tesco personal finance plc - london stock …€¦ · tesco personal finance plc (incorporated with...

TESCO PERSONAL FINANCE PLC(incorporated with limited liability under the laws of Scotland)

£2,000,000,000 Euro Note Programme

Under this £2,000,000,000 Euro Note Programme (the Programme) Tesco Personal Finance PLC (theIssuer) may from time to time issue notes (the Notes) denominated in any currency agreed between theIssuer and the relevant Dealer (as defined on page 2).

An investment in Notes issued under the Programme involves certain risks. For a description ofthese risks, see “Risk Factors” below.

Application has been made to the Financial Services Authority (the UK Listing Authority) in its capacityas competent authority under the Financial Services and Markets Act 2000, as amended (the FSMA) forNotes issued during the period of 12 months from the date of this Offering Circular to be admitted to theofficial list of the UK Listing Authority (the Official List) and to the London Stock Exchange plc (theLondon Stock Exchange) for such Notes to be admitted to trading on the London Stock Exchange’sregulated market. References in this Offering Circular to Notes being “listed” (and all related references)shall either mean that such Notes have been admitted to trading on the London Stock Exchange’s regulatedmarket and have been admitted to the Official List or shall be construed in a similar manner in respect ofany other EEA State Stock Exchange, as applicable. The expression “EEA State” when used in this OfferingCircular has the meaning given to such term in the FSMA (as defined above). The London Stock Exchange’sregulated market is a regulated market for the purposes of Directive 2004/39/EC (the Markets in FinancialInstruments Directive). Notice of the aggregate nominal amount of Notes, interest (if any) payable inrespect of Notes, the issue price of Notes and any other terms and conditions not contained herein whichare applicable to each Tranche (as defined on page 51) of Notes will be set forth in a final terms document(the Final Terms) which, with respect to Notes to be listed on the London Stock Exchange, will be deliveredto the UK Listing Authority and to the London Stock Exchange on or before the date of issue of the Notesof such Tranche or such later date as the UK Listing Authority and the London Stock Exchange may agree.

The Programme provides that Notes may be listed or admitted to trading, as the case may be, on suchother or further stock exchanges or markets as may be agreed between the Issuer and the relevant Dealer.The Issuer may also issue unlisted Notes and/or Notes not admitted to trading on any market.

Any person (an Investor) intending to acquire or acquiring any securities from any person (an Offeror)should be aware that, in the context of an offer to the public as defined in section 102B of the FSMA, theIssuer may be responsible to the Investor for the Offering Circular under section 90 of FSMA, only if theIssuer has authorised that Offeror to make the offer to the Investor. Each Investor should therefore enquirewhether the Offeror is so authorised by the Issuer. If the Offeror is not authorised by the Issuer, the Investorshould check with the Offeror whether anyone is responsible for the Offering Circular for the purposes ofsection 90 of FSMA in the context of the offer to the public, and, if so, who that person is. If the Investoris in any doubt about whether it can rely on the Offering Circular and/or who is responsible for its contents,it should take legal advice.

Arranger

CITIDealers

Barclays Capital BNP PARIBASCiti Deutsche BankHSBC J.P. Morgan CazenoveThe date of this Offering Circular is 5th August, 2010.

This Offering Circular comprises a base prospectus for the purposes of Article 5.4 of Directive 2003/71/ECof 4th November 2003 of the European Parliament and the Council of the European Union (theProspectus Directive).

The Notes may be issued on a continuing basis to one or more of the Dealers specified on page 7 and anyadditional Dealer appointed under the Programme from time to time, which appointment may be for aspecific issue or on an ongoing basis (each a Dealer and together the Dealers). References in this OfferingCircular to the “relevant Dealer” shall, in the case of an issue of Notes being (or intended to be) subscribedby more than one Dealer, be to all Dealers agreeing to purchase such Notes.

The Notes of each Tranche will initially be represented by a temporary global Note which will be depositedon the issue date thereof with a common safekeeper or common depositary for Clearstream Banking,société anonyme (Clearstream, Luxembourg) and Euroclear Bank S.A./N.V. (Euroclear) and/or any otheragreed clearing system and which will be exchangeable, as specified in the applicable Final Terms, for eithera permanent global Note or Notes in definitive form, in each case upon certification as to non-U.S.beneficial ownership as required by U.S. Treasury regulations. A permanent global Note will beexchangeable for Notes in definitive form upon request (unless otherwise specified in the applicable FinalTerms), all as further described in “Form of the Notes” below.

The Issuer may agree with any Dealer and the Trustee (as defined on page 51) that Notes may be issued ina form not contemplated by the Terms and Conditions of the Notes herein, in which event a supplementalOffering Circular, if appropriate, will be made available which will describe the effect of the agreementreached in relation to such Notes (other than in the case of Notes which are neither (i) admitted to tradingon a regulated market in an EEA State nor (ii) offered to the public in an EEA State in circumstances wherea prospectus is required to be published under the Prospectus Directive).

The Issuer (the Responsible Person) accepts responsibility for the information contained in this OfferingCircular. To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensurethat such is the case) the information contained in this Offering Circular is in accordance with the facts anddoes not omit anything likely to affect the import of such information.

The previous paragraph should be read in conjunction with the 5th paragraph on the first page of thisOffering Circular.

Subject as provided in the applicable Final Terms, the only persons authorised to use this Offering Circularin connection with an offer of Notes are the persons named in the applicable Final Terms as the relevantDealer or the Managers and the persons named in or identifiable following the applicable Final Terms asthe Financial Intermediaries (as defined on page 34), as the case may be.

AN INVESTOR INTENDING TO ACQUIRE OR ACQUIRING ANY NOTES FROM AN OFFEROR WILL DOSO, AND OFFERS AND SALES OF THE NOTES TO AN INVESTOR BY AN OFFEROR WILL BE MADE,IN ACCORDANCE WITH ANY TERMS AND OTHER ARRANGEMENTS IN PLACE BETWEEN SUCHOFFEROR AND SUCH INVESTOR INCLUDING AS TO PRICE, ALLOCATIONS AND SETTLEMENTARRANGEMENTS. THE ISSUER WILL NOT BE A PARTY TO ANY SUCH ARRANGEMENTS WITHINVESTORS (OTHER THAN THE DEALERS) IN CONNECTION WITH THE OFFER OR SALE OF THENOTES AND, ACCORDINGLY, THIS OFFERING CIRCULAR AND ANY FINAL TERMS WILL NOTCONTAIN SUCH INFORMATION. THE INVESTOR MUST LOOK TO THE OFFEROR AT THE TIME OFSUCH OFFER FOR THE PROVISION OF SUCH INFORMATION. THE ISSUER HAS NO RESPONSIBILITYTO AN INVESTOR IN RESPECT OF SUCH INFORMATION.

This Offering Circular is to be read in conjunction with all documents which are deemed to be incorporatedherein by reference (see “Documents Incorporated by Reference” below). This Offering Circular shall beread and construed on the basis that such documents are so incorporated and form part of this OfferingCircular.

Copies of the Final Terms will be available from the registered office of the Issuer and the specified officeof each of the Paying Agents (as defined on page 51) (save that Final Terms relating to a Note which isneither admitted to trading on a regulated market in an EEA State nor offered to the public in an EEA Statein circumstances where a prospectus is required to be published under the Prospectus Directive will only beobtainable by a holder of such Note and such holder must produce evidence satisfactory to the Issuer or,as the case may be, the relevant Paying Agent as to its holding of such Notes and identity), and copies ofFinal Terms relating to Notes which are admitted to trading on the London Stock Exchange’s regulatedmarket and/or offered in the United Kingdom in circumstances where a prospectus is required to be

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published under the Prospectus Directive will also be available on the website of the Regulatory NewsService operated by the London Stock Exchange.

