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Lloyds Banking Group PLC Capital/Financing Update 2017
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Capital/Financing Update
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Series No.: KANG0006
Tranche No.: 1
Lloyds Banking Group plc
(incorporated in Scotland with limited liability with registered number SC095000)
A$15,000,000,000
Medium Term Note Programme
Issue of
A$400,000,000 3.65 per cent. Fixed Rate Notes due 20 March 2023
("Notes")
The date of this Pricing Supplement is 18 September 2017.
This Pricing Supplement (as referred to in the Information Memorandum dated 19 December 2014 ("Information Memorandum") in relation to the above Programme) relates to the Tranche of Notes referred to above. It is supplementary to, and should be read in conjunction with, the terms and conditions of the Notes contained in the Information Memorandum, such terms and conditions as supplemented and varied as set out in Annexure A to this Pricing Supplement ("Conditions"), the Information Memorandum and the Note Deed Poll dated 19 December 2014 made by the Issuer. Certain important additional information is also set out in Annexure B and Annexure C to this Pricing Supplement. If there is any inconsistency between the Information Memorandum and this Pricing Supplement, this Pricing Supplement prevails.
Unless otherwise indicated, terms defined in the Conditions have the same meaning in this Pricing Supplement.
This Pricing Supplement does not constitute, and may not be used for the purposes of, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation, and no action is being taken to permit an offering of the Notes or the distribution of this Pricing Supplement in any jurisdiction where such action is required.
The Issuer is not a bank or authorised deposit-taking institution which is authorised under the Banking Act 1959 of Australia ("Australian Banking Act"). The Notes are not obligations of the Australian Government or any other government and, in particular, are not guaranteed by the Commonwealth of Australia. The Issuer is not supervised by the Australian Prudential Regulation Authority. An investment in any Notes issued by the Issuer will not be covered by the depositor protection provisions in section 13A of the Australian Banking Act and will not be covered by the Australian Government's bank deposit guarantee (also commonly referred to as the Financial Claims Scheme).
33924976_13
The particulars to be specified in relation to the Tranche of Notes referred to above are as follows:
- Issuer : Lloyds Banking Group plc
- (i) Series Number : KANG0006
(ii) Tranche Number : 1 - Type of Notes : Fixed Rate Notes
- Method of Distribution : Syndicated Issue
- Joint Lead Managers : Australia and New Zealand Banking Group Limited (ABN 11 005 357 522)
National Australia Bank Limited (ABN 12 004 044 937)
Nomura International plc
The Toronto-Dominion Bank
Westpac Banking Corporation (ABN 33 007 457 141) - Dealers : Australia and New Zealand Banking Group Limited (ABN 11 005 357 522)
National Australia Bank Limited (ABN 12 004 044 937)
Nomura International plc
The Toronto-Dominion Bank
Westpac Banking Corporation (ABN 33 007 457 141) - Registrar : Citigroup Pty Limited (ABN 88 004 325 080)
- Issuing and Paying Agent : Citigroup Pty Limited (ABN 88 004 325 080)
- Calculation Agent : Citigroup Pty Limited (ABN 88 004 325 080)
- Series Particulars (Fungibility with other Tranches) : Not Applicable
- Principal Amount of Tranche : A$400,000,000
- Principal Amount of Series : A$400,000,000
- Issue Date : 20 September 2017
- Issue Price : 99.827 per cent. of the Principal Amount of Tranche
- Currency : Australian dollars ("A$")
3
16 Denomination
: A$10,000 provided that the aggregate consideration payable for the issue and transfer of Notes in Australia will be at least A$500,000 (or its equivalent in an alternative currency and, in either case, disregarding moneys lent by the offeror or its associates) or the offer or invitation does not otherwise require disclosure to investors under Parts 6D.2 or 7.9 of the Corporations Act. In addition, the issue and transfer of Notes in Australia will comply with Banking (Exemption) Order No. 82 dated 23 September 1996 promulgated by the Assistant Treasurer of Australia as if it applied to the Issuer mutatis mutandis (and which requires all offers of any parcels of Notes to be for an aggregate principal amount of at least A$500,000).
