ANNOUNCEMENT DATE 1ST SETTLEMENT DATE/media/Files/R/RBS...This document contains particulars in accordance with the fisting rules made by the Council of the London Stock Exchange (the

U.K. PREFERENCE SHARES CUSIP# ( ) TICKER

SEDOL (REG) CUM/NON-CUM

CALC TYPE PFD TICKER PFD/PFNC

DAY COUNT SERIES PUBLIC/PRIVATE

LONG NAME

SHORT NAME

DIVIDEND MATURITY ISSUE SIZE (IF ANY)

ISSUE PRICE DIV FREQ: S/A A MIN PIECE/INCR/PAR

FIRST CPN DATE INTEREST ACCRUAL DATE

ANNOUNCEMENT DATE 1ST SETTLEMENT DATE LEAD MGR CALL Y / N SINKING FUND Y / N PUT Y / N REDEMPTION INFO:

NOTES:

ENTERED BY: DATE:

CHECKED BY: DATE:

11 September 1991

THIS DOCUMENT GIVES DETAILS OF AN ISSUE BY NATIONAL WESTMINSTER BANK PLC AND SHOULD BE RETAINED FOR REFERENCE PURPOSES

At an issue price of 100.11 p per share

This document contains particulars in accordance with the fisting rules made by the Council of the London Stock Exchange (the "London Stock Exchange") for the purpose of giving information with regard to an issue of up to 140,000,000 9 per cent. Non-Cumulative Sterling Preference Shares, Series A, of £1 each (the "Sterling Preference Shares") by National Westminster Bank PLC (the "Bank").

The Directors of the Bank, whose names appear below, accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

Application has been made to the Council of the London Stock Exchange for the Sterling Preference Shares to be admitted to the Official List.

Copies of this document, which comprises the listing particulars required by Section 142 of the Financial Services Act 1986, have been delivered to the Registrar of Companies in London for registration as required by Section 149 of that Act.

In this document, all references to "£" and "Sterling" are to the lawful currency of, and all references to "U.K." are to, the United Kingdom, and all references to "U.S.J" and "Dollars" are to the lawful currency of, and all references to the "United States" and "U.S." are to, the United States of America.

NatWest Capital Markets Limited Salomon Brothers International Limited

Hoare Govett Corporate Finance Limited

DESCRIPTION OF THE STERLING PREFERENCE SHARES

At the Annual General Meeting held on 24 April 1990, the Bank's shareholders gave the Board of Directors of the Bank (the "Directors") authority to allot during the period ending on 24 April 1995 inter alia up to £500,000,000 aggregate nominal value of preference shares denominated in Sterling. The terms of, and the rights attaching to, the Sterling Preference Shares are contained in the Bank's Articles of Association (the "Articles") and in resolutions of a duly constituted Committee of the Board of Directors of the Bank to be passed on 17 September 1991 (together, the "Terms of Issue").

The Directors are proposing to issue Non-Cumulative Dollar Preference Shares, Series A, of U.S.$25.00 each (the "Dollar Preference Shares") through an American Depositary Receipt facility in the United States. Such issue is intended to take place not later than 31 December 1991. If and when issued, the Dollar Preference Shares will rank pa r i passu as regards participation in profits and as regards participation in assets with the Sterling Preference Shares. The rights attaching to the Dollar Preference Shares are described on pages 8 to 14 below. On the assumption that the issue of the Dollar Preference Shares will proceed, the description of the Sterling Preference Shares set out below reflects the rights and restrictions which will attach to the Sterling Preference Shares following the issue of the Dollar Preference Shares.

Denomination and Form The Sterling Preference Shares will have a nominal value of £1 each and will be issued fully paid for cash. The Sterling Preference Shares will rank in all respects after the 7 per cent. Cumulative Preference Shares of £ 1 each in the Bank (the "Original Preference Shares") and pa r i passu inter se, with the Dollar Preference Shares and with all other shares to the extent that they are expressed to rank p a r i passu therewith and in priority to the Ordinary Shares of £1 each (the "Ordinary Shares") and any other class of shares (see "Dividends", "Capital" and "Voting" below). The Sterling Preference Shares will be in registered form but will initially be represented by renounceable letters of allotment (see page 43 below).

Transfers of the Sterling Preference Shares must be in writing, in the usual common form, or in such other form as the Directors may approve. The Directors may refuse to register a transfer if:

(i) the transfer is in respect of more than one class of shares; or

(ii) the transfer is not lodged, duly stamped, at the registered office of the Bank or at such other place as the Directors may appoint, accompanied by the certificate of the shares to be transferred and such other evidence (if any) as the Directors may require to prove the title of the intending transferor.

The Directors may also decline to register any transfer of a share on which the Bank has a lien.

Dividends (a) Each Sterling Preference Share shall entitle the holder thereof to receive a non-cumulative preferential dividend which will be payable in equal half-yearly instalments in arrear on 16 April and 16 October in each year (each, a "Dividend Payment Date"), provided that the first dividend instalment shall be payable on 16 April 1992 and shall be in respect of the period from 17 September 1991 to 16 April 1992, when, as and if declared by the Directors. Such dividend shall only be payable to the extent that payment of the same can be made out of profits available for distribution under the provisions of the Companies Acts 1985 and 1989 (the "Statutes", which expression shall include any modification, extension or re-enactment thereof then in force) as at each Dividend Payment Date.

(b) The Sterling Preference Shares shall rank as regards participation in profits after the Original Preference Shares, pa r i passu inter se and with the Dollar Preference Shares and all other shares to the extent they are expressed to rank pa r i passu therewith and in priority to any other class of shares.

(c) Subject to the Statutes and to the above, each Sterling Preference Share will entitle the holder thereof to receive non-cumulative preferential dividends payable in sterling at the rate of 9 per cent. per annum of the nominal amount of such share.

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(d) If, in the opinion of the Directors, the distributable profits of the Bank are sufficient to cover the payment in full of dividends on the Sterling Preference Shares on any Dividend Payment Date and also the payment in full of all other dividends stated to be payable on such date on any other shares (including any arrears or deficiency of dividend on any such other shares that are in cumulative form) expressed to rank p a r i passu with the Sterling Preference Shares as regards participation in profits, after payment in full, or the setting aside of a sum to cover the payment in full, of all dividends (including any arrears or deficiency of dividend) in respect of any Original Preference Shares stated to be payable on or before such date, then such dividends on the Sterling Preference Shares and on such other shares shall be declared and paid in full.

(e) If, in the opinion of the Directors, the distributable profits of the Bank are insufficient to cover the payment in full of dividends on the Sterling Preference Shares on any Dividend Payment Date and also the payment in full of all other dividends stated to be payable on such date on any other shares (including any arrears or deficiency of dividend on any such other shares that are in cumulative form) expressed to rank pa r i passu with the Sterling Preference Shares as regards participation in profits, after payment in full, or the setting aside of a sum to cover the payment in full, of all dividends (including any arrears or deficiency of dividend) in respect of any Original Preference Shares stated to be payable on or before such date, then dividends shall be declared by the Directors pro rata on such Sterling Preference Shares and on such other shares to the extent of the available distributable profits (if any) to the intent that the amount of dividend declared per share on each such Sterling Preference Share and on each such other share shall bear to each other the same ratio as the dividends accrued per share on each such Sterling Preference Share and on each such other share (including any arrears or deficiency of dividend on any such other shares that are in cumulative form) bear to each other. If it shall subsequently appear that any such dividend which has been paid should not, in accordance with the provisions of this and the preceding sub-paragraph, have been so paid, then, provided the Directors shall have acted in good faith, they shall not incur any liability for any loss which any shareholder may suffer in consequence of such payment having been made.

( 0 If, in the opinion of the Directors, the payment of any dividend on any Sterling Preference Shares would breach or cause a breach of the Bank of England's capital adequacy requirements from time to time applicable to the Bank and/or any of its subsidiaries, then none of such dividend shall be declared or paid.

(g) Subject to any right to be allotted additional Sterling Preference Shares in accordance with sub-paragraph (h) below, Sterling Preference Shares shall carry no further right as regards participation in the profits of the Bank and if and to the extent that any dividend or part thereof is on any occasion not paid for any reason, the holders of the Sterling Preference Shares shall have no claim in respect of such non-payment.

(h) (i) The provisions of this sub paragraph shall apply where any dividend or any part thereof otherwise payable on a particular Dividend Payment Date on any Sterling Preference Shares (a "Relevant Payment") is, for a reason specified in sub-paragraphs (e) or (f) above, not payable and the amounts (if any) standing to the credit of the Bank's profit and loss account together with the amount of the reserves of the Bank available for the purpose (including any share premium account and capital redemption reserve) are in aggregate sufficient to be applied and capable of being applied in paying up in full at par additional Sterling Preference Shares on the basis provided in (ii) below.