Save for the Issuer, no other party has separately verified the information contained herein. Accordingly,no representation, warranty or undertaking, express or implied, is made and no responsibility or liability isaccepted by any Dealer, the Arranger or the Trustee as to the accuracy or completeness of the informationcontained in this Offering Circular or any other information provided by the Issuer in connection with theProgramme or the Notes or their distribution. The statements made in this paragraph are made withoutprejudice to the responsibility of the Issuer under the Programme. No person is or has been authorised togive any information or to make any representation not contained in or not consistent with this OfferingCircular or any other information supplied in connection with the Programme or the Notes and, if given ormade, such information or representation must not be relied upon as having been authorised by the Issuer,any Dealer, the Arranger or the Trustee.

Neither this Offering Circular nor any other information supplied in connection with the Programme or anyNotes (i) is intended to provide the basis of any credit or other evaluation or (ii) should be considered as arecommendation or as constituting an invitation or offer by the Issuer, any Dealer, the Arranger or theTrustee that any recipient of this Offering Circular or any other information supplied in connection with theProgramme or any Notes should purchase any Notes. Each investor contemplating purchasing any Notesshould make its own independent investigation of the financial condition and affairs, and its own appraisalof the creditworthiness, of the Issuer. Neither this Offering Circular nor any other information supplied inconnection with the Programme or the issue of any Notes constitutes an offer by or on behalf of the Issueror any of the Dealers or the Arranger or the Trustee to any person to subscribe for or to purchase any Notes.

Neither the delivery of this Offering Circular nor the offering, sale or delivery of any Notes shall at any timeimply that the information contained herein concerning the Issuer is correct at any time subsequent to thedate hereof or that any other information supplied in connection with the Programme is correct as at anytime subsequent to the date indicated in the document containing the same. The Dealers, the Arranger andthe Trustee expressly do not undertake to review the financial condition or affairs of the Issuer during thelife of the Programme or to advise any investor in the Notes of any information coming to their attention.When deciding whether or not to purchase Notes of any Tranche, investors should review, inter alia, thedocuments incorporated by reference into this Offering Circular and any supplement to this OfferingCircular (including the Final Terms relating to such Tranche, but not including any other Final Terms).

The distribution of this Offering Circular and the offer or sale of Notes may be restricted by law in certainjurisdictions. The Issuer, the Dealers, the Arranger and the Trustee do not represent that this OfferingCircular may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with anyapplicable registration or other requirements in any such jurisdiction, or pursuant to an exemption availablethereunder, or assume any responsibility for facilitating any such distribution or offering. In particular,unless specifically indicated to the contrary in the applicable Final Terms, no action has been taken by theIssuer, the Dealers, the Arranger or the Trustee which is intended to permit a public offering of any Notesor distribution of this Offering Circular in any jurisdiction (other than the United Kingdom) where action forthat purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neitherthis Offering Circular nor any advertisement or other offering material may be distributed or published inany jurisdiction except under circumstances that will result in compliance with any applicable laws andregulations, and the Dealers have represented or, as the case may be, will be required to represent that alloffers and sales by them will be made on the same terms. Persons into whose possession this OfferingCircular or any Notes come must inform themselves about, and observe, any such restrictions. In particular,there are restrictions on the distribution of this Offering Circular and the offer or sale of Notes in the UnitedStates of America, EEA States (including the United Kingdom and the Republic of France) and Japan (see“Subscription and Sale” below).

The Notes have not been and will not be registered under the United States Securities Act of 1933, asamended, (the Securities Act) and are subject to certain U.S. tax law requirements. Subject to certainexceptions, Notes may not be offered, sold or delivered within the United States of America or to U.S.persons (see “Subscription and Sale” below).

This Offering Circular has been prepared on the basis that, except to the extent sub-paragraph (ii) belowmay apply, any offer of Notes in any Member State of the European Economic Area which has implementedthe Prospectus Directive (each, a Relevant Member State) will be made pursuant to an exemption underthe Prospectus Directive, as implemented in that Relevant Member State, from the requirement to publisha prospectus for offers of Notes. Accordingly any person making or intending to make an offer in thatRelevant Member State of Notes which are the subject of an offering contemplated in this Offering Circular

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as completed by final terms in relation to the offer of those Notes may only do so (i) in circumstances inwhich no obligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of theProspectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in eachcase, in relation to such offer, or (ii) if a prospectus for such offer has been approved by the competentauthority in that Relevant Member State or, where appropriate, approved in another Relevant MemberState and notified to the competent authority in that Relevant Member State and (in either case) published,all in accordance with the Prospectus Directive, provided that any such prospectus has subsequently beencompleted by final terms which specify that offers may be made other than pursuant to Article 3(2) of theProspectus Directive in that Relevant Member State and such offer is made in the period beginning andending on the dates specified for such purpose in such prospectus or final terms, as applicable. Except tothe extent sub-paragraph (ii) above may apply, neither the Issuer nor any Dealer have authorised, nor dothey authorise, the making of any offer of Notes in circumstances in which an obligation arises for the Issueror any Dealer to publish or supplement a prospectus for such offer.

All references in this Offering Circular to Sterling and £ refer to the currency of the United Kingdom, toU.S. dollars, U.S.$ and $ refer to the currency of the United States of America, to Swiss francs refer tothe currency of Switzerland and to euro and € refer to the currency introduced at the start of the thirdstage of European economic and monetary union pursuant to the Treaty on the Functioning of theEuropean Union, as amended.

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as the StabilisingManager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicable Final Terms mayover-allot Notes or effect transactions with a view to supporting the market price of the Notes at a levelhigher than that which might otherwise prevail. However, there is no assurance that the StabilisingManager(s) (or persons acting on behalf of a Stabilising Manager) will undertake stabilisation action. Anystabilisation action may begin on or after the date on which adequate public disclosure of the terms of theoffer of the relevant Tranche of Notes is made and, if begun, may be ended at any time, but it must endno later than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days afterthe date of the allotment of the relevant Tranche of Notes. Any stabilisation action or over-allotment mustbe conducted by the relevant Stabilising Manager(s) (or persons acting on behalf of any StabilisingManager(s)) in accordance with all applicable laws and rules.

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Table of Contents

Page

Summary of the Programme ..................................................................................................... 6

Risk Factors.................................................................................................................................. 11

Documents Incorporated by Reference .................................................................................... 23

Supplements and New Offering Circulars ................................................................................ 24

Form of the Notes....................................................................................................................... 25

Form of Final Terms.................................................................................................................... 27

Form of Final Terms.................................................................................................................... 40

Terms and Conditions of the Notes .......................................................................................... 51

Use of Proceeds .......................................................................................................................... 69

Selected Financial Information .................................................................................................. 70

Tesco Personal Finance PLC........................................................................................................ 75

Taxation....................................................................................................................................... 88

Subscription and Sale ................................................................................................................. 90

General Information ................................................................................................................... 93

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Summary of the Programme

This summary must be read as an introduction to this Offering Circular and any decision to investin any Notes should be based on a consideration of this Offering Circular as a whole, includingthe documents incorporated by reference. Following the implementation of the relevantprovisions of the Prospectus Directive in an EEA State no civil liability will attach to theResponsible Person in any such State in respect of this Summary, including any translationhereof, unless it is misleading, inaccurate or inconsistent when read together with the otherparts of this Offering Circular. Where a claim relating to information contained in this OfferingCircular is brought before a court in an EEA State, the plaintiff may, under the national legislationof the State where the claim is brought, be required to bear the costs of translating the OfferingCircular before the legal proceedings are initiated.

