothe Restricted Global Certificate or ceases to be a ‘‘clearing agency’’ registered under theExchange Act or if at any time it is no longer eligible to act as such, and the Issuer is unable tolocate a qualified successor within 90 days of receiving notice or becoming aware of suchineligibility on the part of DTC; or

(ii) an Regulation S Global Certificate is held by or on behalf of Euroclear or Clearstream, andEuroclear or Clearstream, Luxembourg, as the case may be, is closed for business for a continuousperiod of 14 days (other than by reason of holidays, statutory or otherwise) or announces anintention permanently to cease business or does in fact do so and no Alternative Clearing Systemsatisfactory to the Trustee is available; or

(iii) the Trustee is satisfied that, on the occasion of the next payment due in respect of the CapitalSecurities, the Issuer or any of the Paying Agents would be required to make any deduction orwithholding from any payment in respect of such Capital Securities which would not be requiredwere such Capital Securities in definitive form.

‘‘Alternative Clearing System’’ means any such other clearing system as shall have been approved bythe Trustee.

In such circumstances, the Issuer shall procure the delivery of Definitive Certificates in exchange for theRegulation S Global Certificate and/or the Restricted Global Certificate. A person having an interest in aGlobal Certificate must provide the Registrar (through DTC, Euroclear and/or Clearstream Luxembourg) with(a) such information as the Issuer and the Registrar may require to complete and deliver DefinitiveCertificates (including the name and address of each person in which the Definitive Certificates are to beregistered and the principal amount of each such person’s holding) and (b) (in the case of the RestrictedGlobal Certificate only) a certificate given by or on behalf of the holder of each beneficial interest in theRestricted Global Certificate stating either (i) that such holder is not transferring its interest at the time ofsuch exchange or (ii) that the transfer or exchange of such interest has been made in compliance with thetransfer restrictions applicable to the Capital Securities and that the person transferring such interestreasonably believes that the person acquiring such interest is a QIB and is obtaining such beneficial interestin a transaction meeting the requirements of Rule 144A. Definitive Certificates issued in exchange forinterests in the Restricted Global Certificate will bear the legends and be subject to the transfer restrictions set

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out under ‘‘Book entry, Transfer Restrictions and Summary of Provisions Relating to the Capital Securitieswhile in Global Form’’.

If a Global Certificate is to be exchanged for Definitive Certificates, such Definitive Certificates will beissued within five business days of the delivery to the Registrar of the information and any requiredcertification described in the preceding paragraph against the surrender of the relevant Global Certificate atthe specified office of the Registrar. Such exchange shall be effected in accordance with the regulationsconcerning the transfer and registration from time to time relating to the Capital Securities and shall beeffected without charge, but against such indemnity as the Registrar or other Agents may require in respect ofany tax or other duty of whatsoever nature which may be levied or imposed in connection with suchexchange.

The Registrar will not register the transfer of or exchange of interests in a Global Certificate forDefinitive Certificates for a period of 15 days ending on the due date for any payment of principal or interestin respect of the Capital Securities.

DTC Book-Entry Ownership of Global Certificates

The Issuer has applied to DTC in order to have the Restricted Capital Securities accepted in its book-entry settlement system. Upon the issue of the Restricted Global Certificate, DTC or its custodian will credit,on its internal book-entry system, the respective nominal amounts of the individual beneficial interestsrepresented by the Restricted Global Certificate to the account of DTC participants. Ownership of beneficialinterests in the Restricted Global Certificate will be held through participants of DTC. Ownership ofbeneficial interests in the Restricted Global Certificate will be shown on, and the transfer of such ownershipwill be effected only through, records maintained by DTC or its nominee.

Payments in U.S. dollars of principal and interest in respect of the Restricted Global Certificateregistered in the name of DTC’s nominee will be made to the order of such nominee as the registered holderof such Capital Security. In the case of any payment in a currency other than U.S. dollars, payment will bemade by the Issuer and all or a portion of such payment will be remitted for credit directly to the beneficialholders of interests in the Restricted Global Certificate in the currency in which such payment was madeand/or cause all or a portion of such payment to be converted into U.S. dollars and credited to the applicableparticipants’ account.

Transfers of Interests in Global Certificates

Transfers of interests in the Global Certificates within DTC, Euroclear and Clearstream, Luxembourgwill be in accordance with the usual rules and operating procedures of the relevant clearing system.