(ii) On the Dividend Payment Date of the Relevant Payment had such payment been payable in cash, the Directors shall, subject to the Statutes, allot and issue credited as fully paid to each holder of Sterling Preference Shares such additional nominal amount of Sterling Preference Shares as is equal to an amount determined by multiplying the cash amount of the Relevant Payment which would have been payable to him had such payment been made in cash (exclusive of any associated tax credit) by four-thirds and rounding the resulting sum down to the nearest integral multiple of £ 1 .

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(i) For the purposes of paying up the Sterling Preference Shares to be allotted pursuant to sub-paragraph (h) above, the Directors shall capitalise, out of such of the accounts or reserves of the Bank available for the purpose as they shall determine (including any share premium account and capital redemption reserve), a sum equal to the aggregate nominal amount of the additional Sterling Preference Shares then to be allotted and shall make all appropriations and applications to such sum and all allotments and issues of fully paid Sterling Preference Shares for the purpose of giving effect to sub-paragraph (h) above.

(j) The additional Sterling Preference Shares so allotted pursuant to sub-paragraph (h) above shall be denominated in Sterling and shall confer the same rights and be subject to the same limitations as, and shall rank pa r i passu and pro rata in all respects with, the Sterling Preference Shares save only as regards participation in the Relevant Payment.

(k) If any additional Sterling Preference Shares falling to be allotted under sub-paragraph (h) above cannot be allotted by reason of any insufficiency in the Bank's authorised share capital or in the amount of relevant securities which the Directors are authorised to allot in accordance with Section 80 of the Companies Act 1985, the Directors shall convene a general meeting of the Bank, at which a resolution or resolutions will be proposed to effect an appropriate increase in the authorised share capital of the Bank and to grant to the Directors the appropriate authority to allot the additional Sterling Preference Shares.

(1) The Directors may undertake and do such acts and things as they may consider necessary or expedient for the purposes of giving effect to the provisions of sub-paragraphs (h) to (k) above.

(m) If any Dividend Payment Date is not a day on which banks in London are open for business and on which foreign exchange dealings may be conducted in London (a "Sterling Business Day"), then payment of the dividend otherwise payable on such Dividend Payment Date will be made on the next succeeding Sterling Business Day and without any interest or other payment in respect of such delay unless such day shall fall within the next calendar month in which case such payment will be made on the preceding Sterling Business Day.

(n) Dividends payable on Sterling Preference Shares in respect of any period shorter or longer than a full dividend period will be calculated on the basis of a 365 day year (or, in a leap year, a 366 day year), and the actual number of days elapsed in such period.

(o) If any dividend stated to be payable on any New Preference Share (defined in the Articles as dollar preference shares of U.S.$25 each and sterling preference shares of £1 each in the capital of the Bank, including, for the avoidance of doubt, the Dollar Preference Shares and the Sterling Preference Shares), on any dividend payment date has not been declared and paid in full or a sum has not been set aside to provide for such payment in full or, in the case of New Preference Shares in non-cumulative form, additional non cumulative New Preference Shares have not been allotted in respect thereof as provided in Article 4(C)(2) (b)(v) of the Articles, then until such time as:

( 0 all dividends on New Preference Shares in cumulative form (including any arrears or deficiency of dividend in respect thereof) have been paid in full or a sum has been set aside for payment in full; and

(ii) all dividends on New Preference Shares in non cumulative form, have been paid in full or a sum has been set aside for payment in full (or, where relevant, additional non-cumulative New Preference Shares have been allotted in respect of any such other non-cumulative New Preference Shares as provided for in Article 4 (C) (2) (b) (v) of the Articles), in respect of the then most recently ended half-yearly dividend period to 16 April or 16 October in relation to the Sterling Preference Shares, in respect of the last three quarterly dividend periods in relation to the Dollar Preference Shares and in respect of such period or periods, in relation to such other non- cumulative New Preference Shares as shall be determined by the Directors prior to the allotment of such other non-cumulative New Preference Shares,

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the Bank may not redeem or purchase or otherwise acquire any other shares of the Bank (including where relevant the Sterling Preference Shares) ranking as regards participation in the assets of the Bank par i passu with or after the New Preference Shares (except by conversion into or exchange for shares of the Bank ranking after the New Preference Shares or any other shares expressed to rank pari passu therewith as regards participation in profits and assets) and, save as provided in sub paragraph (p) below, no dividends may be paid or declared on any other share capital of the Bank (including where relevant the Sterling Preference Shares) ranking as regards participation in profits pari passu with or after the New Preference Shares.

(p) Notwithstanding any of the foregoing or any provision in the Articles, the Directors may, subject to the Statutes, pay a special dividend on any shares of the Bank at a rate not exceeding £0.01 per share in respect of any share denominated in Sterling and not exceeding U.S. $0.01 in respect of any share denominated in Dollars if, in the opinion of the Directors, it is necessary to do so to preserve the status of the Bank's shares as wider range investments under the Trustee Investments Act 1961 as amended or re-enacted from time to time.

Capital (a) On a return of capital on a winding up or otherwise (but not on a redemption or purchase by the Bank of shares of any class) the Sterling Preference Shares shall rank after the Original Preference Shares, pari passu inter se and with the Dollar Preference Shares and any other shares that are expressed to rank pari passu therewith as regards participation in assets, and otherwise in priority to any other share capital of the Bank. On such a return of capital on a winding up or otherwise, each Sterling Preference Share shall, out of the assets of the Bank available for distribution amongst the members, carry the right to repayment of the amount paid up or credited as paid up on such Sterling Preference Share together with any premium paid on issue, and also together with:—

(i) the amount of any dividend thereon, whether or not declared or earned, which is due for payment on or after the date of commencement of the winding up or other return of capital but which is payable in respect of a period ending on or before such date; and

(ii) in respect of any period in respect of which a dividend thereon is payable that begins before, but ends after, the date of the commencement of the winding up or other return of capital, the proportion, whether or not declared or earned, of the dividend that would otherwise have been payable thereon in respect of such period that is attributable to the part of the period that ends on such date.

(b) If, upon any such return of capital on a winding up or otherwise, the amounts available for payment are insufficient to cover the amounts payable in full on the Sterling Preference Shares and on any other shares expressed to rank pari passu therewith as regards participation in assets, then the holders of the Sterling Preference Shares and such other shares will share rateably in the distribution of surplus assets (if any) in proportion to the full respective preferential amounts to which they are entitled.

(c) No Sterling Preference Share shall confer any right to participate in the surplus assets of the Bank other than that set out in (a) and (b) above.

Redemption The Sterling Preference Shares shall be non-redeemable.

Voting The holders of Sterling Preference Shares shall only be entitled to receive notice of or to attend or vote at General Meetings of the Bank in the following circumstances:

(i) if the dividend on the Sterling Preference Shares has not been paid in full for the dividend period immediately prior to the notice convening the relevant General Meeting; or

(ii) if a resolution is to be proposed at the General Meeting varying or abrogating the rights attaching to the Sterling Preference Shares and then only on the relevant resolution; or

(iii) if a resolution is to be proposed at the General Meeting to wind up the Bank and then only on the relevant resolution;

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but not otherwise. Whenever holders of the Sterling Preference Shares are entitled to vote at a General Meeting, on a show of hands every such holder who is present in person shall have one vote and, on a poll, every such holder who is present in person or by proxy shall have one vote for each Sterling Preference Share held.

Purchases Subject to the provisions of the Statutes and, if applicable, to the Articles and as provided in sub-paragraph (o) under "Dividends" above, the Bank may at any time purchase any Sterling Preference Shares in issue in the market, by tender or by private treaty upon such terms and conditions as the Directors may think fit. No repurchase of any Sterling Preference Shares will be made without the prior consent of the Bank of England.

Variations of Rights and Further Issues (a) Save with the written consent of the holders of three-quarters in nominal value of the New Preference Shares then in issue, or with the sanction of an Extraordinary Resolution passed at a separate General Meeting of the holders of the New Preference Shares then in issue, the Directors shall not authorise or create, or increase the amount of, any shares of any class or any security convertible into shares of any class ranking as regards participation in the profits or assets of the Bank (other than on a redemption or purchase by the Bank of any such share) in priority to the New Preference Shares.

(b) Subject to sub-paragraph (a) above, the rights attaching to the Sterling Preference Shares shall not be deemed to be varied by the creation or issue of any further series of New Preference Shares or by the creation or issue of any other shares ranking, as regards participation in profits or assets, pa r i passu with or after the Sterling Preference Shares (and for the avoidance of doubt such rights shall not be deemed to be varied by the alteration of any of the provisions, other than provisions as to pa r i passu ranking, as set out above or in the Articles in respect of any unissued New Preference Shares). Any further series of New Preference Shares or other shares ranking, as regards participation in profits or assets, pa r i passu with the Sterling Preference Shares then in issue may, without their creation or issue being deemed to vary the special rights attached to the Sterling Preference Shares, either carry identical rights in all respects with the Sterling Preference Shares or carry rights differing therefrom in any respect including, but without prejudice to the foregoing, in that:—

(i) the rate and/or basis of calculating the dividend may differ and the dividend may be cumulative or non-cumulative;

(ii) such shares may rank for dividends as from such date as may be provided by the terms of issue thereof and the dates for payment of dividend may differ;

(iii) such shares may he denominated in any currency or, if permitted by law, any basket of currencies;

(iv) a premium may be payable on return of capital or there maybe no such premium;

(v) such shares may be redeemable at the option of the Bank, or may be non-redeemable; and

(vi) such shares may be convertible into Ordinary Shares or any other class of shares ranking as regards participation in the profits and assets of the Bank p a r i passu with or after the Sterling Preference Shares, in each case on such terms and conditions as may be prescribed by the terms of issue thereof.