17 Status of Notes
: Senior
As set out more fully in the new Condition 4.5 ("Agreement with respect to the exercise of U.K. bail-in power") which is set out in Annexure A to this Pricing Supplement, by subscribing or otherwise acquiring the Notes, the Noteholders shall be bound by the exercise of any U.K. bail-in power by the relevant U.K. resolution authority. See also the information in relation to the EU Bank Resolution and Recovery Directive which is set out in Annexure B to this Pricing Supplement.
18 Waiver of Set-off
: Applicable. See the new Condition 4.1A ("No set-off, compensation or retention") which is set out in Annexure A to this Pricing Supplement.
19 Restricted Events of Default
: Applicable. See the amended Condition 14.2 ("Consequences of an Event of Default") which is set out in Annexure A to this Pricing Supplement.
20 Maturity Date
: 20 March 2023
21 Record Date
: As per the Conditions
22 Condition 6 (Fixed Rate Notes) applies
: Yes
Fixed Coupon Amount
: A$182.50 payable semi-annually per A$10,000 in principal amount
Interest Rate
: 3.65 per cent. per annum
Interest Commencement Date
: Issue Date
Interest Payment Dates
: 20 March and 20 September in each year, commencing on 20 March 2018 up to, and including, the Maturity Date
4
Business Day Convention : Following (Unadjusted) Business Day Convention
Relevant Financial Centres : Sydney and London
Day Count Fraction : RBA Bond Basis
Other terms relating to the method of calculating interest for Fixed Rate Notes: : Not Applicable
23 Condition 7 (Floating Rate Notes) applies : No
24 Details of Zero Coupon Notes : Not Applicable
25 Capital Disqualification Event Call : Not Applicable
26 Loss Absorption Disqualification Event Call : Applicable. See the new Condition 9.11 ("Redemption Due to Loss Absorption Disqualification Event") which is set out in Annexure A to this Pricing Supplement.
Loss Absorption Disqualification Event - Partial Exclusion : Applicable
27 Condition 9.4 (Noteholder put) applies : No
28 Condition 9.5 (Issuer call) applies : No
29 Minimum / maximum notice period for early redemption for taxation purposes : As per Condition 9.2
30 Early Redemption Amount payable on early redemption for taxation purposes or as an Event of Default : The outstanding principal amount as at the date of redemption
31 Final Redemption Amount : The outstanding principal amount as at the date of redemption
32 Capital Disqualification Event Substitution and Variation : Not Applicable
33 Additional Conditions : See Annexure A to this Pricing Supplement.
34 Clearing System : Austraclear System.
Interests in the Notes may also be traded through Euroclear and Clearstream, Luxembourg as set out on pages 61 and 62 of the Information Memorandum.
35 ISIN : AU3CB0247237
36 Common Code : 168635516
37 Selling Restrictions : As set out in the section entitled "Selling Restrictions" in the Information Memorandum
38 Listing
: It is intended that the Notes will be listed on the Australian Securities Exchange operated by ASX Limited (ABN 98 008 624 691).
39 Credit ratings
: The Notes are expected to be assigned the following credit ratings:
BBB+ by S&P Global Ratings
Baa1 by Moody's Investors Service Limited
A+ by Fitch Ratings Ltd.
A credit rating is not a recommendation to buy, sell or hold Notes and may be subject to revision, suspension or withdrawal at any time by the assigning rating agency.
Credit ratings are for distribution only to a person (a) who is not a "retail client" within the meaning of section 761G of the Corporations Act and is also a sophisticated investor, professional investor or other investor in respect of whom disclosure is not required under Parts 6D.2 or 7.9 of the Corporations Act, and (b) who is otherwise permitted to receive credit ratings in accordance with applicable law in any jurisdiction in which the person may be located. Anyone who is not such a person is not entitled to receive this Pricing Supplement and anyone who receives this Pricing Supplement must not distribute it to any person who is not entitled to receive it.