The laws of some states of the United States require that certain persons receive individual certificates inrespect of their holdings of Capital Securities. Consequently, the ability to transfer interests in the GlobalCertificates to such persons will be limited. Because DTC only acts on behalf of participants, who in turn acton behalf of indirect participants, the ability of a person having an interest in the Global Certificate to pledgesuch interest to persons or entities which do not participate in DTC, or otherwise take actions in respect ofsuch interest, may be affected by the lack of an Definitive Certificate representing such interest.

Cross market transactions will require delivery of instructions to Clearstream, Luxembourg or (as thecase may be) Euroclear by the counterparty in such system in accordance with its rules and procedures andwithin its established deadlines. Clearstream, Luxembourg or (as the case may be) Euroclear will, if thetransaction meets its settlement requirements, deliver instructions to its respective depositary to take action toeffect final settlement on its behalf by delivering or receiving beneficial interests in the relevant GlobalCertificate in DTC, and making or receiving payment in accordance with normal procedures for same dayfunds settlement applicable to DTC. Clearstream, Luxembourg account holders and Euroclear account holdersmay not deliver instructions directly to the depositaries for Clearstream, Luxembourg or Euroclear.

Because of time zone differences, credits of Capital Securities received in Clearstream, Luxembourg orEuroclear as a result of a transaction with a DTC participant will be made during the securities settlement

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processing day following the DTC settlement date and such credits of any transactions in such securitiessettled during such processing will be reported to the relevant Clearstream, Luxembourg or Euroclear accountholder on such business day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales ofCapital Securities by or through a Clearstream, Luxembourg account holder or a Euroclear account holder toa DTC participant will be received for value on the DTC settlement date but will be available in the relevantClearstream, Luxembourg or Euroclear cash account only as of the business day following settlement in DTC.Settlement between Euroclear or Clearstream, Luxembourg account holders and DTC participants cannot bemade on a delivery versus payment basis. The arrangements for transfer of payments must be establishedseparately from the arrangements for transfer of Capital Securities, the latter being effected on a free deliverybasis. The customary arrangements for delivery versus payment between Euroclear and Clearstream,Luxembourg account holders or between DTC participants are not affected.

For a further description of restrictions on the transfer of Capital Securities, see ‘‘Subscription andSale’’.

DTC has advised the Issuer that it will take any action permitted to be taken by a holder of RestrictedCapital Securities (including, without limitation, the presentation of the Restricted Global Certificates forexchange as described above) only at the direction of one or more participants in whose account with DTCinterests in the Restricted Global Certificate are credited, and only in respect of such portion of the aggregateprincipal amount of the Restricted Global Certificate as to which such participant or participants has or havegiven such direction. However, in certain circumstances, DTC will exchange the Restricted Global Certificatefor Restricted Definitive Certificates (which will, in the case of Restricted Capital Securities, bear the legendset out above under ‘‘Transfer Restrictions’’).

Although DTC, Clearstream, Luxembourg and Euroclear have agreed to the foregoing procedures inorder to facilitate transfers of interests in the Global Certificates among participants and account holders ofDTC, Clearstream, Luxembourg and Euroclear, they are under no obligation to perform or continue toperform such procedures, and such procedures may be discontinued at any time. None of the Issuer, thePrincipal Paying Agent, the Registrar, the Trustee, and Transfer Agent will have any responsibility for theperformance by DTC, Clearstream, Luxembourg or Euroclear or their respective direct or indirect participantsor account holders of their respective obligations under the rules and procedures governing their respectiveoperations.

While the Restricted Global Certificate is lodged with DTC or the custodian, Restricted DefinitiveCertificates will not be eligible for clearing and settlement through Clearstream, Luxembourg or Euroclear.

Payments

Payments of amounts falling due in respect of the Global Certificates will be made against presentationfor endorsement and, if no further payment falls to be made on it, surrender of the Global Certificates to orto the order of the Principal Paying Agent or such other Paying Agent as shall have been notified to theHolders for such purpose. A record of each payment so made will be endorsed in the appropriate schedule tothe Global Certificates, which endorsement will be prima facie evidence that such payment has been made.

Meetings

The holder of the Global Certificates shall be treated at any meeting of Holders as having one vote inrespect of each $1,000 principal amount of Capital Securities for which the Global Certificates may beexchanged.

Purchase and Cancellation

Cancellation of any Capital Security represented by the Global Certificates which is required by theTerms and Conditions of the Capital Securities to be cancelled will be effected by reduction in the principalamount of the relevant Global Certificate.