Notices Any notice required to be given by the Bank to the holders of the Sterling Preference Shares shall be sufficiently given if posted to such holders in accordance with the Articles.

Registrar and Paying Agent The Registrar's Department of the Bank, presently located at P.O. Box 82, Caxton House, Redcliffe Way, Bristol BS99 7NH, England, will act as registrar and paying agent for the Sterling Preference Shares.

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ORDINARY SHARES

The following is a summary of certain information concerning the Bank's Ordinary Shares and certain provisions of the Articles. This summary does not purport to be complete and is subject to, and qualified in its entirety by reference to, the Articles, copies of which are available for inspection (see "Documents available for inspection" below).

Dividend Rights Holders of Ordinary Shares are entitled to receive on a pro rata basis (according to the number of paid up shares held) such dividends or interim dividends as may be declared by the Directors but no dividend or interim dividend will be paid otherwise than in accordance with the Statutes. Dividends on Ordinary Shares, as well as on Sterling Preference Shares and the Dollar Preference Shares, may only be declared and paid out of the distributable profits of the Bank.

If any dividend on the Original Preference Shares, the Sterling Preference Shares, the Dollar Preference Shares or any other class of share capital ranking prior to the Ordinary Shares as regards participation in profits has not been declared and paid in full or a sum has not been set aside for payment in full on any dividend payment date, then no dividends may be paid or declared on the Ordinary Shares until such time as all dividends on any cumulative series of New Preference Shares (including any arrears or deficiency of dividends thereon) have been paid in full or a sum has been set aside for payment in full and all dividends on any non-cumulative series of New Preference Shares have been paid in full or a sum set aside for payment in full for such dividend periods as may be determined by the Directors or a Committee and specified in the terms of issue thereof.

Rights upon Liquidation In the event of a return of capital on a winding up of the Bank or otherwise, after payment of all liabilities, and after there shall have been paid or set aside for payment to the holders of the Original Preference Shares, Sterling Preference Shares, Dollar Preference Shares and any other shares of the Bank ranking senior to the Ordinary Shares upon liquidation the full preferential amounts to which they are entitled (including, with respect to the Original Preference Shares and any cumulative series of New Preference Shares, any arrears or deficiency of dividends thereon), the remaining assets of the Bank will be divided among the holders of Ordinary Shares according to the number of Ordinary Shares held by them respectively.

Voting Rights Each holder of Ordinary Shares who is entitled to be and is present in person at a general meeting of shareholders has one vote on a show of hands, and on a poll each such holder present in person or by proxy has one vote for each Ordinary Share held by such holder. Voting at any general meeting of shareholders is by show of hands unless a poll is demanded.

A poll may be demanded by the Chairman of the meeting, by five shareholders entitled to vote at the meeting who are present in person or by proxy or by any shareholder or shareholders present in person or by proxy that represent not less than 10 per cent of the total voting rights of all the shareholders entitled to vote at the meeting.

Miscellaneous Holders of Ordinary Shares have no pre-emptive rights under the Articles. However, the ability of the Directors (a) to allot any shares or rights to subscribe for, or to convert any security into, any shares of the Bank under any circumstances or (b) to issue for cash Ordinary Shares or rights to subscribe for, or to convert any security into, Ordinary Shares otherwise than by way of rights to existing holders of Ordinary Shares is restricted by law and (except in certain cases) requires appropriate authorisation to be given by shareholders in general meeting.

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DESCRIPTION OF THE DOLLAR PREFERENCE SHARES

The following is a description of the terms of and rights attaching to the Dollar Preference Shares which the Bank proposes to issue not later than 31 December, 1991 and is accordingly qualified by reference to the terms of the resolutions of the Directors under which the Dollar Preference Shares will be issued.

Denomination and Form The Dollar Preference Shares will have a nominal value of U.S.$25,00 each and will be issued fully paid for cash. The Dollar Preference Shares will rank in all respects after the Original Preference Shares and p a r i passu inter se, with the Sterling Preference Shares and with all other shares to the extent that they are expressed to rank pa r i passu therewith and in priority to the Ordinary Shares and any other class of shares.

Upon initial issue the Dollar Preference Shares will be represented by one or more share warrants to bearer within the meaning of the Companies Act 1985 and in accordance with the Articles (the "Share Warrants"). A Share Warrant shall entitle the bearer thereof to the Dollar Preference Shares included in it and the Dollar Preference Shares may be transferred by the delivery of the Share Warrant, as described below. The provisions of the Articles with respect to certificates, transfer and transmission of shares shall not apply thereto.

Title to Dollar Preference Shares in bearer form (or to the dividend coupons appertaining thereto) will pass by delivery of the relevant Share Warrants (or dividend coupons, as the case may be), and title to Dollar Preference Shares in registered form will pass by transfer and registration on the register for the Dollar Preference Shares. Subject to the limitations set forth in the following paragraph, Dollar Preference Shares in bearer form will be exchangeable for a like number of Dollar Preference Shares in registered form upon surrender of the relevant Share Warrants and all unmatured dividend coupons appertaining thereto (if any). Dollar Preference Shares in registered form will not be exchangeable, in whole or in part, for Dollar Preference Shares in bearer form.

Dividends

(a) Each Dollar Preference Share shall entitle the holder thereof to receive a non-cumulative preferential dividend which will accrue from the date of issue of such Dollar Preference Share and will be payable quarterly in arrear on such dates as may be determined by the directors in each year (each a "Dividend Payment Date") when, as and if declared by the Directors. Such dividend shall only be payable to the extent that payment of the same can be made out of profits available for distribution under the provisions of the Companies Acts 1985 and 1989 (the "Statutes" which expression shall include any modification, extension or re enactment thereof then in force) as at each Dividend Payment Date.

(b) The dividends payable on the Dollar Preference Shares shall rank after the Original Preference Shares, p a r i passu inter se and with the Sterling Preference Shares and with all other shares to the extent they are expressed to rank pa r i passu therewith as regards participation in profits and in priority to any other class of shares.

(c) (i) Subject to the Statutes and to the above, each Dollar Preference Share will entitle the holder thereof to receive, on each individual Dividend Payment Date, a non-cumulative preferential dividend in an amount to be determined by the Directors, subject to adjustment as described in (ii) below. Such dividend shall be payable in cash in U.S. Dollars.

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(ii) The Bank shall be required to increase or, as the case maybe, decrease the rate of dividend payable on each Dollar Preference Share so that the sum of the dividend paid or payable on any Dividend Payment Date together with any related Associated Tax (as defined below) shall equal the sum of the amount initially payable as determined in (i) above together with any related Associated Tax on such amount. For these purposes, the term "Associated Tax" means any United Kingdom taxation in accordance with, and at the rate specified by, United Kingdom law in effect at the relevant time (a) which is, or is treated as having been, borne by recipients of dividends on the Dollar Preference Shares by deduction at source or (b) for which a credit (which term shall include an absence of or relief from liability for all or part of any United Kingdom taxation which would otherwise be imposed in respect of such dividends) in respect of United Kingdom taxation is available to the recipient of such dividends, in each case on the assumption that such recipients are individuals resident in the United Kingdom for United Kingdom taxation purposes.

(d) If, in the opinion of the Directors, the distributable profits of the Bank are sufficient to cover the payment in full of dividends on the Dollar Preference Shares on any Dividend Payment Date and also the payment in full of all other dividends stated to be payable on such date on any other shares (including any arrears or deficiency of dividend on any such other shares that are in cumulative form) expressed to rank pari passu with the Dollar Preference Shares as regards participation in profits, after payment in full, or the setting aside of a sum to cover the payment in full, of all dividends (including any arrears or deficiency of dividend) in respect of any Original Preference Shares stated to be payable on or before such date, then such dividends on the Dollar Preference Shares and on such other shares shall be declared and paid in full.