40 Additional Information
: The section entitled "Taxation – United Kingdom Taxation" of the Information Memorandum is amended as set out in Annexure C to this Pricing Supplement
The Issuer accepts responsibility for the information contained in this Pricing Supplement.
CONFIRMED
For and on behalf of
Lloyds Banking Group plc
By: 
Date: 18 September 2017
6
ANNEXURE A
The Conditions of the Notes are supplemented and varied by the following:
- A new Condition 4.1A (“No set-off, compensation or retention”) is added as follows:
4.1A No set-off, compensation or retention
Subject to applicable law, no Noteholder may exercise or claim any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer arising under or in connection with the Notes, and each Noteholder shall, by virtue of being the holder of any Notes, be deemed to have waived all such rights of set-off, compensation and retention, both before and during any winding-up, liquidation or administration of the Issuer. Notwithstanding the provisions of the foregoing sentence, if any of the said rights and claims of any Noteholder against the Issuer is discharged by set-off, compensation or retention, such Noteholder will immediately pay an amount equal to the amount of such discharge to the Issuer, or, in the event of winding-up or administration of the Issuer, the liquidator or, as applicable, the administrator of the Issuer and accordingly such discharge will be deemed not to have taken place.
- Condition 4.5 (“Agreement with respect to the exercise of U.K. bail-in power”) and the definition of “U.K. bail-in power” as set out in Condition 1.1 (“Definitions”) are deleted and replaced with the following:
4.5 Agreement with respect to the exercise of U.K. bail-in power
(a) Notwithstanding any other agreements, arrangements, or understandings between the Issuer and each Noteholder, by purchasing the Notes, each Noteholder of the Notes acknowledges, accepts, agrees to be bound by and consents to the exercise of any U.K. bail-in power by the relevant U.K. resolution authority that may result in:
(i) the reduction or cancellation of all, or a portion, of the principal amount of, or interest on, the Notes;
(ii) the conversion of all, or a portion, of the principal amount of, or interest on, the Notes into shares or other securities or other obligations of the Issuer or another person; and/or
(iii) the amendment or alteration of the maturity of the Notes, or amendment of the amount of interest due on the Notes, or the dates on which interest becomes payable, including by suspending payment for a temporary period; which U.K. bail-in power may be exercised by means of variation of the terms of the Notes solely to the exercise by the relevant U.K. resolution authority of such U.K. bail-in power.
(b) Each Noteholder of the Notes further acknowledges and agrees that the rights of the Noteholders under the Notes are subject to, and will be varied, if necessary, solely to give effect to, the exercise of any U.K. bail-in power by the relevant U.K. resolution authority.
(c) No repayment of the principal amount of the Notes or payment of interest on the Notes shall become due and payable after the exercise of any U.K. bail-in power by the relevant U.K. resolution authority unless, at the time that such repayment or payment, respectively, is scheduled to become due, such repayment or payment would be permitted to be made by the Issuer under the laws and regulations of the United Kingdom and the European Union applicable to the Issuer or other members of the Group.
(d) The exercise of any U.K. bail-in power by the relevant U.K. resolution authority shall not constitute an Event of Default under the Notes.
(e) By purchasing the Notes, each Noteholder shall be deemed to have:
(i) consented to the exercise of any U.K. bail-in power as it may be imposed without any prior notice by the relevant U.K. resolution authority of its decision to exercise such power with respect to the Notes; and
(ii) authorised, directed and requested the Registrar and relevant Clearing System and any direct participant in the relevant Clearing System or other intermediary through which it holds such Notes to take any and all necessary action, if required, to implement the exercise of any U.K. bail-in power with respect to the Notes as it may be imposed, without any further action or direction on the part of such holder or beneficial owner.