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Trustee’s Powers

In considering the interests of Holders in circumstances where the Global Certificates are held on behalfof any one or more of DTC, Euroclear, Clearstream, Luxembourg, and an Alternative Clearing System, theTrustee may have regard to such information as may have been made available to it by or on behalf of therelevant clearing system or its operator as to the identity of its accountholders (either individually or by wayof category) with entitlements in respect of a Global Certificate and may consider such interests on the basisthat such accountholders were the holder of the relevant Global Certificate.

Notices

So long as the Capital Securities are represented by the Global Certificates and the Global Certificatesare held on behalf of any one or more of DTC, Euroclear, Clearstream, Luxembourg and an AlternativeClearing System, notices required to be given to Holders may be given by their being delivered to therelevant clearing system for communication by it to entitled accountholders in substitution for notification, asrequired by the Description.

Transfers

Transfers of interests in the Capital Securities with respect to which the Global Certificates are issuedshall be made in accordance with the rules and procedures of Euroclear, Clearstream, Luxembourg, or DTC,as the case may be.

Enforcement

For the purposes of enforcement of the provisions of the Trust Deed against the Trustee, the personsnamed in a certificate of the holder of the Capital Securities in respect of which the Global Certificates areissued shall be recognized as the beneficiaries of the trusts set out in the Trust Deed to the extent of theprincipal amount of their interest in the Capital Securities set out in the certificate of the holder as if theywere themselves the holders of Capital Securities in such principal amounts.

Redemption at the Option of the Issuer

The option of the Issuer provided for under ‘‘Description of Securities — Redemption — Issuer’s CallOption, — Redemption Due to Taxation or — Redemption for Capital Disqualification Event’’ shall beexercised by the Issuer giving notice to the Holders within the time limits set out in and containing theinformation required by that Condition.

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LEGAL OPINIONS

United States counsel to the Issuer, Shearman & Sterling LLP, and Sidley Austin LLP, United Statescounsel for the Initial Purchasers, will pass upon certain matters of U.S. federal law relating to the issue andsale of the securities. Scottish solicitors to the Issuer, Dundas & Wilson CS LLP, will pass upon the validityof the Capital Securities under Scots law. The English solicitors of the Issuer, Linklaters LLP, will pass uponcertain matters of English law relating to the issue and sale of the securities and the enforceability of theGlobal Securities under English law.

EXPERTS

The financial statements and management’s report on the effectiveness of the Group’s internal controlover financial reporting included in the Annual Report on Form 20-F of the Issuer, incorporated by referencein this Offering Memorandum as described in ‘‘Documents Incorporated by Reference’’, have been audited byDeloitte & Touche LLP, an independent registered public accounting firm (which reports (1) express anunqualified opinion on the financial statements and include an explanatory paragraph describing thatInternational Financial Reporting Standards vary in certain significant respects from accounting principlesgenerally accepted in the United States of America and that information relating to the nature and effect ofsuch differences is presented in Note 47 to the financial statements, (2) express an unqualified opinion onmanagement’s assessment regarding the effectiveness of the Group’s internal control over financial reporting,and (3) express an unqualified opinion on the effectiveness of the Group’s internal control over financialreporting).

The consolidated financial statements of the Group for the years ended December 31, 2006 andDecember 31, 2005 have been audited by Deloitte & Touche LLP, Chartered Accountants (authorised andregulated by the Financial Services Authority for designated investment business) of Saltire Court, 20 CastleTerrace, Edinburgh EH1 2DB.

A9.2.1The financial information contained in, or incorporated by reference in, this Offering Memorandum asdescribed in ‘‘Documents Incorporated by Reference’’ above, in relation to the Group does not constitute theGroup’s statutory accounts. Statutory accounts for the years ended December 31, 2006 and December 31,2005 have been delivered to the Registrar of Companies in Scotland. Deloitte & Touche LLP has reported onsuch statutory accounts and such reports were unqualified and did not contain a statement under Section 237of the Companies Act 1985.

ENFORCEMENT OF CIVIL LIABILITIES AND SERVICE OF PROCESS

The Issuer is a public limited company incorporated and registered in Scotland, United Kingdom. All buttwo of the directors and executive officers of the Issuer, and certain experts named in this OfferingMemorandum, reside outside the United States. All or a substantial portion of the assets of the Issuer and theassets of those non-resident persons are located outside the United States. As a result, it may not be possiblefor investors to effect service of process within the United States upon the Issuer or those persons or toenforce against them judgments obtained in U.S. courts predicated upon civil liability provisions of thefederal securities laws of the United States. The Issuer has been advised by its Scottish solicitors, Dundas &Wilson CS LLP (as to Scots law), and its English solicitors, Linklaters LLP (as to English law), that, both inoriginal actions and in actions for the enforcement of judgments of U.S. courts, there is doubt as to whethercivil liabilities predicated solely upon the U.S. federal securities laws are enforceable in Scotland andEngland.