(e) If, in the opinion of the Directors, the distributable profits of the Bank are insufficient to cover the payment in full of dividends on the Dollar Preference Shares on any Dividend Payment Date and also the payment in full of all other dividends stated to be payable on such date on any other shares (including any arrears or deficiency of dividend on any such other shares that are in cumulative form) expressed to rank pari passu with the Dollar Preference Shares as regards participation in profits, after payment in full, or the setting aside of a sum to cover the payment in full, of all dividends (including any arrears or deficiency of dividend) in respect of any Original Preference Shares stated to be payable on or before such date, then dividends shall be declared by the Directors pro rata on such Dollar Preference Shares and on such other shares to the extent of the available distributable profits (if any) to the intent that the amount of dividend declared per share on each such Dollar Preference Share and on each such other share shall bear to each other the same ratio as the dividends accrued per share on each such Dollar Preference Share and on each such other share (including any arrears or deficiency of dividend on any such other shares that are in cumulative form) bear to each other. If it shall subsequently appear that any such dividend which has been paid should not, in accordance with the provisions of this and the preceding sub-paragraph, have been so paid, then, provided the Directors shall have acted in good faith, they shall not incur any liability for any loss which any shareholder may suffer in consequence of such payment having been made.

(0 If, in the opinion of the Directors, the payment of any dividend on any Dollar Preference Shares would breach or cause a breach of the Bank of England's capital adequacy requirements from time to time applicable to the Bank and/or any of its subsidiaries, then none of such dividend shall be declared or paid.

(g) The Dollar Preference Shares shall carry no further right as regards participation in the profits of the Bank and if and to the extent that any dividend or part thereof is on any occasion not paid for any reason, the holders of the Dollar Preference Shares shall have no claim in respect of such non-payment.

(h) If any Dividend Payment Date is not a day on which banks in London and The City of New York are open for business and on which foreign exchange dealings may be conducted in such cities (a "Dollar Business Day"), then payment of the dividend otherwise payable on such Dividend Payment Date will be made on the next succeeding Dollar Business Day and without any interest or other payment in respect of such delay.

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(i) Dividends payable on Dollar Preference Shares in respect of any period shorter or longer than a full dividend period will be calculated on the basis of twelve 30 day months and a 360 day year, and the actual number of days elapsed in such period.

(j) If any dividend stated to be payable on any New Preference Shares (defined in the Articles as dollar preference shares of U.S.$25 each and sterling preference shares of £1 each in the capital of the Bank, including, for the avoidance of doubt, the Dollar Preference Shares and the Sterling Preference Shares) on any Dividend Payment Date has not been declared and paid in full or a sum has not been set aside to provide for such payment in full and, in the case of New Preference Shares in non-cumulative form, additional non-cumulative New Preference Shares have not been allotted in respect thereof as provided in Article 4(C) (2) (b) (v) of the Articles, then until such time as:

(i) all dividends on New Preference Shares in cumulative form (including any arrears or deficiency of dividend in respect thereof) have been paid in full or a sum has been set aside for payment in full; and

(ii) all dividends on New Preference Shares in non-cumulative form have been paid in full or a sum has been set aside for payment in full (or, where relevant, additional non-cumulative New Preference Shares have been allotted in respect of any such other non-cumulative New Preference Shares provided for in Article 4(C)(2)(b)(v) of the Articles), in respect of the last three quarterly dividend periods in relation to the Dollar Preference Shares, in respect of the then most recently ended dividend period in relation to the Sterling Preference Shares and in respect of such period or periods, in relation to such other non-cumulative New Preference Shares as shall be determined by the Directors prior to the allotment of such other non-cumulative New Preference Shares;

the Bank may not redeem or purchase or otherwise acquire any other shares of the Bank (including where relevant the Dollar Preference Shares) ranking as regards participation in the assets of the Bank pa r i passu with or after the New Preference Shares (except by conversion into or exchange for shares of the Bank ranking after the New Preference Shares or any other shares expressed to rank par i passu therewith as regards participation in profits and assets) and, save as provided in paragraph (k) below, no dividends may be paid or declared on any other share capital of the Bank (including where relevant the Dollar Preference Shares) ranking as regards participation in profits pa r i passu with or after the New Preference Shares.

(k) Notwithstanding any of the foregoing or any provision in the Articles, the Directors may, subject to the Statutes, pay a special dividend on any shares of the Bank at a rate not exceeding £0.01 per share in respect of any share denominated in sterling and not exceeding U.S.$0.01 in respect of any share denominated in Dollars if, in the opinion of the Directors, it is necessary to do so to preserve the status of the Bank's shares as wider range investments under the Trustee Investments Act 1961 as amended or re-enacted from time to time.

(1) Notwithstanding any of the foregoing or any provision in the Articles but subject to paragraphs (e), ( 0 and (j) above, the Directors shall pay dividends on the Dollar Preference Shares due to be redeemed on any Redemption Date (as hereinafter defined —see "Redemption", below) payable on the Dollar Business Day immediately preceding such Redemption Date. The dividend paid pursuant to this paragraph (1) shall be the amount of any dividend on the relevant Dollar Preference Shares which would (apart from the proposed redemption thereof) be due for payment on the relevant Redemption Date.

10

Capital (a) On a return of capital on a winding up or otherwise (but not on a redemption or purchase by the Bank of shares of any class), the Dollar Preference Shares shall rank after the Original Preference Shares, p a r i passu inter se, with the Sterling Preference Shares and with any other shares that are expressed to rank pa r i passu therewith as regards participation in assets, and otherwise in priority to any other share capital of the Bank. On such a return of capital on a winding up or otherwise, each Dollar Preference Share shall, out of the assets of the Bank available for distribution amongst the members, carry the right to repayment of the amount paid up or credited as paid up on such Dollar Preference Share together with any premium paid on issue, and also together with:

(i) the amount of any dividend thereon, whether or not declared or earned, which is due for payment on or after the date of commencement of the winding up or other return of capital but which is payable in respect of a period ending on or before such date; and

(ii) in respect of any period in respect of which a dividend thereon is payable that begins before, but ends after, the date of the commencement of the winding up or other return of capital, the proportion, whether or not declared or earned, of the dividend that would otherwise have been payable thereon in respect of such period that is attributable to the part of the period that ends on such date.

(b) If, upon any such return of capital on a winding up or otherwise, the amounts available for payment are insufficient to cover the amounts payable in full on the Dollar Preference Shares and on any other shares expressed to rank pa r i passu therewith as regards participation in assets, then the holders of the Dollar Preference Shares and such other shares will share rateably in the distribution of surplus assets (if any) in proportion to the full respective preferential amounts to which they are entitled.

(c) No Dollar Preference Share shall confer any right to participate in the surplus assets of the Bank other than those set out in (a) and (b) above.

Redemption The Dollar Preference Shares shall, subject to the provisions of the Statutes, be redeemable at the option of the Bank in accordance with the provisions set out below. No redemption of any Dollar Preference Shares will be made without the prior consent of the Bank of England.

(a) The Bank may, if the provisions described above in "Dividends", sub-paragraph (1), have been satisfied in full in relation to the Dollar Preference Shares, redeem on any Redemption Date (as hereinafter defined) all or some only of the Dollar Preference Shares by giving to the holders of Dollar Preference Shares not less than thirty days' nor more than sixty days prior notice in writing of the relevant Redemption Date (a "Redemption Notice"). "Redemption Date" means any Dividend Payment Date that falls after the fifth anniversary of the date of allotment of the Dollar Preference Shares.

(b) There shall be paid on each Dollar Preference Share so redeemed, in dollars, the amount paid up or credited as paid up on such Dollar Preference Share and together with the Dollar Redemption Premium.

"Dollar Redemption Premium" means an amount calculated in accordance with the provisions set out below as applied in relation to any Redemption Date which falls within the period of five years commencing on the day following the fifth anniversary of the first date of allotment of the Dollar Preference Shares (the "Relevant Allotment Date").

The basis for calculating the Dollar Redemption Premium shall be as follows:—

in relation to a Redemption Date falling within the period of twelve months from but excluding the fifth anniversary of the Relevant Allotment Date to and including the sixth anniversary of the Relevant Allotment Date, the Dollar Redemption Premium shall, in respect of each Dollar Preference Share, be 6 per cent of the aggregate of the nominal amount of such share together with any premium paid on issue; or

11

in relation to a Redemption Date falling within the period of twelve months from but excluding the sixth anniversary of the Relevant Allotment Date to and including the seventh anniversary of the Relevant Allotment Date, the Dollar Redemption Premium shall, in respect of each Dollar Preference Share, be 4.8 per cent of the aggregate of the nominal amount of such share together with any premium paid on issue; or

in relation to a Redemption Date falling within the period of twelve months from but excluding the seventh anniversary of the Relevant Allotment Date to and including the eighth anniversary of the Relevant Allotment Date, the Dollar Redemption Premium shall, in respect of each Dollar Preference Share, be 3.6 per cent of the aggregate of the nominal amount of such share together with any premium paid on issue; or

in relation to a Redemption Date falling within the period of twelve months from but excluding the eighth anniversary of the Relevant Allotment Date to and including the ninth anniversary of the Relevant Allotment Date, the Dollar Redemption Premium shall, in respect of each Dollar Preference Share, be 2.4 per cent of the aggregate of the nominal amount of such share together with any premium paid on issue; or

in relation to a Redemption Date falling within the period of twelve months from but excluding the ninth anniversary of the Relevant Allotment Date to and including the tenth anniversary of the Relevant Allotment Date, the Dollar Redemption Premium shall, in respect of each Dollar Preference Share, be 1.2 per cent of the aggregate of the nominal amount of such share together with any premium paid on issue.