(f) Upon the exercise of the U.K. bail-in power by the relevant U.K. resolution authority with respect to the Notes, the Issuer shall provide a written notice to the Registrar and relevant Clearing System as soon as practicable regarding such exercise of the U.K. bail-in power for purposes of notifying Noteholders of such occurrence.
For the purposes of this Condition 4.5, a reference to "Noteholders" includes any person holding an interest in the Notes.
"U.K. bail-in power means any write-down, conversion, transfer, modification or suspension power existing from time to time under any laws or directives relating to the resolution of banks, banking group companies, credit institutions and/or investment firms incorporated in the United Kingdom in effect and applicable in the United Kingdom to the Issuer or other members of the Group, including but not limited to any such laws or directives which are implemented, adopted or enacted within the context of a European Union directive or regulation of the European Parliament and of the Council establishing a framework for the recovery and resolution of credit institutions and investment firms and/or within the context of a U.K. resolution regime under the Banking Act 2009 of the United Kingdom, as the same has been or may be amended from time to time (whether pursuant to the U.K. Financial Services (Banking Reform) Act 2013, secondary legislation or otherwise), pursuant to which any obligations of a bank, banking group company, credit institution or investment firm or any of its affiliates can be reduced, cancelled, modified, transferred and/or converted into shares or other securities or obligations of the obligor or any other person (or suspended for a temporary period) or pursuant to which any right in a contract governing such obligations may be deemed to have been exercised. A reference to the "relevant U.K. resolution authority" is to any authority with the ability to exercise a U.K. bail-in power."
3 A new Condition 9.11 ("Redemption Due to Loss Absorption Disqualification Event") is added as follows:
9.11 Redemption Due to Loss Absorption Disqualification Event
The Issuer may at its option, having given not less than 30 days nor more than 60 days' notice to the Noteholders in accordance with Condition 19 ("Notices"), redeem all but not some only of the Notes outstanding at any time at the Early Redemption Amount, together (if applicable) with any accrued but unpaid interest up to (but excluding) the date fixed for redemption, if immediately prior to the giving of the notice referred to above, a Loss Absorption Disqualification Event has occurred.
Any redemption under this Condition 9.11 is subject to, if and to the extent then required by the Relevant Regulator or the Loss Absorption Regulations, the Issuer giving notice to the Relevant Regulator and the Relevant Regulator granting permission to the Issuer to redeem the relevant Notes.
Prior to the publication of any notice of redemption pursuant to this Condition 9.11, the Issuer shall deliver to the Registrar a certificate signed by two Directors of the Issuer certifying that the relevant requirements or circumstance giving rise to the right to redeem is satisfied, including that a Loss Absorption Disqualification Event exists. The Registrar may accept such certificate without any further inquiry as sufficient evidence of the existence of the circumstances required to be established in which event it shall be conclusive and binding on the Issuer and the Noteholders and the Registrar will not be responsible for any loss that maybe occasioned by the Registrar's acting or relying on such certificate.