Words and expressions defined in “Form of the Notes” and “Terms and Conditions of the Notes” belowshall have the same meanings in this summary.

Issuer: Tesco Personal Finance PLC

The Issuer is a public limited company organised under the laws ofScotland.

The Issuer is a wholly-owned indirect subsidiary of Tesco PLC(Tesco), the holding company of the Tesco group (the TescoGroup). The Issuer provides a wide range of retail financial serviceproducts, primarily in the United Kingdom, to personal customers.

Products offered to its customers include general insurance, creditcards, personal loans, personal savings products and a network ofautomated teller machines.

A significant proportion of the Issuer’s United Kingdom customerbase are existing Tesco Group customers that utilise other retailservices offered by Tesco.

Risk Factors: There are certain factors that may affect the Issuer’s ability to fulfilits obligations under Notes issued under the Programme. These areset out under “Risk Factors” below and include:

• general and sector-specific economic conditions in themarkets in which it operates;

• the competitive markets for United Kingdom retail financialservices in which it operates;

• credit risk in relation to its customers and counterparties;

• operational risk;

• interest rate and liquidity risk;

• risks in relation to its insurance business including event risk;

• legal and regulatory risk in relation to the financial sector;and

• tax, reputational, systems and pensions exposure risks.

In addition, there are certain factors which are material for thepurpose of assessing the market risks associated with Notes issuedunder the Programme, see “Risk Factors”.

Description: Euro Note Programme

Arranger: Citigroup Global Markets Limited

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Dealers: Barclays Bank PLCBNP ParibasCitigroup Global Markets LimitedDeutsche Bank AG, London BranchHSBC Bank plcJ.P. Morgan Securities Ltd.

The Issuer may, from time to time, terminate the appointment ofany Dealer under the Programme or appoint Dealers either inrelation to the Programme as a whole or in relation to specificissues under the Programme.

Trustee: Capita Trust Company Limited

Issuing and Principal Paying Agent: HSBC Bank plc

Size: Up to £2,000,000,000 (or its equivalent in other currenciescalculated as described in the Dealer Agreement) outstanding atany time. The Issuer may increase the amount of the Programme inaccordance with the terms of the Dealer Agreement.

Distribution: Notes may be distributed by way of private or public placementand in each case on a syndicated or non-syndicated basis inaccordance with the terms of the Dealer Agreement.

Currencies: Subject to any applicable legal or regulatory restrictions, suchcurrencies as may be agreed between the Issuer and the relevantDealer (as indicated in the applicable Final Terms).

Each issue of Notes denominated in a currency in respect of whichparticular laws, guidelines, regulations, restrictions or reportingrequirements apply will only be issued in circumstances whichcomply with such laws, guidelines, regulations, restrictions orreporting requirements from time to time (see “Subscription andSale” on page 90).

Maturities: Such maturities as may be agreed between the Issuer and therelevant Dealer and as indicated in the applicable Final Terms,subject to such minimum or maximum maturities as may beallowed or required from time to time by the relevant central bank(or equivalent body) or any laws or regulations applicable to theIssuer or the relevant Specified Currency.

At the date of this Offering Circular, the minimum maturity of allNotes is one month.

Issue Price: Notes may be issued on a fully-paid or a partly-paid basis and at anissue price which is at par or at a discount to, or premium over, par.

Form of Notes: Each Tranche of Notes will be in bearer form and will initially berepresented by a temporary global Note. If the Global Notes areintended to be issued in new global note (NGN) form, as stated inthe applicable Final Terms, the temporary global Note will bedelivered on the original issue date of the Tranche to a commonsafekeeper (the Common Safekeeper) for Euroclear Bank SA/NV(Euroclear) and Clearstream Banking, société anonyme(Clearstream, Luxembourg); and if the global Notes are notintended to be issued in NGN form, the temporary global Note willbe delivered on the original issue date of the Tranche to a commondepositary (the Common Depositary) for Euroclear andClearstream, Luxembourg and/or any other agreed clearing systemand be exchangeable, upon request, as described therein for eithera permanent global Note or definitive Notes (as indicated in theapplicable Final Terms and subject, in the case of definitive Notes,to such notice period as is specified in the applicable Final Terms)in each case not earlier than 40 days after the Issue Date upon

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certification of non-U.S. beneficial ownership as required by U.S.Treasury regulations. The applicable Final Terms will specify that apermanent global Note either (i) is exchangeable (in whole but notin part) for definitive Notes upon not less than 60 days’ notice or(ii) is exchangeable (in whole but not in part) for definitive Notesonly upon the occurrence of an Exchange Event, as described in“Form of the Notes” below. Any interest in a global Note will betransferable only in accordance with the rules and procedures forthe time being of Clearstream, Luxembourg, Euroclear and/or anyother agreed clearing system, as appropriate.

Fixed Rate Notes: Interest on Fixed Rate Notes will be payable on such date or datesas may be agreed between the Issuer and the relevant Dealer (asindicated in the applicable Final Terms) and on redemption, andwill be calculated on the basis of such Fixed Day Count Fraction asmay be agreed between the Issuer and the relevant Dealer.

Floating Rate Notes: Floating Rate Notes will bear interest at a rate determined:

(i) on the same basis as the floating rate under an interest rateswap transaction in the relevant Specified Currency governedby an agreement incorporating the 2006 ISDA Definitions (aspublished by the International Swaps and DerivativesAssociation, Inc., and as amended and updated as at theIssue Date of the first Tranche of the Notes of the relevantSeries); or

(ii) on the basis of a reference rate appearing on the agreedscreen page of a commercial quotation service; or

(iii) on such other basis as may be agreed between the Issuer andthe relevant Dealer,

as indicated in the applicable Final Terms.

The Margin (if any) relating to such floating rate will be agreedbetween the Issuer and the relevant Dealer for each Series ofFloating Rate Notes.

Index Linked Notes: Payments of principal in respect of Index Linked Redemption Notesor of interest in respect of Index Linked Interest Notes will becalculated by reference to such index and/or formula as the Issuerand the relevant Dealer may agree (as indicated in the applicableFinal Terms).

Floating Rate Notes and Index Linked Interest Notes may also havea maximum interest rate, a minimum interest rate or both (asindicated in the applicable Final Terms).

Interest on Floating Rate Notes and Index Linked Interest Notes inrespect of each Interest Period, as selected prior to issue by theIssuer and the relevant Dealer, will be payable on such InterestPayment Dates specified in, or determined pursuant to, theapplicable Final Terms and will be calculated on the basis of suchFloating Day Count Fraction as selected by the Issuer and therelevant Dealer.

Dual Currency Notes: Payments (whether in respect of principal or interest and whetherat maturity or otherwise) in respect of Dual Currency Notes will bemade in such currencies, and based on such rates of exchange, asthe Issuer and the relevant Dealer may agree (as indicated in theapplicable Final Terms).

Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to theirnominal amount and will not bear interest.