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GENERAL INFORMATION

Consents

The issue of the Capital Securities has been authorised pursuant to resolutions passed at a meeting of theBoard of Directors held on September 16, 2007. The terms of issue of the Capital Securities will be approvedby a meeting of a Committee of the Board of Directors (the ‘‘Committee’’) to be held prior to the Issue Date,such Committee having been appointed by the Board of Directors on September 16, 2007.

Listing

A13.5.1

A13.6.1

Application has been made for the Capital Securities to be listed on the Official List of the U.K. ListingAuthority and to be admitted to trading on the Market of the London Stock Exchange. The estimated totalexpenses of the admission to trading of the Capital Securities are approximately $14,000 (4 7,000).

Securities Codes

The Capital Securities have been accepted for clearance through the DTC and the Euroclear andClearstream, Luxembourg systems. The CUSIP number for the Restricted Capital Securities is 780097AS0.The Common Code for the Regulation S Capital Securities is 32386504. The ISIN for the Restricted CapitalSecurities is US780097AS09. The ISIN for the Regulation S Capital Securities is XS0323865047.

The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium and the address ofClearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg. The address of The DepositoryTrust Company is 55 Water Street, New York, NY 10041-0099, USA.

Significant or Material Change

A9.11.6

A9.7.1

There has been no significant change in the financial or trading position of the Group or the Issuer andits subsidiaries taken as a whole since June 30, 2007. There has been no material adverse change in theprospects of the Group since December 31, 2006.

Litigation

A9.11.5Proceedings, including consolidated class actions on behalf of former Enron securities holders, have beenbrought in the United States against a large number of defendants, including the Group, following thecollapse of Enron. The claims against the Group could be significant; the class plaintiff’s position is that eachdefendant is responsible for an entire aggregate damage amount less settlements — they have not quantifiedclaimed damages against the Group in particular. The Group considers that it has substantial and crediblelegal and factual defences to these claims and it continues to defend them vigorously. A number of otherdefendants have reached settlements in the principal class action. The Group is unable reliably to estimate thepossible loss to it in relation to these matters or the effect that the possible loss might have on the Group’sconsolidated net assets or its operating results or cash flows in any particular period. In addition, pursuant torequests received from the U.S. Securities and Exchange Commission and the Department of Justice, theGroup has provided copies of Enron-related materials to these authorities and has co-operated fully withthem.

On July 27, 2007, following discussions between the OFT, the Financial Ombudsman Service, theFinancial Services Authority and all the major U.K. banks (including the Group) in the first half of 2007, theOFT issued proceedings in a test case against the banks, including the Group, to determine the legal statusand enforceability of certain charges relating to unauthorised overdrafts. The Group maintains that its chargesare fair and enforceable and intends to defend its position vigorously. The Group cannot predict with anycertainty the outcome of the test case and is unable reliably to estimate the liability, if any, that may arise orits effect on the Group’s consolidated net assets, operating results or cash flows in any particular period. Seethe seventh paragraph of ‘‘Risk Factors — Risks Related to the Business of the Group — Governmental policyand regulation may have an adverse effect on the results of the Group’’ for further details.

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Members of the Group are engaged in other litigation in the United Kingdom and a number of overseasjurisdictions, including the United States, involving claims by and against them arising in the ordinary courseof business. The Group has reviewed these other actual, threatened and known potential claims andproceedings and, after consulting with its legal advisers, is satisfied that the outcome of these other claimsand proceedings will not have a material adverse effect on its consolidated net assets, operating results orcash flows in any particular period.

Save as described in the first and second paragraphs above, neither the Group nor any of its subsidiarieshave been involved in any governmental, legal or arbitration proceedings (including any such proceedingswhich are pending or threatened of which the Group is aware) during the 12 months prior to the date hereof,which may have or have had in the recent past a significant effect on the financial position or profitability ofthe Group or its subsidiaries.