In this Condition 9.11:
(i) A “Loss Absorption Disqualification Event” shall be deemed to have occurred if, as a result of any amendment to, or change in, the Loss Absorption Regulations, or any change in the application or official interpretation of the Loss Absorption Regulations, in any such case becoming effective on or after the Issue Date of the first Tranche of the Notes, such Notes are or (in the opinion of the Issuer, the Relevant Regulator and/or the United Kingdom resolution authority) are likely to be partially excluded from the Issuer’s and/or the Group’s minimum requirements for:
(A) own funds and eligible liabilities; and/or
(B) loss absorbing capacity instruments,
in each case as such minimum requirements are applicable to the Issuer and/or the Group and determined in accordance with, and pursuant to, the relevant Loss Absorption Regulations; provided that a Loss Absorption Disqualification Event shall not occur where the exclusion of Notes from the relevant minimum requirement(s) is due to the remaining maturity of the Notes being less than any period prescribed by any applicable eligibility criteria for such minimum requirements under the relevant Loss Absorption Regulations effective with respect to the Issuer and/or the Group on the Issue Date of the first Tranche of the Notes; and
(ii) “Loss Absorption Regulations” means, at any time, the laws, regulations, requirements, guidelines, rules, standards and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments of the United Kingdom, the Relevant Regulator, the United Kingdom resolution authority, the Financial Stability Board and/or of the European Parliament or of the Council of the European Union then in effect in the United Kingdom including, without limitation, to the generality of the foregoing, any delegated or implementing acts (such as regulatory technical standards) adopted by the European Commission and any regulations, requirements, guidelines, rules, standards and policies relating to minimum requirements for own funds and eligible liabilities and/or loss absorbing capacity instruments adopted by the Relevant Regulator and/or the United Kingdom resolution authority from time to time (whether or not such regulations, requirements, guidelines, rules, standards or policies are applied generally or specifically to the Issuer or to the Group).
Condition 14.2 (“Consequences of an Event of Default”) is deleted and replaced with the following:
“14.2 Consequences of an Event of Default
(a) If an Event of Default occurs and is continuing, any Noteholder may:
(i) in respect of an Event of Default specified in Condition 14.1(a) (“Events of Default”), institute proceedings for the winding-up of the
Issuer, or prove in respect of, amounts required to be paid pursuant to these Conditions, but may (without prejudice to Condition 4.2 ("Status of Senior Notes") or Condition 14.2(a)(ii)) take no other action in respect of such default; and
(ii) in respect of an Event of Default specified in Condition 14.1(b) ("Events of Default"), at any time at its discretion and without notice give notice to the Issuer that the Notes are, and they shall accordingly immediately become, due and repayable at their Early Redemption Amount, together with any accrued interest.
(b) Should any Noteholder institute proceedings for the winding-up of the Issuer to enforce its obligations under the Notes or prove in any such winding-up commenced by any other person, proof therein that as regards any specified Notes the Issuer has made default in paying any principal or interest due in respect of such Note shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Notes which are then repayable."
5 Condition 20.1 ("Governing law") is deleted and replaced with the following:
20.1 Governing law
The Notes are governed by, and construed in accordance with, the law in force in New South Wales, Australia, save that the provisions of Condition 4 ("Status and ranking") (including Condition 4.1A ("No set-off, compensation or retention")) relating to subordination and set-off of Notes are governed by, and shall be construed in accordance with, the laws of Scotland."
6 Condition 20.2 ("Jurisdiction") is deleted and replaced with the following:
20.2 Jurisdiction
The Issuer irrevocably and unconditionally submits, and each Noteholder is taken to have submitted, to the non-exclusive jurisdiction of the courts of New South Wales and courts of appeal from them (other than Condition 4 ("Status and ranking") (including Condition 4.1A ("No set-off, compensation or retention")) relating to subordination and set-off of Notes, in respect of which the Court of Session in Scotland shall have jurisdiction). The Issuer waives any right it has to object to a suit, action or proceedings ("Proceedings") being brought in those courts including by claiming that the Proceedings have been brought in an inconvenient forum or that those courts do not have jurisdiction."
9
10
ANNEXURE B
The section entitled "EU Bank Resolution and Recovery" of the Information Memorandum is deleted and replaced with the following:
EU Bank Resolution and Recovery Directive
The stated aim of the BRRD is to provide authorities designated by Member States to apply the resolution tools and exercise the resolution powers set forth in the BRRD (the "resolution authorities") with common tools and powers to address banking crises pre-emptively in order to safeguard financial stability and minimise taxpayers' exposure to losses. The powers granted to resolution authorities under the BRRD include (but are not limited to) a "write-down and conversion power" relating to Tier 1 and Tier 2 capital instruments and a "bail-in" power relating to eligible liabilities (including the Notes). Such powers give resolution authorities the ability to write down or write off all or a portion of the claims of certain unsecured creditors of a failing institution or group and/or to convert certain debt claims into another security, including ordinary shares of the surviving Group entity, if any, which ordinary shares may also be subject to write-down or write-off. Such powers were implemented with effect from January 1, 2015.