Other provisions in relation toFloating Rate Notes and IndexLinked Interest Notes:

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Redemption: The Final Terms relating to each Tranche of Notes will indicateeither that the Notes of such Tranche cannot be redeemed prior totheir stated maturity (other than in specified instalments (seebelow), if applicable, or for taxation reasons or following an Eventof Default) or that such Notes will be redeemable at the option ofthe Issuer and/or the Noteholders. The terms of any suchredemption, including notice periods, any relevant conditions to besatisfied and the relevant redemption dates and prices will beindicated in the applicable Final Terms.

The applicable Final Terms may provide that Notes may beredeemable in two or more instalments of such amounts and onsuch dates as are indicated in the applicable Final Terms.

Denomination of Notes: Notes will be issued in such denominations as may be agreedbetween the Issuer and the relevant Dealer and as indicated in theapplicable Final Terms save that the minimum denomination ofeach Note will be such amount as may be allowed or required fromtime to time by the relevant central bank (or equivalent body) orany laws or regulations applicable to the relevant SpecifiedCurrency (see “Maturities” above).

Taxation: All payments in respect of Notes will be made without deductionfor or on account of withholding taxes imposed within the UnitedKingdom, subject as provided in Condition 7. In the event that anysuch deduction is required, the Issuer will, save in thecircumstances provided in Condition 7, be required to payadditional amounts to cover the amount so deducted.

Negative Pledge: The terms and conditions of the Notes contain a negative pledgeprovision as described in Condition 3.

Cross Default: The terms and conditions of the Notes contain a cross-defaultprovision as described in Condition 9.

Status of the Notes: The Notes will constitute direct, unconditional, unsubordinatedand (subject to the provisions of Condition 3) unsecuredobligations of the Issuer and will rank pari passu among themselvesand (save for certain debts preferred by law) equally with all otherpresent and future unsecured obligations (other than subordinatedobligations, if any) of the Issuer, from time to time outstanding.

Listing: Application has been made to the UK Listing Authority for Notesissued under the Programme during the period of 12 months fromthe date of this Offering Circular to be admitted to the Official Listand to the London Stock Exchange for such Notes to be admittedto trading on the London Stock Exchange’s regulated market. TheNotes may also be listed or admitted to trading, as the case maybe, on such other or further stock exchanges or markets as may beagreed between the Issuer and the relevant Dealer in relation toeach Series.

Notes which are neither listed nor admitted to trading on anymarket may also be issued (but see “United Kingdom Taxation” forcertain important taxation implications of such Notes).

The Final Terms relating to each Tranche of Notes will statewhether or not and, if so, on which stock exchanges or marketsthe Notes are to be listed and/or admitted to trading.

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Governing Law: The Programme documentation (including the Notes) and any non-contractual obligations arising out of or in connection with theProgramme documentation will be governed by, and shall beconstrued in accordance with, English law.

Selling Restrictions: There are restrictions on the offer, sale and transfer of the Notes inthe United States of America, EEA States (including the UnitedKingdom and the Republic of France) and Japan and such otherrestrictions as may be required in connection with the offering andsale of a particular Tranche of Notes; see “Subscription and Sale”on pages 90 to 92.

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Risk Factors

The Issuer believes that the following factors may affect its ability to fulfil its obligations under Notes issuedunder the Programme. All of these factors are contingencies which may or may not occur and the Issuer isnot in a position to express a view on the likelihood of any such contingency occurring.

In addition, factors which are material for the purpose of assessing the market risks associated with Notesissued under the Programme are also described below.

The Issuer believes that the factors described below represent the principal risks inherent in investing inNotes issued under the Programme, but the inability of the Issuer to pay interest, principal or other amountson or in connection with any Notes may occur for other reasons and the Issuer does not represent that thestatements below regarding the risks of holding any Notes are exhaustive. Prospective investors should alsoread the detailed information set out elsewhere in this Offering Circular and reach their own views prior tomaking any investment decision.

Factors that may affect the Issuer’s ability to fulfil its obligations under Notes issuedunder the Programme

Investors are relying solely on the creditworthiness of the IssuerThe Notes will constitute direct, unconditional, unsubordinated and (subject to the provisions of Condition3) unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain debtspreferred by law) equally with all other unsecured obligations (other than subordinated obligations, if any)of the Issuer. Each investor in the Notes is relying on the creditworthiness of the Issuer, and no otherperson.

Business and economic risksGeneralThe Issuer’s business is subject to inherent risks arising from general and sector-specific economicconditions in the markets in which it operates, particularly the United Kingdom, in which the Issuer’searnings are predominantly generated. Over approximately the past two years, the global economy and theglobal financial system have been experiencing a period of significant turbulence and uncertainty. The verysevere dislocation of the financial markets around the world, that began in August 2007 but hassubstantially worsened since September 2008, triggered widespread problems at many large global andUnited Kingdom commercial, investment and insurance companies and other financial and relatedinstitutions. This dislocation has severely impacted general levels of liquidity, the availability of credit andthe terms on which credit is available. This crisis in the financial markets led the United KingdomGovernment and other governments to inject liquidity into the financial system and to require (andparticipate in) recapitalisation of the banking sector to reduce the risk of failure of certain large institutionsand provide confidence to the market.

Despite this intervention, the volatility and market disruption in the banking sector has continued albeitwith some easing from the second half of 2009. This market dislocation was also accompanied byrecessionary conditions and trends in many economies throughout the world, including the UnitedKingdom. The global economy has been in a severe recession, possibly the worst since World War II,although the United Kingdom has now emerged from its 18 month recession. The widespread and severedeterioration in the United Kingdom and virtually all other economies throughout the world, including, butnot limited to, consumer confidence, unemployment trends, the availability and cost of credit, the liquidityof the financial markets and market interest rates, could continue to reduce the level of demand for, andsupply of, the Issuer’s products and services, lead to lower asset and other realisations and increasednegative fair value adjustments and impairments of investments and other assets and materially andadversely impact its operating results, financial condition and prospects. While recent economic figuresshow a number of countries exiting recession, forecasts are that the recovery will be at a modest pace andis likely to be protracted. Any further significant deterioration in the United Kingdom and other economiesin which the Issuer operates could have a material adverse impact on the future results of operations of theIssuer. Moreover, economic growth may be modest and is likely to be insufficient to prevent unemploymentrising further. The rate at which deterioration of the global and United Kingdom economies has occurredhas proven very difficult to predict and this will apply to any further deterioration or any recovery.

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The performance of the Issuer may also be adversely affected by economic conditions impacting sovereignstates including euro-zone member states. For example, the financial problems currently experienced bycertain euro-zone member states may lead to the issue of significant volumes of debt, which may in turnreduce demand for debt issued by financial institutions and corporate borrowers. This could adversely affectthe Issuer’s access to the debt capital markets and may increase its funding costs, having a negative impacton its earnings and financial condition.

The volatility and disruption of the capital and credit markets (including that arising by reason of thefinancial difficulties experienced by sovereign states described above) have affected and could continue toaffect the availability and cost of credit for financial institutions, including the Issuer, and could continue toimpact the credit quality of customers and counterparties. Such conditions, alone or in combination withregulatory changes or actions of other market participants, may have a material adverse effect on theIssuer’s operating results, financial condition and prospects.

CompetitionThe markets for United Kingdom retail financial services are highly competitive, and management expectssuch competition to intensify in response to competitor behaviour, consumer demand, technologicalchanges, the impact of consolidation, regulatory actions and other factors. Moreover, United KingdomGovernment and/or European intervention in the banking sector may impact the competitive position ofthe Issuer relative to its international competitors which may be subject to different forms of governmentintervention, thus potentially putting the Issuer at a competitive disadvantage to local Issuers in suchjurisdictions. Any combination of these factors could result in a reduction in profit. The Issuer’s financialperformance and its ability to capture additional market share depends significantly upon the competitiveenvironment and management’s response to it.