No Dollar Redemption Premium shall be payable when the Redemption Date falls after the tenth anniversary of the Relevant Allotment Date. The Dollar Redemption Premium shall be rounded down to the nearest whole cent.

(c) In the case of redemption of some only of the Dollar Preference Shares, the Bank shall for the purposes of determining the particular Dollar Preference Shares to be redeemed cause a drawing to be made at the Bank's registered office or such other place as the Directors may approve in the presence of the Auditors for the time being of the Bank.

(d) Any Redemption Notice given under sub paragraph (a) above shall specify the applicable Redemption Date, the particular Dollar Preference Shares to be redeemed and the redemption price and shall state the place or places at which documents of title in respect of such Dollar Preference Shares are to be presented and surrendered for redemption and at which payment of the redemption moneys is to be effected. Upon such Redemption Date, the Bank shall redeem the particular Dollar Preference Shares to be redeemed on that date subject to the provisions of this sub paragraph (d) and of the Statutes. No defect in the Redemption Notice or in the giving thereof shall affect the validity of the redemption proceedings.

Payments in respect of the amount due on redemption of a Dollar Preference Share in registered form shall be made by a Dollar cheque drawn on a bank in London or in The City of New York, or, upon the request of the holder or joint holders not later than the date specified for the purpose in the Redemption Notice, by transfer to a Dollar account maintained by the payee with a bank in London or in The City of New York. Such payment will be made against presentation and surrender of the relative certificate at the place or one of the places specified in the Redemption Notice. If any certificate so surrendered includes any Dollar Preference Shares not to be redeemed on the relevant Redemption Date, the Bank shall within twenty-one days thereafter issue and send to the holder, or the first named of joint holders, at his risk but free of charge, a new certificate in respect of such Dollar Preference Shares.

Payments in respect of the amount due on redemption of a Dollar Preference Share in bearer form (a "Bearer Share") shall be made by a Dollar cheque drawn on a bank in London or in The City of New York, or, upon request of the holder not later than the date specified for the purpose in the Redemption Notice, by transfer to a Dollar account maintained by the payee with a bank in London or in The City of New York. Such payment will be made against presentation and surrender of the relative Share Warrant (as defined in the Articles) and all unmatured dividend coupons and talons (if any) appertaining thereto at the place or one of the places specified in the Redemption Notice. Upon the relevant Redemption Date all unmatured dividend coupons and any talons for additional dividend coupons appertaining thereto (whether or not returned) shall become void and no payment will be

12

made in respect thereof. If the Share Warrant so surrendered represents any Dollar Preference Shares not to be redeemed on the relevant Redemption Date, the Bank shall issue and send, at the risk of the holder but free of charge, a new Share Warrant representing such Bearer Shares which are not to be redeemed on such Redemption Date (and such new Share Warrant shall have attached thereto unmatured dividend coupons and any talon for additional dividend coupons that correspond to those surrendered as aforesaid insofar as the same are attributable to the Bearer Shares represented by such new Share Warrant).

All payments in respect of redemption moneys will in all respects be subject to any applicable fiscal or other laws.

(e) As from the relevant Redemption Date, the dividend on the Dollar Preference Shares due for redemption shall cease to accrue except on any Dollar Preference Share in respect of which, upon the due surrender of the certificate or, as the case may be, the relative Share Warrant and all unmatured dividend coupons and talons (if any) appertaining thereto, in accordance with sub paragraph (d) above, payment of the redemption moneys due on such Redemption Date shall be improperly withheld or refused, in which case such dividend, at the rate or rates that would have been applicable in the absence of any such redemption, shall be deemed to have continued and shall accordingly continue to accrue from the relevant Redemption Date to the date of payment of such redemption moneys. Such Dollar Preference Shares shall not be treated as having been redeemed until the redemption moneys in question have been paid.

(0 If the due date for the payment of the redemption moneys on any Dollar Preference Share is not a Dollar Business Day, then payment of such moneys will be made on the next succeeding Dollar Business Day and without any interest or other payment in respect of such delay.

(g) The receipt of the holder for the time being of any Dollar Preference Share in registered form (or in the case of joint holders the receipt of any one of them) and the receipt of the person delivering any Share Warrant to the place or one of the places specified in the Redemption Notice in respect of the moneys payable on redemption of such Dollar Preference Share in registered form or, as the case may be, such Bearer Share shall constitute an absolute discharge to the Bank in respect thereof.

Voting The holders of Dollar Preference Shares shall only be entitled to receive notice of or to attend or vote at General Meetings of the Bank in the following circumstances:

(a) if the dividend on the Dollar Preference Shares has not been paid in full for the three consecutive quarterly dividend periods immediately prior to the notice convening the relevant General Meeting; or

(b) if a resolution is to be proposed at the General Meeting varying or abrogating the rights attached to Dollar Preference Shares and then only on the relevant resolution; or

(c) if a resolution is to be proposed at the General Meeting to wind up the Bank and then only on the relevant resolution; or

(d) if a resolution is to be proposed at the General Meeting reducing the paid up capital of the Dollar Preference Shares and then only on the relevant resolution; or

(e) if a resolution is to be proposed at the General Meeting for the sale of the whole of the business of the Bank and then only on the relevant resolution;

but not otherwise.

Whenever holders of the Dollar Preference Shares are entitled to vote at a General Meeting, on a show of hands every such holder who is present in person shall have one vote and, on a poll, every such holder who is present in person or by proxy shall have such number of votes for each Dollar Preference Share as would be carried by Ordinary Shares having an aggregate market value (as derived from the closing middle market quotation on the London Stock Exchange Daily Official List) of U.S.$25 as of the close of business on the business day preceding the date of determination by the Directors prior to the issue of the Dollar Preference Shares (subject to adjustment to reflect any issue to the holders

13

of Ordinary Shares of further Ordinary Shares by way of capitalisation of profits or reserves or by way of rights of a price per Ordinary Share which is less than 90 per cent of the middle market quotation for an Ordinary Share (as derived from the London Stock Exchange Daily Official List) for the dealing day immediately preceding the day on which the announcement of such issue by way of rights is first made and any consolidation or subdivision of such Ordinary Shares, such adjustment or adjustments to be determined by the Auditors of the Bank for the time being, acting as experts).

Purchases Subject to the provisions of the Statutes and, if applicable, to the Articles and as provided in "Dividends" — paragraph (j) above, the Bank may at any time purchase any Dollar Preference Shares in issue in the market, by tender or by private treaty upon such terms and conditions as the Directors may think fit. No repurchase of any Dollar Preference Shares will be made without the prior consent of the Bank of England.

Variations of Rights (a) Save with the written consent of the holders of three-quarters in nominal value of the New Preference Shares then in issue, or with the sanction of an Extraordinary Resolution passed at a separate General Meeting of the holders of the New Preference Shares then in issue, the Directors shall not authorise or create, or increase the amount of, any shares of any class or any security convertible into shares of any class ranking as regards participation in the profits or assets of the Bank (other than on a redemption or purchase by the Bank of any such share) in priority to the New Preference Shares.

(b) Subject to sub-paragraph (a) above the rights attaching 10 any Dollar Preference Shares shall not be deemed to be varied by the creation or issue of any further series of New Preference Shares or by the creation or issue of any other shares ranking, as regards participation in profits or assets, pari passu with or after the Dollar Preference Shares (and for the avoidance of doubt such special rights shall not be deemed to be varied by the alteration of any of the provisions, other than provisions as to part passu ranking, as set out above in respect of any unissued New Preference Shares). Any further series of New Preference Shares or other shares ranking, as regards participation in profits or assets, pari passu with the Dollar Preference Shares then in issue may, without their creation or issue being deemed to vary the special rights attached to the Dollar Preference Shares, either carry identical rights in all respects with the Dollar Preference Shares or carry rights differing therefrom in any respect including, but without prejudice to the foregoing, in that:

(i) the rate and/or basis of calculating the dividend may differ and the dividend may be cumulative or non-cumulative;

(ii) such shares may rank for dividends as from such date as may be provided by the terms of issue thereof and the dates for payment of dividend may differ;

(iii) such shares may be denominated in any currency or, if permitted by law, any basket of currencies;

(iv) a premium may be payable on return of capital or there may be no such premium;

(v) such shares may be redeemable at the option of the Bank, or may be non redeemable and, if redeemable at the option of the Bank, they may be redeemable at different terms from those applying to the Dollar Preference Shares then in issue;

(vi) such shares may be convertible into Ordinary Shares or any other class of shares ranking as regards participation in the profits and assets of the Bank pari passu with or after the Dollar Preference Shares, in each case on such terms and conditions as may be prescribed by the terms of issue thereof.