The conditions for use of the bail-in power are, in summary, that (i) the regulator determines that the bank is failing or likely to fail, (ii) having regard to timing and other relevant circumstances, it is not reasonably likely that (ignoring the stabilisation powers) action will be taken by or in respect of the bank to avoid the failure of the bank, (iii) the relevant U.K. resolution authority determines that it is necessary having regard to the public interest to exercise the bail-in power in the advancement of one of the statutory objectives of resolution and (iv) that one or more of those objectives would not be met to the same extent by the winding up of the bank. The BRRD, as implemented, contains certain other limited safeguards for creditors in specific circumstances which (a) in the case of the write-down and conversion power, may provide compensation to holders of the relevant capital instruments via the issue or transfer of ordinary shares of the bank or its parent undertaking in certain circumstances and (b) in the case of senior creditors (such as holders of the Notes), aim to ensure that they do not incur greater losses than they would have incurred had the relevant financial institution been wound up under normal insolvency proceedings.
According to the principles contained in the BRRD and the amendments to the U.K. Banking Act 2009 ("U.K. Banking Act") by way of the U.K. Banking Reform Act 2013, the Group expects that the relevant U.K. resolution authority would exercise its U.K. bail-in powers in respect of the Notes having regard to the hierarchy of creditor claims (with the exception of excluded liabilities) and that the holders of the Notes would be treated equally in respect of the exercise of the U.K. bail-in powers with all other claims that would rank pari passu with the Senior Notes upon an insolvency of the Issuer.
The Issuer is subject to the "Special Resolution Regime" under the U.K. Banking Act, that gives wide powers in respect of U.K. banks and their parent and other group companies to HM Treasury, the Bank of England, the Prudential Regulation Authority, and the Financial Conduct Authority in circumstances where a U.K. bank has encountered or is likely to encounter financial difficulties.
The Special Resolution Regime under the U.K. Banking Act also includes powers to (a) transfer all or some of the securities issued by a U.K. bank or its parent, or all or some of the property, rights and liabilities of a U.K. bank or its parent (which would include the Notes), to a commercial purchaser or, in the case of securities, into temporary public ownership, or, in the case of property, rights or liabilities, to a bridge bank (an entity owned by the Bank of England); (b) together with another resolution tool only, transfer impaired or problem assets to one or more publicly owned asset management vehicles to allow them to be managed with a view to maximising their value through eventual sale or orderly wind-down; (c) override any default provisions, contracts or other agreements, including provisions that would otherwise allow a party to terminate a contract or accelerate the payment of an obligation; (d) commence certain insolvency procedures in relation to a U.K. bank; and (e) override, vary or impose contractual obligations, for reasonable consideration, between a U.K. bank or its parent and its group undertakings (including undertakings which have ceased to be members of the group), in order to enable any transferee or successor bank of the U.K. bank to operate effectively.
The U.K. Banking Act also gives power to the U.K. government to make further amendments to the law for the purpose of enabling it to use the Special Resolution Regime powers effectively, potentially with retrospective effect.
The powers set out in the U.K. Banking Act could affect how credit institutions (and their parent companies) and investment firms are managed as well as, in certain circumstances, the rights of creditors. Accordingly, the taking of any actions contemplated by the U.K. Banking Act may affect a holder's rights under the Notes, and the value of the Notes may be affected by the exercise of any such powers or threat thereof.