Available documents

A9.14For so long as any Capital Securities remains outstanding, copies of the following documents will, whenavailable, be available during business hours on a weekday (Saturdays, Sundays and public holidays excepted)for inspection at the principal office of the Group at RBS Gogarburn, PO Box 1000, Edinburgh EH12 1HQ,free of charge:

) the Trust Deed, the Paying Agency Agreement and any Calculation Agency Agreement;

) the memorandum and articles of association of the Group;

) the documents incorporated by reference herein, as described under ‘‘Documents Incorporated byReference’’ above;

) the audited consolidated annual financial statements of the Group for the financial years endedDecember 31, 2006 and December 31, 2005 together in each case with the audit report thereon;

A9.11.3.3) the unaudited consolidated interim financial statements of the Group for the six months endedJune 30, 2007 together with the review report thereon.

Filings with the SEC

The Issuer is required to file reports and other information with the SEC under the Securities ExchangeAct of 1934, as amended. You can read and copy these reports and other information at the SEC’s PublicReference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, U.S.A. You may call the SECat 1-800-SEC-0330 for further information on the Public Reference Room. The SEC also maintains a websiteat http://www.sec.gov which contains in electronic form each of the reports and other information that theIssuer has filed electronically with the SEC. You can also read this material at the offices of The New YorkStock Exchange, 20 Broad Street, New York, New York 10005, U.S.A., on which certain of the securities ofthe Issuer are listed. The Issuer will agree in the Purchase Agreement (as defined herein) that for so long asany of the Capital Securities are ‘‘restricted securities’’ within the meaning of Rule 144(a)(3) under theSecurities Act, and, with respect to all Capital Securities, if at any time during the 40 days restricted periodfollowing the later of the commencement of the offering of the Capital Securities and the related closing (the‘‘Restricted Period’’), the Issuer is not subject to and in compliance with the reporting requirements ofSection 13 or 15(d) of the Exchange Act nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder,the Issuer will make available, at the Issuer’s expense, to any beneficial owner or any holder of CapitalSecurities, and to any prospective purchaser of Capital Securities, upon request of any such beneficial owneror holder of Capital Securities or prospective purchaser, the information specified in, and meeting therequirements of, Rule 144A(d)(4)(i) under the Securities Act and otherwise comply with Rule 144A(d)(4)under the Securities Act.

You may request a copy of any document that the Issuer has filed with the SEC at no cost, by writing ortelephoning the Issuer at Citizens Financial Group, Inc., 28 State Street, Boston, Massachusetts 02109 U.S.A.;Attention: Donald J. Barry, Jr., telephone (617) 725-5810.

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A9.4.1.4THE COMPANY

Registered Office Principal Office

The Royal Bank of Scotland Group plc The Royal Bank of Scotland Group plc36 St. Andrew Square RBS Gogarburn PO Box 1000Edinburgh EH2 2YB Edinburgh EH12 1HQ

United Kingdom United KingdomTel: +44 (0) 131 523 2307 Tel: +44 (0) 131 626 0000

A13.5.2PRINCIPAL PAYING AND SETTLEMENT AGENT

The Bank of New York1 Canada SquareLondon E14 5ALUnited Kingdom

INITIAL PURCHASERS

Merrill Lynch, Pierce, Greenwich Capital Markets, IncFenner & Smith Incorporated 600 Steamboat Road

4 World Financial Center Greenwich, CT 06830New York, NY 10080 USA

USA

LEGAL ADVISERS TO THE COMPANY

As to English law As to United States law As to Scottish law

Linklaters LLP Shearman & Sterling LLP Dundas & Wilson C.S. LLPOne Silk Street 9 Appold Street Saltire Court

London EC2Y 8HQ London EC2A 2AP 20 Castle TerraceUnited Kingdom United Kingdom Edinburgh EH1 2EN

United Kingdom

LEGAL ADVISERS TO THE INITIAL PURCHASERS

A13.7.1As to English law As to United States law

Freshfields Bruckhaus Deringer Sidley Austin LLP65 Fleet Street Woolgate Exchange

London EC4Y 1HS 25 Basinghall StreetUnited Kingdom London EC2V 5HA

United Kingdom

A9.2.1

A13.7.1

AUDITORS

Deloitte & Touche LLPSaltire Court

20 Castle TerraceEdinburgh EH1 2DB

United Kingdom

$1,600,000,000

The Royal Bank of Scotland Group plc

Fixed Rate/Floating RatePreferred Capital Securities

OFFERING MEMORANDUM

September 26, 2007

Joint Lead Managers and Book Runners

MERRILL LYNCH & CO. RBS GREENWICH CAPITAL

Senior Co-Managers

Banc of America Securities LLC Wachovia Securities

Junior Co-Managers

Goldman, Sachs & Co. Lehman Brothers