14

DESCRIPTION OF THE ORIGINAL PREFERENCE SHARES

The following is a summary of the rights attaching to Original Preference Shares which rank in priority to the Dollar Preference Shares and the Sterling Preference Shares.

The holders of the Original Preference Shares are entitled:

(a) to a fixed cumulative preferential dividend of 7 per cent (now 4.90 per cent., exclusive of the associated tax credit), payable by equal half-yearly instalments in February and August in respect of the six months ending on the preceding 31 December and 30 June respectively paid in priority to any dividend on the Dollar Preference Shares, the Sterling Preference Shares or any other class of shares;

(b) on a return of capital whether on a winding up or otherwise to receive in priority to the Ordinary Shares, the Dollar Preference Shares and the Sterling Preference Shares the capital paid up on the Original Preference Shares together with a sum equal to any arrears or deficiency of dividend in respect thereof up to the date of repayment and together also by way of premium with an amount per share equal to the excess (if any) of the market value of such Original Preference Shares over the amount paid up thereon.

The holders of the Original Preference Shares are entitled to receive notice of or attend or vote at General Meetings of the Bank if either:

(a) at the date of the notice convening the meeting the dividend thereon is six months in arrears; or

(b) the business of the meeting includes the consideration of a resolution for reducing the capital of the Bank, or for winding up the Bank or for the sale of the undertaking of the Bank or for any resolution modifying or abrogating any rights attached to the Original Preference Shares.

Whenever holders of the Original Preference Shares are entitled to vote at a General Meeting every such person who is present in person shall have one vote and on a poll every such person who is present in person or by proxy shall have one vote for every £ 1 nominal of share capital held by him.

15

PROCEEDS OF ISSUE

The net proceeds arising from the issue of the Sterling Preference Shares are estimated to be approximately £138.2 million.

The net proceeds from the issue of the Sterling Preference Shares will be used for the purpose of the Bank's general business.

THE BANK AND THE GROUP

Business The Bank and its subsidiary undertakings (the "Group"), together with its associated undertakings, are engaged in a wide range of banking, financial and related activities in the U.K. and throughout the world.

The Group is among the larger international banking groups in the world. At 31 December 1990 the Group reported consolidated total assets of £121.1 billion, consolidated total deposits of £106.3 billion and consolidated ordinary shareholders' equity of £5.9 billion. In its unaudited results for the 6 months period ended 30 June 1991 the Group reported consolidated total assets of £127.7 billion, consolidated total deposits of £110.1 billion and consolidated ordinary shareholders' equity of £5.9 billion.

The profit before tax and extraordinary items by sector for each of the three years ended 31 December 1990 was as follows:

U.K. Financial Services Corporate and Institutional Banking International Businesses Investment Banking

1990 £m

563 193

(189) (63)

1989 £m

950 (517)

9 (38)

1988* £m

1,101 229

98 (21)

Profit before taxation and extraordinary items 504 404 1,407

* Comparative figures for 1988 have not been restated to reflect either the creation of the Coutts & Co Group within International Businesses or the revision to the basis of allocating capital and certain central costs among business sectors.

At 31 December 1990 the Group employed approximately 112,600 people worldwide. Its domestic operations are conducted directly through the Bank, which is one of the major London clearing banks, through several banking subsidiary undertakings and through other subsidiary undertakings. At 31 December 1990 international operations were conducted by the Bank and affiliated (subsidiary and associated) undertakings in the U.K. and in 32 other countries. At such date, based on the location of the office at which assets are booked, no country outside the U.K., with the exception of the U.S., accounted for more than 10 per cent of the total assets or profit attributable to shareholders of the Bank for the year ended 31 December 1990 of the Group.

Current Trading and Prospects Except as disclosed herein, there has been no material change in the financial or trading position of the Bank or the Group since 30 June 1991.

The effect of the charge for bad and doubtful debts in the U.K. and the U.S. has been severe and has overshadowed the results for the first six months of 1991. The credit quality environment in which the Group operates continues to be difficult. Consequently, the bad and doubtful debt charge which will ultimately be required for 1991 is likely to be substantially greater than in 1990.

Directors The Directors of the Bank, each of whose business address is, unless otherwise indicated, at 41 Lothbury, London EC2P 2BP, their functions within the Bank and, where relevant, its subsidiary undertakings and their principal outside activities are as follows:

16

Name

Functions within the Bank, and where relevant, its subsidiary undertakings Principal outside activity

Lord Alexander of Weedon, Q.C.

Sir Edwin Ronald Nixon, C.B.E.,D.L.

John Anthony Burns

The Hon. Sir Richard Clive Butler, D.L.

Denis Marsden Child, C.B.E.

Roger Flemington

Thomas Pearson Frost

Martin Richard Harris

Robin Arthur Elidyr Herbert.J.P., D.L.

Sir Brian Smith Kellen

Sir James Geoffrey Littler, K.C.B.

Sir Ian Charter MacLaurin

John William Melbourn

Albert Morris

Sir Antony Richard Pilkington

Dr. William George Henry Quigley, C.B.

Martin Gibbeson Taylor

John Tugwell

Derek Wanless

The Rt. Hon. The Baroness Young, P.C.

Chairman

Deputy Chairman

General Manager & Group Chief Financial Officer

Non-Executive Director


Deputy Group Chief Executive

Group Chief Executive




Chairman, NatWest Investment Bank Limited


Chief Executive, Group Credit Risk

Chief Executive, Support Services




Chairman & Chief Executive Officer, National Westminster Bancorp Inc.

Chief Executive, U.K. Financial Services


Chairman, Amersham International PLC

Farmer, Chairman, Agricola U.K. Limited

Chairman, ICCH Limited

Director, The De La Rue Company PLC

Chairman, Leopold Joseph Holdings PLC

Chairman, Port of London Authority

Chairman, Tesco PLC

Chairman, Pilkington plc

Chairman, Ulster Bank Limited

A Vice Chairman, Hanson plc

Director, Marks and Spencer PLC

The Company Secretary is Mr. P.J. S.Hammonds, F.CI.S.

The business address of Mr. Tugwell is 175 Water Street, New York, NY 10038.

On 6 August 1991, the Bank announced the appointment with effect from 1 October 1991 of Sir Michael Angus as a Non-Executive Director and Deputy Chairman, and Sir Charles Powell, K.C.M.G. as a Non-Executive Director.

17

INTERIM FINANCIAL INFORMATION

The consolidated financial information set forth below has been extracted from the unaudited interim consolidated accounts of the Bank for the 6 month period ended 30 June 1991, restated where appropriate to accord with current accounting practice.

18

INTERIM FINANCIAL RESULTS (Unaudited)

Group Profit and Loss Account

Half-year to 30 June 1991

Half-year to 30 June 1990

Income: Interest income Interest expense

Notes £ m

7,070 5,214

£m

7,115 5,322

Net interest income Commission Foreign exchange Other income

1,856 998

71 164

1,793 798

67 131

Total Income 3,089 2,789

Operating Costs: Personnel costs Premises and equipment Other expenditure

1,232 386 487

1,173 337 433

Total Operating Costs 2,105 1,943

Operating Profit Before Provisions Bad and Doubtful Debts 1

984 902

846 425

Trading Surplus Exceptional items Share of associated undertakings' results

including exceptional credit

2

3

82 (28)

47

421 (5)

15

Group Profit Before Taxation Taxation 4

101 26

431 151

Group Profit After Taxation Minority interests and preference dividends

of the Bank

75

2

280

4

Group Profit After Taxation and Before Extraordinary Item

Extraordinary item 5 73 276

163

Group Profit Attributable to Ordinary Shareholders of the Bank

Ordinary dividends: interim 73

100 439 100

Retentions for the Period (27) 339

19

INTERIM FINANCIAL RESULTS (Unaudited)

Summary Group Balance Sheet

At 30 June 1991

At 30 June 1990

£m £ m

Assets: Liquid and short-term assets Due from customers less provision Market placings over one month Other accounts

24,363 84,450

9,351 5,741

22,967 80,886 9,310 4,574

Advances and other accounts less provision Investments in associated undertakings Premises and equipment

99,542 315

3,510

94,770 329

3,269

127,730 121,335

Liabilities: Ordinary share capital Reserves

1,618 4,264

1,603 4,532

Ordinary shareholders' equity Minority interests and preference share capital Undated loan capital Dated loan capital Deferred taxation Current deposit and other accounts Other liabilities

5,882 154

1,931 2,984

682 110,061

6,036

6,135 148

1,819 2,189

687 105,161

5,196

127,730 121,335

20

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL INTERIM

1 Bad and doubtful debts INFORMATION

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL INTERIM

1 Bad and doubtful debts INFORMATION

Half-year to Half-year to 30June 1991 30 June 1990

Specific General Specific General Provision at 1 January £ m £ m £ m £m

1,244 370 1.795 263 Charge against profits:

Domestic International — PCD 668 2 227 11

— other (53) — (29) — 250 35 192 24

Exchange and other adjustments 865 37 390 35 Subsidiaries and businesses acquired 79 36 (102) (I1) Amounts written off net of recoveries: 15 1 52 12

Domestic International — PCD (436) (203)

— other (174) (189)

(799)

(600) (80)

(883)

Domestic International — PCD 775 159 382 128

— other 150 — 554 — 479 285 316 171

"1,404 444 1,252 299 Group Total

1,848 1,551

Closing provision as a % of gross lending: Domestic International — PCD* 1.8% 1.0%

— other 41.9% 65.1% Total — including PCD 2.3% 1.6%

— excluding PCD 2.2% 1.9% Percentage of Provisionable exposure. 2.0% 1.2%

At 30 June 1991 the total Group provision against problem cou which represented 42 per cent of the Group's £358 million pnntry debt ("PCD") was £150 million rescheduling or in payment difficulties. provionable exposure to 15 countries

21

2 Exceptional items Half-year

to 30 June 1991

Half-year to 30 June

1990

2 Exceptional items

£m £ m Restructuring costs* Provision for call under the Deposit Protection Fund**

(16) (12)

(28)

(5)

(5)

• The restructuring costs, primarily early retirement and redundancy costs, are being incurred as part of a Group-wide cast reduction programme which is expected to continue for the remainder of 1991 and into 1992.