In addition to the BRRD described above, it is possible that the exercise of other powers under the U.K. Banking Act, to resolve failing banks in the United Kingdom and give the authorities powers to override events of default or termination rights that might be invoked as a result of the exercise of the resolution powers, could have a material adverse effect on the rights of holders of the Notes, including through a material adverse effect on the price of the Notes. The U.K. Banking Act also gives the Bank of England the power to override, vary or impose contractual obligations between a U.K. bank, its holding company and its group undertakings for reasonable consideration, in order to enable any transferee or successor bank to operate effectively. There is also power for the U.K. Treasury to amend the law (excluding provisions made by or under the U.K. Banking Act) for the purpose of enabling it to use the regime powers effectively, potentially with retrospective effect. In addition, the U.K. Banking Act may be further amended and/or other legislation may be introduced in the United Kingdom to amend the resolution regime that would apply in the event of a bank failure or to provide regulators with other resolution powers.
Finally, the determination that all or part of the principal amount of any series of Notes will be subject to bail-in is likely to be inherently unpredictable and may depend on a number of factors which may be outside of the Issuer's control. This determination will also be made by the relevant U.K. resolution authority and there may be many factors, including factors not directly related to the Issuer or the Group, which could result in such a determination. Because of this inherent uncertainty, it will be difficult to predict when, if at all, the exercise of a U.K. bail-in power may occur which would result in a principal write-off or conversion to other securities, including equity. Moreover, as the criteria that the relevant U.K. resolution authority will be obliged to consider in exercising any U.K. bail-in power provide it with considerable discretion, holders of the Notes may not be able to refer to publicly available criteria in order to anticipate a potential exercise of any such power and consequently its potential effect on the Issuer, the Group and the Notes. Potential investors in the Notes should consider the risk that a holder may lose all of its investment, including the principal amount plus any accrued interest, if such statutory loss absorption measures are acted upon.
Holders of Notes may have limited rights or no rights to challenge any decision of the relevant U.K. resolution authority to exercise the U.K. bail-in power or to have that decision reviewed by a judicial or administrative process or otherwise.
Accordingly, trading behaviour in respect of the Notes is not necessarily expected to follow the trading behaviour associated with other types of securities that are not subject to such recovery and resolution powers. Potential investors in the Notes should consider the risk that a holder of the Notes may lose all of its investment, including the principal amount plus any accrued and unpaid interest, if such statutory loss absorption measures are acted upon or that the Notes may be converted into ordinary shares. Further, the introduction or amendment of such recovery and resolution powers, and/or any implication or anticipation that they may be used, may have a significant adverse effect on the market price of the Notes, even if such powers are not used.
11
12
ANNEXURE C
The section entitled "Taxation – United Kingdom Taxation" of the Information Memorandum is deleted and replaced with the following:
United Kingdom Taxation
The following is a summary of the United Kingdom taxation treatment, at the date of this Pricing Supplement, of the Notes to be issued by an Issuer under the Programme and certain other matters. It is a general guide and should be treated with appropriate caution. Prospective holders of Notes should consult their professional advisers on the tax implications of an investment in the Notes for their particular circumstances.
1. Interest withholding tax
Payments of interest on the Notes will be subject to deduction of United Kingdom income tax at the basic rate (currently, 20%), subject to the availability of any exemption or relief under the provisions of any applicable double tax treaty or otherwise (for which see below).
On the basis that the Notes become and remain listed on a "recognised stock exchange" within the meaning of section 1005 of the UK Income Tax Act 2007 ("ITA"), interest on the Notes will, based on current law, be payable without withholding or deduction for or on account of United Kingdom income tax. It is currently intended that the Notes will be listed on the Australian Securities Exchange operated by ASX Limited (ABN 98 008 624 691), which is a recognised stock exchange for these purposes.
In addition, pursuant to the Taxation of Regulatory Capital Securities Regulations 2013 (the "Regulations") payments of interest on the Notes may be made without deduction of or withholding on account of United Kingdom income tax under section 874 of ITA provided that such Notes qualify, or have qualified, as Tier 2 instruments under Article 63 of the Commission Regulation (EU) No 575/2013 (as amended from time to time) ("CRR") and such Notes form, or formed, a component of Tier 2 capital for the purposes of the CRR and provided further that there are not arrangements the main purpose, or one of the main purposes, of which is to obtain a tax advantage for any person as a result of the application of the Regulations. However, it is not currently anticipated that the Notes will qualify as Tier 2 instruments under Article 63 of the CRR.