The Issuer’s financial performance may be materially and adversely affected by competition, includingdeclining lending margins or competition for savings driving up funding costs which cannot be recoveredfrom borrowers.

Credit riskThe Issuer’s business, including its credit card and personal loans business, is exposed to the risk that itscustomers and counterparties may fail to meet their payment obligations to the Issuer. The risk arisesprincipally from the Issuer’s lending activities. Limits to the amount lent to a customer or counterparty havebeen established for all customers and counterparties based on their respective credit ratings. The level oflimits imposed and proposed customers or counterparties are reviewed and approved by the RiskManagement Committee (RMC).

Credit risk, arising from its unsecured lending, is managed using a variety of industry standard practices.Internal reporting and oversight of non-consumer risk assets is principally differentiated by credit ratings.Internal ratings are used to assess the credit quality of borrowers. Customers are assigned credit ratings,based on various credit grading models that reflect the probability of default.

The inability of the Issuer to correctly implement its credit-risk assessment system or a flaw in the nature ofthe design of its credit-risk assessment system could, in certain circumstances, lead to loans being made bythe Issuer to inappropriate customers or counterparties. A failure by such customers or counterparties tomeet payment obligations to the Issuer, could have a material adverse effect on the Issuer’s business.

Operational riskThe Issuer has at this stage in its development an increased element of operational risk as it currentlyoutsources most of its operations to The Royal Bank of Scotland Group. The Issuer is in the process ofbuilding new banking and insurance systems and infrastructure to decrease its reliance on The Royal Bankof Scotland Group’s banking and insurance systems and infrastructure but this process is an on-going onethat has not yet been completed. During the period of migration, any adverse impact on The Royal Bankof Scotland Group’s banking and insurance systems and infrastructure could have a material adverse effecton the Issuer’s business, financial condition and results of operations.

A transformation programme has been established to build the business systems, processes and teams forthe Issuer, staffed by experienced change professionals, the programme team manage risks across all buildteams for lines of business and central functions. There is proactive risk management to identify risks interms of potential systems or process failures that could impact customers in the future, or delays in thetransformation that create additional costs to the Issuer. The programme is subject to regular reporting and

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there are appropriate mitigation plans in place. There is also continuous oversight from seniormanagement, board members and the audit function. The transformation programme is a complex systemsproject, which may be subject to unforeseen errors and delays.

The Issuer will also be subject to the risk of unexpected losses arising from operational failure of its ownbusiness and insurance systems and infrastructure, whether as a result of human error, systems failures,fraud or inadequate controls. Any adverse impact on the Issuer’s own banking and insurance systems andinfrastructure could have a material adverse effect on the Issuer’s business, financial condition and resultsof operations.

Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that the Issuerwill be unable to comply with its obligations as a company with securities admitted to the Official List or asa supervised firm regulated by the Financial Services Authority.

Interest rate riskInterest rate risk arises where assets and liabilities in the Issuer’s banking activities have differentcharacteristics. The Issuer seeks to minimise the sensitivity of net interest income to changes in interestrates. Potential exposures to interest rate movements in the medium to long term are measured andcontrolled through position and sensitivity limits. Risk is managed through the execution of appropriateinterest rate derivatives in accordance with risk policies defined by RMC.

Liquidity riskThe Issuer’s business is subject to risks concerning liquidity, which are inherent in banking operations. Ifaccess to liquidity is constrained for a prolonged period of time, this could affect the Issuer’s profitabilityand in extreme circumstances its ability to meet obligations on time.

The Issuer adheres to the liquidity requirements set by the Financial Services Authority (FSA) from time totime. In the United Kingdom, the FSA requires the Issuer to adopt appropriate policies in order to be self-sufficient for liquidity purposes for both business as usual and stress scenarios. To meet regulatoryrequirements a high quality liquid and marketable asset portfolio is maintained. Cash flow commitmentsand marketable asset holdings are measured and managed on a daily basis. The Issuer believes it hassufficient liquidity to meet foreseeable outflow requirements as they fall due. However, under extreme andunforeseen circumstances a prolonged and severe restriction on the Issuer’s access to liquidity could affectthe Issuer’s ability to meet its financial obligations as they fall due or to fulfil its commitments to lend, andin such extreme circumstances the Issuer may not be in a position to continue to operate without additionalfunding support, which it may be unable to access, which could have a material impact on the Issuer’ssolvency, including its ability to meet its regulatory minimum liquidity requirements which in turn couldhave a material adverse effect on the Issuer’s business, financial condition and results of operations.

The Issuer has utilised the UK Credit Guarantee Scheme as well as the Special Liquidity Scheme (see “TescoPersonal Finance, Funding and Liquidity” below). The Special Liquidity Scheme was closed for newtransactions in January 2009 and the UK Credit Guarantee Scheme was closed for new issuance in February2010 and it is not expected that either Scheme will be renewed or extended. The Issuer expects that it willbe able, to the extent necessary, to refinance the £225 million bonds issued under the UK Credit GuaranteeScheme and due for repayment in 2012 and to replace the liquidity provided by its holding of £401 millionof UK Treasury Bills under the Special Liquidity Scheme when they are redelivered to the Bank of Englandin December 2011 or January 2012, in each case through its own cash or alternative funding resources overthe next two years, but there can be no assurance that it will be able to do so. Any such failure could havea material adverse effect on the financial position of the Issuer.

Insurance riskThe Issuer is exposed to insurance risk indirectly through its profit sharing commission arrangement withThe Royal Bank of Scotland Group.

Insurance risk is the risk of fluctuations in the timing, frequency or severity of insured events, relative to theexpectations at the time of underwriting. In addition, market conditions may not allow the Issuer topurchase the amount of re-insurance it considers necessary on terms it considers acceptable. Actual claimsmay exceed the claims provisions that have been made on the basis of past experience.

The frequency and severity of claims and the sources of uncertainty for the key classes that the Issuer isexposed to are as follows:

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• Motor insurance: claims experience is quite variable, due to a wide range of factors, but the principalones are age, sex and driving experience, type and nature of vehicle, use of vehicle and area. Thereare many sources of uncertainty that will affect the Issuer’s experience under motor insuranceincluding operational risk, reserving risk, premium rates not matching claims inflation rates, theweather, the social, economic and legislative environment and reinsurance failure risk.

• Motor claims – Third Party Bodily Injury: There are currently significant market wide inflationarypressures on personal motor bodily injury claims arising from both increased frequency of injuryclaims and higher than expected inflation in settled costs. According to industry reports, this is, inpart, being driven by the increasing influence of claims management companies causing both ahigher number of claims and a higher proportion of claims involving multiple claimants and/or thirdparty legal costs.

• Property insurance: the major causes of claims for property insurance are theft, flood, escape ofwater, fire, storm, subsidence and various types of accidental damage. The major source ofuncertainty is the volatility of weather. A large weather related event could generate the largestadverse variance against expected levels of losses for the Issuer’s insurance business.

Should a significant insurance risk or event materialise, it could have a material adverse effect on theIssuer’s business, financial condition and results of operations.