*» A provision of £12 million has been made to cover possible liabilities under the U.K. Deposit Protection Scheme in respect of the Bank of Credit and Commerce International, SA. All institutions authorised by the Bank of England are liable to make contributions, which are levied in proportion to the relevant Sterling deposits with the U.K. offices of each institution.

3 Associates The share of results for the half-year to 30 June 1991 includes a £52 million exceptional release of provisions by an associated undertaking.

4 Taxation The tax charge for the half-year at 26% is lower than the U.K. corporation tax rate for the year ending 31 December 1991 of 33.25%. The factors affecting the lower tax charge are the release of provisions by an associated undertaking which are not subject to tax and the release of £75 million of deferred tax in respect of the Bank's plant and equipment. In addition, the net effect of the changes in corporation tax rates in the Finance Act 1991 has reduced the tax charge by £15 million. These benefits have been offset in part by losses arising overseas, principally in the U.S. and Australia, for which no relief is currently available.

5 Extraordinary item Half-year

to 30 June 1991

Half year to 30 June

1990

5 Extraordinary item

£m £ m Surplus on disposal of investment in Yorkshire Bank PLC,

after tax of £87 million — 163

22

FINANCIAL INFORMATION

The consolidated financial information set forth below has been extracted from the audited consolidated accounts of the Bank for the three years ended 31 December 1990, restated where appropriate to accord with current accounting practice.

23

CONSOLIDATED PROFIT AND LESS ACCOUNT OF NATIONAL WESTMINSTER BANK GROUP

Group profit before charge for bad and doubtful debts and exceptions] items

Notes Year ended 31 December


Notes 1990 1989 1988


Notes

£m £m £m


1,708 1,889 1,673

Charge/(release) for bad and doubtful debts — commercial and personal — problem countries

1,237 (84)

1,153

445 990

1,435

217 49

266

Group profit: before exceptional items Exceptional items 2

555 (51)

454 (50)

1,407

Group profit before taxation Taxation

3 6

504 292

404 161

1,407 463

Minority interests

212 4 1 5

243 9 I 10

944 5 1 6

Group profit after taxation and

Extraordinary items

Group profit attributable to ordinary shareholders of the Bank

Ordinary dividends — interim — Final

Retentions for the year

7

16

207 163

370

100 184 284

86

233 (35")

198

84 179 263

(65)

938

938

70 148 218

720

Per ordinary share Dividends Earnings 8

17.5p 13p

l6.7p 15p

I4.125p 62p

24

CONSOLIDATED BALANCE SHEET OF NATIONAL WESTMINSTER BANK GROUP

Notes At 31 December

1990 1989 1988

Assets employed Coin, bank notes and balances with the Bank of

England and with State banks abroad

£m £ m £,m Assets employed Coin, bank notes and balances with the Bank of

England and with State banks abroad 1,600 1,683 1,300 Items in course of collection on other banks 1,620 1,696 1,052 Money at call and short notice 10,755 10,493 11,523 Bills discounted 2,367 3,146 1,844 Dealing assets 9 1,275 939 981 Certificates of deposit 1,784 980 1,543 Investments 10 3,821 3,784 2,781 Advances and other accounts 11 94,279 89,627 74,398 Investments in associated undertakings 13 237 638 375 Premises and equipment 14 3,362 3,203 2,845

121,100 116,189 98,642

Financed by Ordinary shareholders' funds: Ordinary share capital Reserves 15

2,615 4,279

2,576 4,358

778 5,155

5,894 5,934 5,933 Preference share capital 15 14 14 14 Minority interests 133 131 80 Undated loan capital 17 1,681 1,941 1,302 Dated loan capital 17 2,193 2,284 1,789 Deferred taxation 18 741 695 651 Current, deposit and other accounts 19 106,332 101,251 84,981 Other liabilities 20 4,112 3,939 3,892

121,100 116,189 98,642

25

CONSOLIDATED STATEMENT OF SOURCE AND APPLICATION OF FUNDS

For the year ended 31 December 1990 1990 1989 1989 1988 1988

£m £m £ m £m £m £m Source of funds Group profit before taxation 504 404 1,407 Items not involving the

movement of funds: Depreciation 253 219 171 (Profits)/tosses before taxation

retained by associated undertakings (9) 31 (96)

Extraordinary items before taxation (38) —

Exchange rate translation differences (19)

225

(6)

206

—

75

Funds generated by operations 729 610 1,482 Funds from other sources: Net increase in loan capital — 1,128 1,027 Disposal of premises and

equipment 136 70 81 116 Net proceeds of share issues 77 32 81

116 Increase in minority

interests — 42 13 Decrease in associated

undertakings 428

641

1,370

44

1,316

1,926

1,237

2,719

Application of funds Additions to premises and

equipment Net decrease in loan capital Taxation paid Goodwill purchased Dividends paid Additions to associated

undertakings Decrease in minority interests

548 351 203

32 269

30 2

1,435

(65)

637

426 141 219

135

1,558

368

549

364 351 192

30

1,486

1,233

Represented by Increase in advances and other accounts 4,652 15,229 11,270 Increase in liquid assets 501 1,689 (6l6) (Increase) in creditors and

accrued expenses (137) (280) (794) (Increase) in current, deposit

and other accounts (5,081) (16,270) (8,627)

(65) 368 1,233

• Liquid assets comprise coin, bank notes and balances with the Bank of England and State hanks abroad, items in course of collection, money at call and short notice, bills discounted, dealing assets, certificates of deposit and investments.

26

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION

1 Principal accounting policies

(i) Accounting convention The Group accounts have been prepared under the historical cost convention modified by the inclusion of the revaluation of freehold properties and in compliance with Part VII Chapter II of the Companies Act 1985 and in accordance with applicable Statements of Standard Accounting Practice.

(it) Basis of consolidation In order to avoid undue delay in the presentation of the Group's accounts, the accounts of certain subsidiary undertakings have been made up to 30 September or 30 November; National Westminster Bank of Canada's accounts have been made up to 31 October to comply with local legislation; the accounts of certain securities businesses in the U.K, are made up to the London Stock Exchange end-of-account date immediately preceding 31 December.

(iii) Goodwill The excess of the cost of shares in subsidiary and associated undertakings over the fair value of underlying separable net assets at the date of acquisition is deducted from the Group's reserves in the year of acquisition. Other purchased goodwill is similarly written off against reserves in the year of acquisition.

(iv) Provision for bad a n d doubtful debts Provision for bad and doubtful debts is made as considered necessary having regard to both specific and general factors. The general element arises in relation to existing losses which, although not separately identified, are known from experience to be present in any portfolio of bank advances. Provision made (less amounts released) during the year is charged against profits (note 12). Advances are written down to estimated realisable value when the normal banking relationship with the borrower has ceased. Generally, interest on advances up to that time is credited to profit and loss account and provision made as appropriate.

(v) Investments in associated undertakings The Group's investments in associated undertakings are included in the consolidated balance sheet at the Group's share of net tangible assets.

(vi) Other investments Dated investments are stated at cost adjusted for the amortisation of premiums or discounts on a straight-line basis over the period to maturity; investment income includes the amortisation of premiums or discounts. Undated investments are stated at the lower of cost and valuation. Dealing assets are stated at market value.

(vii) Foreign currencies Assets and liabilities, and the results of overseas subsidiary and associated undertakings in foreign currencies have been translated to sterling at rates current on 31 December. Exchange differences arising from retranslation of opening net assets of overseas subsidiary and associated undertakings have been taken to reserves together with exchange differences arising on retranslating related foreign-currency borrowings,

(viii) Deferred taxation Tax deferred or accelerated by timing differences is accounted for to the extent that it is probable that a liability or asset will arise. It is calculated at rates expected to be applicable when the liabilities or assets are expected to crystallise.