The Notes may be issued at a price that is less than their nominal amount. Any discount element of the redemption amount should not be subject to withholding or deduction for or on account of UK income tax provided that it is not re-characterised as a payment of interest.
The Notes may be issued with a premium payable on redemption. The payment of such a redemption premium may be treated as a payment of interest for UK tax purposes and may be subject to the withholding tax treatment as discussed above.
The references to "interest" in this paragraph 1 above are to "interest" as understood for the purposes of United Kingdom tax law. They do not take into account any different definition of "interest" or "principal" that may prevail under any other tax law or that may apply under the terms and conditions of the Notes or any related document.
2. Stamp duty and stamp duty reserve tax ("SDRT")
No U.K. stamp duty should be payable on the issue of the Notes, including into a clearance service or depository receipt arrangement.
U.K. SDRT may arise on the issue, and U.K. SDRT or U.K. stamp duty may arise on the transfer, of the Notes into a clearance service or depository receipt arrangement, in each case at a rate of 1.5 per cent. However, following litigation, Her Majesty's Revenue and Customs have confirmed that it will not collect such SDRT on the issue, or (where integral to the raising of capital) the transfer, of the Notes into a clearance service or depository receipt
arrangement on the basis that the charge is not compatible with European law, provided that the Notes comprise loans raised by the issue of debentures or other negotiable securities for the purposes of Article 5(2)(b) of the Capital Duty Directive (2008/7/EC).
No U.K. stamp duty should be required to be paid on the transfer of the Notes within a clearance service or depository receipt arrangement provided that no instrument is used to effect the transfer. No U.K. SDRT should be payable on the transfer of the Notes within a clearance service or depository receipt arrangement provided that no election has been made under which the alternative system of charge (as provided for in section 97A Finance Act 1986) applies to the Senior Notes.
No U.K. stamp duty or SDRT should be payable on the redemption of the Notes.
3. Information Reporting
H.M. Revenue & Customs has powers to obtain information relating to securities in certain circumstances. This may include details of the beneficial owners of the Notes (or the persons for whom the Notes are held), details of the persons to whom payments derived from the Notes are or may be paid and information and documents in connection with transactions relating to the Notes and payments of interest, payments treated as interest and other payments derived from the Notes. Information may be required to be provided by, amongst others, the holders of the Notes, persons by (or via) whom payments derived from the Notes are made or who receive (or would be entitled to receive) such payments, persons who effect or are a party to transactions relating to the Notes on behalf of others and certain registrars or administrators. In certain circumstances, the information obtained by H.M. Revenue & Customs may be exchanged with tax authorities in other countries.
4. European Union Directives on the taxation of savings income and administrative cooperation
Council Directive 2003/48/EC on the taxation of savings income in the form of interest payments (the "EUSD") required EU member states to provide to the tax authorities of another member state details of payments of interest (or similar income) by a person within the jurisdiction of the first member state paid (or deemed to be paid) to an individual (or certain other types of person) resident in that other member state.
Council Directive 2011/16/EU on administrative co-operation in the field of taxation (as amended by Council Directive 2014/107/EU) (the "DAC") requires EU member states to apply new measures on mandatory automatic exchange of information as from 1 January 2016 (1 January 2017 in the case of Austria). The DAC is generally broader than the EUSD.
In order to avoid overlap between the EUSD and the DAC, the EUSD was repealed from 1 January 2016 (1 January 2017 in the case of Austria).
A number of non-EU countries and territories, together with certain dependent or associated territories of member states, adopted measures similar to the EUSD. Some of these measures have been revised to be aligned with the DAC, and other such measures may be similarly revised in the future.
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