People capabilitiesIt is critical to the Issuer’s success to attract, retain, develop and motivate the best people with the rightcapabilities at all levels of operations. The Issuer considers its people policies regularly and is committed toinvesting in training and development and incentives for its people. The Issuer’s ‘Talent Planning’ processhelps individuals achieve their full potential. The Issuer also carries out succession planning to ensure thatthe needs of the business going forward are considered and provided for. If the Issuer failed to attract andretain the best people with the right capabilities at all levels of its operations, it could have a materialadverse effect on the Issuer’s business, financial condition and results of operations.

Legal and regulatory risksGeneralThe Issuer is subject to significant legislative and regulatory oversight. In particular, it is subject tosupervision by the FSA, which has substantial powers of intervention; the Issuer is required to satisfy certaincapital adequacy and liquidity ratios. If the Issuer is unable or fails to satisfy these ratios in the future, itcould lose its licence and, consequently, its ability to transact business. Furthermore as described below,under the Banking Act 2009, the Treasury has wide powers to make certain orders, including withretrospective effect, in respect of an authorised deposit-taking institution such as the Issuer. The orders mayinclude transfers of property, rights and liabilities and other orders that could adversely affect the Issuer’sassets and liabilities. Future changes in regulation, fiscal or other policies are unpredictable and beyond thecontrol of the Issuer and could materially adversely impact the Issuer’s business.

Areas where changes could have an adverse impact include, but are not limited to:

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

• general changes in government or regulatory policy, or changes in regulatory regimes that maychange the structure of the markets in which the Issuer operates and the products offered or mayincrease the costs of doing business in those markets;

• changes to prudential regulatory rules relating to capital adequacy and liquidity frameworks;

• external bodies applying or interpreting standards or laws differently to those applied by the Issuerhistorically;

• changes in competition and pricing environments;

• further developments in requirements relating to financial reporting, corporate governance, conductof business and employee compensation;

• expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreignownership; and

• other unfavourable political, military or diplomatic developments producing social instability or legaluncertainty which, in turn, may affect demand for the Issuer’s products and services.

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In the United Kingdom and elsewhere, there is increased political and regulatory scrutiny of the bankingindustry and, in particular, retail banking. The United Kingdom Government, the FSA and other regulatorsin the United Kingdom or overseas may intervene further in relation to areas of industry risk alreadyidentified, or in new areas, which could adversely affect the Issuer.

Increased regulatory intervention may lead to requests from regulators to carry out wide ranging reviewsof past sales and/or sales practices. In the United Kingdom, the Competition Commission, the FSA and theOffice of Fair Trading (OFT) have recently carried out, or are currently conducting, several inquiries.Regulatory reviews and investigations may result in enforcement actions and public sanction, which couldexpose the Issuer to an increased risk of litigation in addition to financial penalties and/or the deploymentof such regulatory tools as the relevant regulator deems appropriate in the circumstances.

In April 2009 the OFT indicated its intention to focus its efforts in the financial services markets on thebanking sector, including credit, leasing and debt recovery activities. Amongst other plans, it announced itsintention to launch a review of the unsecured consumer credit sector in 2009.

The FSA published the Turner Review (“A Regulatory Response to the Global Banking Crisis”) on18th March 2009. The Turner Review assesses the various factors which contributed to the severe financialproblems suffered by deposit-taking institutions at the end of 2008, and then considers a wide range ofproposals to counter these factors and reform global financial regulation. These proposals include, amongstother things, significantly increasing deposit-taking institutions’ minimum regulatory capital requirements,regulating deposit-taking institutions’ liquidity requirements, requiring deposit-taking institutions’ toestablish capital buffers and a major shift in the supervisory approach of the FSA. The proposals could havean adverse impact on the shape of the Issuer’s business model. In the Issuer’s view, deposit-takinginstitutions can also expect a shift from the previous “light touch” principles-based regime to a moreintensive, and interventionist, rules-based regime. The cost of compliance with these proposals may welllead to reduced profitability, as well as to a lower return on equity.

Amendments to a number of EU directives are being considered, including the, Markets in FinancialInstruments Directive; Capital Requirements Directive, E-Money Directive, and the Financial IssuersDirective. Compliance with any changes in regulation or with any regulatory intervention resulting frompolitical or regulatory scrutiny may significantly increase the Issuer’s costs, impede the efficiency of itsinternal business processes, limit its ability to pursue business opportunities, or diminish its reputation. Anyof these consequences could have a material adverse effect on the Issuer’s operating results, financialcondition and prospects.

Banking Act 2009Under Part 1 of the Banking Act 2009 (the 2009 Act) which received Royal Assent on 12th February 2009and came into effect on 21st February 2009, actions may be taken by the United Kingdom Treasury (theTreasury) and the Bank of England pursuant to the special resolution regime, instituted to address asituation where all or part of the business of a United Kingdom institution with permission to acceptdeposits under the FSMA (a UK Bank) (such as the Issuer) has encountered, or is likely to encounter,financial difficulties. The 2009 Act gives the Treasury certain wide powers to support the implementationof the stabilisation measures contemplated by the 2009 Act.

These powers, which apply regardless of any contractual restrictions, include (a) power to issue sharetransfer instruments or orders pursuant to which there may be transferred to a commercial purchaser or anominee of or company wholly owned by the Treasury, all or some of the securities (as defined inSection 14 of the 2009 Act) issued by a UK Bank; the share transfer order can extend to a wide range of“securities” including shares and bonds issued by a UK Bank or its holding company and warrants for suchshares and bonds and (b) the power to transfer all or some of the property, rights and liabilities of a UKBank to a commercial purchaser or Bank of England entity. In certain circumstances encumbrances andtrusts can be over-reached or varied. Power also exists to over-ride any default provisions in transactionsotherwise affected by these powers. Compensation may be payable in the context of share transferinstruments and orders and property transfer instruments. The 2009 Act also includes provisions relatingto two new insolvency procedures which may be commenced by specified United Kingdom authorities(bank insolvency and bank administration).

The 2009 Act also vests power in the Bank of England to over-ride, vary or impose contractual obligationsbetween a UK Bank or its holding company and its former group undertakings (as defined in the 2009 Act),for reasonable consideration, in order to enable any transferee or successor bank of a UK Bank, or itsholding company, to operate effectively. There is also power for the Treasury to amend the law (save for a

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provision made by or under the 2009 Act) by order for the purpose of enabling the special resolutionregime powers to be used effectively, potentially with retrospective effect.

Exercise of powers under the 2009 Act might have a material adverse effect on all or part of the Issuer’sbusiness.

Financial Services Compensation SchemeIn the United Kingdom, the Financial Services Compensation Scheme (FSCS) was established under theFSMA and is the United Kingdom’s statutory fund of last resort for customers of authorised financialservices firms. The FSCS can pay compensation to customers if a firm is unable, or likely to be unable, topay claims against it. The FSCS is funded by levies on firms authorised by the FSA, including the Issuer. Therecent arrangements put in place to protect the depositors of Bradford & Bingley and other failed deposit-taking institutions involving the FSCS are expected to result in a significant increase in the levies made bythe FSCS on the industry. The Issuer continues to provide for its share of the management expenses levyand the estimated interest cost on the FSCS borrowings. As at 28th February 2010 the Issuer had accrued£5.8 million in respect of its share of the expenses of the FSCS. Going forward, further provisions in respectof these costs are likely to be necessary until the borrowings are repaid. The ultimate cost to the industry,which will also include the cost of any compensation payments made by the FSCS and, if necessary, thecost of meeting any shortfall after recoveries on the borrowings entered into by the FSCS, remainsuncertain although it may be significant and the associated costs to the Issuer may have a material adverseeffect on its results of operations and financial condition.

