Credit Guarantee Scheme

Guarantee

8. The guarantee will be provided by HM Treasury in relation to eligible instruments by the relevant institution. It is unconditional, irrevocable and ensures timely payment. The Deed of Guarantee is available to be viewed at www.dmo.gov.uk.

Period during which guarantees will be issued

9. The Government will guarantee specified bank and building society debt instruments issued during a six-month period (the “Issuance Period”) from the date of this Market Notice, subject to any extension at the discretion of HM Treasury.

Fee

10. The fee payable to HM Treasury on guaranteed issues will be based on a per annum rate of 50 basis points plus 100% of the institution’s median five-year Credit Default Swap (CDS) spread during the twelve months to 7 October 2008, as determined by HM Treasury. This fee will be applied to the principal amount of an interest bearing debt instrument and in the case of non-interest bearing debt instrument to the gross proceeds of issue of debt instruments. HM Treasury may apply its own estimate of an appropriate CDS spread if public data is unavailable. In addition, HM Treasury may charge an incremental fee to any guarantee being applied to non-sterling denominated issuance.

11. The fee is payable three-monthly in arrears and/or on maturity from the earlier of the third business day after the date of the guarantee certificate and the date of the guaranteed debt issuance. The fee may be varied at HM Treasury’s discretion.

Instruments guaranteed

Eligible Liabilities comprise, in broad terms, sterling deposit liabilities, excluding deposits with an original maturity of over two years, plus any sterling resources obtained by switching foreign currencies into sterling. Interbank transactions (excluding cash ratio and special deposits with the Bank of England) are taken into the calculation of an individual institution’s eligible liabilities on a net basis, irrespective of term, except for unsubordinated capital market instruments with a maturity of five years or more (more than five years from 1992) which are not taken into account. Adjustments are also made in respect of transit items and liabilities and claims under sale and repurchase agreements

12. Instruments eligible to be guaranteed are Certificates of Deposit (CDs); Commercial Paper (CP); and senior unsecured bonds and notes. The guarantee may be applied to stand-alone debt securities or to instruments issued off programmes, and to plain vanilla, non-complex instruments only, in each case approved by HM Treasury at its sole discretion.

13. Instruments must be denominated in sterling, euro or US dollars.

Term of guaranteed instruments

14. The term of the instruments guaranteed under the Scheme must be no longer than three years.

15. Within that period of three years, rollovers of guaranteed instruments maturing after the end of the Issuance Period are permitted under programmes, subject to the total guaranteed amount not increasing and rollovers being continuous with a maturity date not going beyond 13 April 2012.

16. The issuer may not trigger early redemption, either in full or in part, ahead of the scheduled maturity date of the instrument guaranteed under the Scheme.

17. The guarantee will terminate at midnight on 13 April 2012, unless extended at the discretion of HM Treasury.