27

(ix) Finance lease and operating lease assets The amounts receivable under finance leases and operating lease assets are included with other amounts receivable under "Advances and other accounts". Income from finance leases (including regional development grants grossed up to reflect their tax free nature) and instalment credit agreements is credited to profit and loss account in proportion to the funds invested.

Income from operating lease assets is credited to profit and loss account on a straight-line basis over the period of the contract.

(x) Depreciation Land is not depreciated. It is the Group's policy to maintain its properties in a state of good repair. In the case of freehold and long leasehold properties, the Directors continue to assess the lives of these properties and consider that residual values are such that depreciation is not significant; consequently these properties are not depreciated.

Depreciation of other fixed assets is provided on a straight-line basis over estimated useful lives generallv as follows:

Leases of less than 50 years unexpired Unexpired periods Computers 5 years Motor vehicles 5 years Other plant and equipment (including fixed plant in buildings) 10-15 years

2 Exceptional Items 1990 1989

£m £ m Restructuring costs Provisions relating to civil claims and costs arising from

(46) --

Blue Arrow PLC rights issue (5) (50)

(51) (50)

• The amounts for the year ended 31 December 1990 have been restated to reflect restructuring costs now presented as exceptional items.

28

(xi) Pensions The pension cost relating to U.K. schemes is assessed in accordance with the advice of qualified actuaries so as to recognise the cost of pensions on a systematic basis over employees' service lives. The cost of certain overseas schemes is calculated in accordance with local law and best practice.

3 Group profit before taxation

1990 1989

is stated after: £m £m

(a) Income: (0 Aggregate amounts receivable, including capital

repayments, under finance leases, hire purchase and conditional sale Contracts operating leases

3,336 2,940 413 291

(ii) Income from investments and dealing assets listed unlisted

120 103 238 236

Profits less losses in the year on 358 339

dealing assets 58 54 investments (7) 43

409 436

Dividends from associated undertakings amounting to £13 million (1989 £132 million) are not included above.

(b) Charges:

0) Interest on loan capital repayable in more than five years or undated repayable in less than five years

336 41

377

311 48

359

(ii) Depreciation and amortisation fixed plant in buildings computers and other equipment.

47 206

253

35 184

219

(iii) Hire of computers and equipment 43 44

(iv) Rents payable receivable Jess outgoings

128 (28)

122 (30)

100 92

(v) Auditors' remuneration £000 4,116

£000 4,568

(vi) Staff Profit Sharing Schemes

Under the terms of the Staff Profit Sharing Schemes, provided that Group profit before taxation and profit-sharing amounts to at least £100 million, a payment totalling £3 million plus 5% of the excess over £100 million will be made for distribution to the staff of the Group; the allocation for 1990 amounts to £24 million (1989 £19 million).

29

4 Emoluments of Directors 1990 1989

£000 £000 Directors' fees for main board membership 165 211 Other emoluments, including pension contributions 3,287 3,154 Pensions for former Directors or dependants 208 192 Superannuation gratuities to former Directors 133 46 Compensation for loss of office as Executive Directors of the Bank — 505

3,793 4,108

The Chairman's basic salary and benefits were £268,725. His appointment is non-pensionable and a further sum of £52,500 was paid in respect of his personal pension arrangements making a total of £321,225. During 1989 Lord Boardman received £231,725 and Lord Alexander £66,250 for their respective periods as Chairman.

The total remuneration and benefits of the highest paid Director, Mr. J. H. Macdonald, were £497,612 (1989 £309,819).

The following table shows the number of Directors of the Bank in the U.K. receiving emoluments within the bands stated.

Emoluments Directors Emoluments Directors £ 1990 1989 £ 1990 1989 Up to 5,000 1 1 115,001 - 120,000 1 —

5,001 - 10,000 4 — 135,001 - 140,000 — J 10,001 - 15,000 3 1 165,001 - 170,000 — 1 15,001 - 20,000 — 2 175,001 - 180,000 — 1 20,001- 25,000 1 3 180,001 - 185,000 — 1 25,001 - 30,000 2 4 190,001 - 195,000 — 1 30,001 - 35,000 — 5 195,001 - 200,000 1 — 35,001 - 40,000 1 — 200,001 - 205,000 — 1 40,001 - 45,000 2 1 205,001-210,000 — 1 45,001 - 50,000 1 — 230,001-235,000 __ 1 55,001 - 60,000 1 — 260,001-265,000 2 — 60,001 - 65,000 1 — 270,001-275,000 1 — 70,001 - 75,000 1 — 295,001-300,000 1 1 80,001 - 85,000 1 — 305,001-310,000 — 1 90,001- 95,000 — 1 320,001 - 325,000 1 —

105,001-110,000 — 2 345,001 - 350,000 1 _ 110,001 - 115,000 — 2 495,001 - 500,000 1 —

30

5 Pension costs The Group operates a number of pension schemes throughout the world. The major schemes, which cover 95% of the Group's employees, are defined benefit schemes and their assets are held in trust funds separate from the Group. The total pension cost for the Group was £,212 million (1989 -£201 million). The pension cost relating to the U.K. schemes is assessed in accordance with the advice of qualified actuaries. £13 million (1989 £12 million) of the total pension cost relates to foreign schemes (of which £3 million (1989 £5 million) has been determined in accordance with best practice and regulations in the U.S.).

At the date of the latest formal review of the major U.K. schemes, which was as at 31 March, 1990, the market value of their assets was £4,334 million and the actuarial value of the assets was sufficient to cover 104% of the future benefits that had accrued to members after allowing for expected increases in earnings. The valuation was carried out using the projected unit method, on the basis that adjustment is made to the ongoing contribution rate, over a period approximating to the average future service life of members of the schemes in respect of any imbalance between assets and liabilities. The assumptions, determined in consultation with the actuaries, which have the most significant effect on the results of the valuation are those relating to the period of return on new investments and the rates of increase in salaries, pensions and dividends. It has been assumed, for both 1990 and 1989, that the real rate of return on new investments, relative to price inflation of 6%, will be 4% per annum, that the real rate of increase in future earnings will be 2% per annum, that pensions increases will be equal to approximately 90% of the rate of price inflation and that, in the long term, dividend growth will be 0.5% per annum less than price inflation.

6 Taxation 1990 1989

£ m £ m

The Bank and subsidiary undertakings U.K. corporation tax at 35% 105 105 Relief for double taxation (4) (8)

Tax credit on franked investment income 101

19 97 13

Deferred taxation 129 (33) Overseas taxes 31 45

280 122 Share of associated undertakings' taxation 12 39

292 161

The tax charge for the year at 58% (1989 40%) is significantly higher than the U.K. corporation tax rate of 35%, mainly because of losses arising overseas, principally in the U.S., for which no relief is currently available, and disallowable provisions for bad and doubtful debts.

7 Extraordinary items

Surplus on disposal of investment in

1990 1989

Surplus on disposal of investment in £ m £m

Yorkshire Bank PLC, after tax of £87 million Loss on discontinuance of primary dealership

163 —

in New York, after tax credit of £ 3 million — (6) Provisions in respect of trade investments

163

(29)

(35)

31

8 Earnings per ordinary share Earnings per ordinary shares are calculated on the "Group profit after taxation and before extraordinary items™ of £207 million (1989 £233 million; 1988 £938 million) and on the weighted average of 1,600 million ordinary shares (1989 1,564 million; 1988 1,522 million) in issue during the year.

The weighted average number of ordinary shares has been adjusted for the effects of the capitalisation issue in June 1989.

9 Dealing assets 1990 1989 £m £ m

Listed in Great Britain 419 289 Listed elsewhere 569 453

988 742 Unlisted 287 197

1,275 939

Listed investments are stated at middle market prices and unlisted investments at Directors' estimates.

10 Investments 1990

Balance Sheet

1990

Valuation

1989 Balance

Sheet

1989

Valuation

£m £m £m £m Listed Securities of, or guaranteed by,

the British Government 128 121 138 133 Other securities listed in Great Britain 20 27 65

953 87

938 Securities listed elsewhere 1,309 1,292

1,457 1,440 1,156 2,628

1,158 2,663 Unlisted 2,364 2,375

3,821 3,815 3,784 3,821

The valuation of listed investments is at middle-market prices and of unlisted investments at Directors' estimates.

11 Advances and other accounts 1990 1989

£m £m Due from customers* (less provision) 80,838 77,091 Market placings over one month Other debtors and prepaid expenses

9,735 2,545

9,154 2,314

1,l6l 1,068 Operating lease assets

94,279 89,627

♦Amounts due from customers include £4,327 million (1989 £3,962 million) receivable under finance leases and .£2,470 million (1989 £2,421 million) in respect of hire purchase and conditional sale agreements. Operating lease assets are stated after accumulated depreciation of £326 million (1989 £254 million).

32

12 Provision for bad and doubtful debts 1990 1989