The FSA requires that United Kingdom deposit-taking institutions develop systems by 31st December 2010to produce a Single Customer View (SCV), providing an aggregated view of each customer’s eligibility forcompensation in the event of a failure. In the event that the Issuer fails to deliver such a project to theregulator’s standards or timetables, there is the risk of public sanction, financial penalty and/or thedeployment by the FSA of such other regulatory tools as it deems appropriate to the circumstances. Otherpotential changes to the FSCS arrangements with the potential to require the Issuer to incur additionalcosts or expose the Issuer to risks may arise from ongoing discussions at the national and European Unionlevels around the future design of deposit protection schemes, including but not limited to potentiallyincreasing the level of protection which is accorded to deposits and/or moving to pre-funding ofcompensation schemes. The FSA intends to carry out a consultation exercise in the fourth quarter of 2010before introducing any further proposals relating to the FSCS.

From 1st January 2010 (subject to the rules of the FSCS):

• eligible deposit claimants remain entitled to receive 100 per cent., compensation for financial loss upto £50,000; and

• eligible insurance claimants are entitled to receive 90 per cent., of the claim (except compulsoryinsurance for which it is 100 per cent., of the claim).

On 16th March 2009, the European Directive on Deposit Guarantee Schemes (1994/19/EC) was amendedby Directive 2009/14/EC (the Amended Directive). The Amended Directive required EU Member States,by 30th June 2009, to increase the minimum level of coverage they provide for deposits from €20,000 to€50,000 and to reduce the payout period in the event of Issuer failure from three months to 20 days.Furthermore, by 31st December 2010, Member States must set coverage for the aggregate deposits ofeach depositor at €100,000.

The FSA announced further changes to the FSCS on 24th July 2009, which in part seek to implement thefast payout rules set out under the Amended Directive referred to above through a SCV. In addition, theother key changes announced by the FSA to the FSCS include the following:

• changing the payout of compensation to avoid customers who hold loans and deposits with the sameinstitution having any debt deducted from their compensation;

• widening eligibility of the FSCS to include more individuals;

• introducing a requirement that deposit takers must disclose the existence of the FSCS and the levelof protection it offers to help familiarise consumers with the services it provides; and

• if an institution operates under a number of trading names, it must tell its customers which of thedifferent trading names are covered by a particular authorisation.

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Tax riskTax risk is the risk associated with changes in taxation rates or law, or misinterpretation of the law. Thiscould result in increased charges, financial loss including penalties, and reputational damage. Failure tomanage these risks adequately could impact the Issuer materially and adversely and could have a materialnegative impact on the Issuer’s performance.

Reputational riskFailure to protect the Issuer’s reputation, or damage to the reputation of the Tesco Group, could lead to aloss of trust and confidence in the Issuer. This could result in a decline in the customer base and could havea material adverse effect on the Issuer’s business, financial condition and results of operations.

Environmental risksThe Issuer’s key environmental risks are related to minimising energy usage. The Issuer developsenvironmental policy through engaging with key stakeholders and experts in this field to achievesustainable growth and minimise its environmental impacts.

Fraud and complianceAs the Issuer’s business grows in size, complexity and geographical spread, the risk of occurrence offraudulent behaviour by its employees increases. Whilst the potential for fraud and other dishonest activityalways exists, the Issuer takes extensive steps to ensure the correct calibre of staff are recruited and theirperformance and behaviours are monitored through a robust Performance Management Framework.Additionally a rigorous Control Framework is embedded throughout the business to ensure that risks areidentified, evaluated and mitigated using a combination of preventative, directive and detective measures,such as established Policies and Procedures, segregation of duties and access control over computersystems.

The Issuer is also exposed to customer fraud; this exposure is limited through the rigorous application ofsophisticated controls at all stages of a customer relationship, from acquisition through to account closure.Robust strategies are maintained to ensure emerging fraud threats are identified and losses minimised,through the use of industry data, account profiling and fraud investigations.

The performance of the Control Framework against agreed thresholds and standards is reported to theIssuer’s Risk Management Committee and Board and instances of non-compliance are subject to actionplans for remediation. The Issuer’s Audit Department undertakes detailed investigations into all areas of thebusiness and highlights its findings to the Audit Committee of the Board of Directors.

Information Technology (IT) systems and infrastructureEfficient IT systems are integral to the successful operation of the Issuer’s business. A range of systems areused for the origination of product sales, servicing and settlement of accounts. Any significant failure in theIT processes of its operations would impact its reputation and potentially its ability to carry on its business.The Issuer recognises the essential role that IT plays across its operations. The Issuer has controls in placeto maintain the integrity and efficiency of its IT infrastructure.

Activism and terrorismA major incident or terrorist event incapacitating management or systems could impact on the Issuer’sability to carry on its business. In addition to contingency plans, the Issuer has security systems andprocesses that reflect best practice.

Pension risksThe Issuer is a participating employer in the Tesco plc Pension Scheme (the Scheme), which is a definedbenefit pension arrangement sponsored by companies in the Tesco Group. The Issuer regards such pensionarrangements as an important part of its employees’ overall benefits package and as a strong contributorto its ability to attract and retain good people.

The Tesco Group has considered its pension risks and has taken action by increasing contributions, reducingrisk in its investment strategy and moving benefit accrual for new joiners onto a career average rather thana final salary basis.

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As a participating employer in the Scheme, the Issuer shares responsibility for funding the Scheme with theother participating employers. If the Issuer withdrew from the Scheme or the Scheme were wound up, itmay be required by section 75 of the Pensions Act 1995 to make a payment to the Scheme in respect ofany funding shortfall at that time.

The Pensions Regulator could also, in certain circumstances, if he considered it reasonable, require theIssuer to provide financial support if the other employers were unable to meet their obligations to theScheme.

There can therefore be no certainty as to the Issuer’s liability for contributions to the Scheme. The Issuer’sliability for contributions may adversely affect its financial position.

Other risksThe Issuer’s financial statements are based in part on assumptions and estimates which, if wrong, couldcause losses in the future.

The preparation of financial statements requires management to make judgements, estimates andassumptions that affect the reported amounts of assets, liabilities, income and expenses. Due to theinherent uncertainty in making estimates, actual results reported in future periods may be based uponamounts which differ from those estimates. Estimates, judgements and assumptions are continuallyevaluated and are based on historical experience and other factors, including expectations of future eventsthat are believed to be reasonable under the circumstances. Revisions to accounting estimates arerecognised in the period in which the estimate is revised and in any future periods affected. The accountingpolicies deemed critical to the Issuer’s results and financial position, based upon materiality and significantjudgements and estimates, include impairment of financial assets, valuation of financial instruments,pensions, goodwill, insurance and taxation.

If the judgement, estimates and assumptions used by the Issuer in preparing its consolidated financialstatements are subsequently found to be incorrect, there could be a material impact on the Issuer’s resultsof operations and a corresponding impact on its funding requirements and capital ratios.

Factors which are material for the purpose of assessing the market risks associatedwith Notes issued under the Programme

The Notes may not be a suitable investment for all investorsEach potential investor in the Notes must determine the suitability of that investment in light of its owncircumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the meritsand risks of investing in the Notes and the information contained or incorporated by reference in thisOffering Circular or any applicable supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the Notes and the impact the Notes will have on itsoverall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,including Notes with principal or interest payable in one or more currencies, or where the currencyfor principal or interest payments is different from the potential investor’s currency;

(iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevantindices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bear theapplicable risks.

Some Notes are complex financial instruments. Sophisticated institutional investors generally do notpurchase complex financial instruments as stand-alone investments. They purchase complex financialinstruments as a way to reduce risk or enhance yield with an understood, measured, appropriate additionof risk to their overall portfolios. A potential investor should not invest in Notes which are complex financialinstruments unless it has the expertise (either alone or with a financial adviser) to evaluate how the Notes

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will perform under changing conditions, the resulting effects on the value of the Notes and the impact theinvestment will have on the potential investor’s overall investment portfolio.

Risks related to the structure of a particular issue of NotesA wide range of Notes may be issued under the Programme. A number of such Notes may have featureswhich contain particular risks for potential investors. Set out below is a description of the most commonsuch features:

Notes subject to optional redemption by the IssuerAn optional redemption feature of Notes is likely to limit their market value. During any period when theIssuer may elect to redeem Notes, the market value of those Notes generally will not rise substantially abovethe price at which they can be redeemed. This also may be true prior to any redemption period.

The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate onthe Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds atan effective interest rate as high as the interest rate on the Notes being redeemed and may only be ableto do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of otherinvestments available at that time.

Index Linked Notes and Dual Currency NotesThe Issuer may issue Notes with principal or interest determined by reference to an index or formula, tochanges in the prices of securities or commodities, to movements in currency exchange rates or otherfactors (each, a Relevant Factor). In addition, the Issuer may issue Notes with principal or interest payablein one or more currencies which may be different from the currency in which the Notes are denominated.Potential investors should be aware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency than expected;

(iv) they may lose all or a substantial portion of their principal;

(v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes ininterest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or containssome other leverage factor, the effect of changes in the Relevant Factor on principal or interestpayable is likely to be magnified; and

(vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if the averagelevel is consistent with their expectations. In general, the earlier the change in the Relevant Factor,the greater the effect on yield.

The historical experience of an index should not be viewed as an indication of future performance of suchindex during the term of any Index Linked Note. Accordingly, each potential investor should consult its ownfinancial and legal advisers about the risk entailed by an investment in any Index Linked Notes and thesuitability of such Notes in light of its particular circumstances.

Partly-paid NotesThe Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay anysubsequent instalment could result in an investor losing all of his investment.

Variable rate Notes with a multiplier or other leverage factorNotes with variable interest rates can be volatile investments. If they are structured to include multipliers orother leverage factors, or caps or floors, or any combination of those features or other similar relatedfeatures, their market values may be even more volatile than those for securities that do not include thosefeatures.

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Inverse Floating Rate NotesInverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a referencerate such as LIBOR. The market values of those Notes typically are more volatile than market values of otherconventional floating rate debt securities based on the same reference rate (and with otherwise comparableterms). Inverse Floating Rate Notes are more volatile because an increase in the reference rate not onlydecreases the interest rate of the Notes, but may also reflect an increase in prevailing interest rates, whichfurther adversely affects the market value of these Notes.

Fixed/Floating Rate NotesFixed/Floating Rate Notes may bear interest at a rate that the Issuer may elect to convert from a fixed rateto a floating rate, or from a floating rate to a fixed rate. The Issuer’s ability to convert the interest rate willaffect the secondary market and the market value of the Notes since the Issuer may be expected to convertthe rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts from a fixedrate to a floating rate, the spread on the Fixed/Floating Rate Notes may be less favourable than thenprevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, the newfloating rate at any time may be lower than the rates on other Notes. If the Issuer converts from a floatingrate to a fixed rate, the fixed rate may be lower than then prevailing rates on its Notes.

Notes issued at a substantial discount or premiumThe market values of securities issued at a substantial discount or premium from their principal amounttend to fluctuate more in relation to general changes in interest rates than do prices for conventionalinterest-bearing securities. Generally, the longer the remaining term of the securities, the greater the pricevolatility as compared to conventional interest-bearing securities with comparable maturities.

Risks related to Notes generallySet out below is a brief description of certain risks relating to the Notes generally:

Modification, waiver and substitutionThe Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders to considermatters affecting their interests generally. These provisions permit defined majorities to bind all Noteholdersincluding Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted ina manner contrary to the majority.

The Terms and Conditions of the Notes also provide that the Trustee may, without the consent ofNoteholders, (i) agree to any modification of, or to the waiver or authorisation of any breach or proposedbreach of, any of the conditions of the Notes or any of the provisions of the Trust Deed or (ii) determinethat any condition, event or act which, but for such determination, would constitute an Event of Default,shall not be treated as such or (iii) agree to the substitution of another company as principal debtor underany Notes in place of the Issuer, in the circumstances described in Condition 16 of the Terms andConditions of the Notes.

EU Savings DirectiveUnder EC Council Directive 2003/48/EC on the taxation of savings income, each Member State of theEuropean Union (each a Member State) is required to provide to the tax authorities of any other MemberState details of payments of interest (or similar income) paid by a person within its jurisdiction to or for thebenefit of, or collected by such person for, an individual resident in that other Member State or to certainlimited types of entities established in that other Member State. However, for a transitional period,Luxembourg and Austria are instead required (unless during that period they elect otherwise) to operate awithholding system in relation to such payments (the ending of such transitional period being dependentupon the conclusion of certain other agreements relating to information exchange with certain othercountries). A number of non-EU countries and territories including Switzerland have adopted similarmeasures (a withholding system in the case of Switzerland).

If a payment were to be made or collected through a Member State which has opted for a withholdingsystem and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuernor any Paying Agent nor any other person would be obliged to pay additional amounts with respect toany Note as a result of the imposition of such withholding tax. The Issuer is required to maintain a PayingAgent in a Member State that is not obliged to withhold or deduct tax pursuant to the Directive.

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On 15th September 2008 the European Commission issued a report to the Council of the European Unionon the operation of the Directive, which included the Commission’s advice on the need for changes to theDirective. On 13th November 2008 the European Commission published a more detailed proposal foramendments to the Directive, which included a number of suggested changes. The European Parliamentapproved an amended version of this proposal on 24th April 2009. If any of those proposed changes aremade in relation to the Directive, they may amend or broaden the scope of the requirements describedabove.

Notes where denominations involve integral multiples: definitive NotesIn relation to any issue of Notes which have denominations consisting of a minimum SpecifiedDenomination plus one or more higher integral multiples of another smaller amount, it is possible that suchNotes may be traded in amounts that are not integral multiples of such minimum Specified Denomination.In such a case a holder who, as a result of trading such amounts, holds an amount which is less than theminimum Specified Denomination in his account with the relevant clearing system at the relevant time maynot receive a definitive Note in respect of such holding (should definitive Notes be printed) and would needto purchase a principal amount of Notes such that its holding amounts to a Specified Denomination.

If definitive Notes are issued, holders should be aware that definitive Notes which have a denomination thatis not an integral multiple of the minimum Specified Denomination may be illiquid and difficult to trade.

Change of lawThe Terms and Conditions of the Notes are governed by English law. No assurance can be given as to theimpact of any possible judicial decision or change to English law or administrative practice after the date ofthis Offering Circular.

Risks related to the market generallySet out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk,interest rate risk and credit risk:

The secondary market generallyNotes may have no established trading market when issued, and one may never develop. If a market doesdevelop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or at pricesthat will provide them with a yield comparable to similar investments that have a developed secondarymarket. This is particularly the case for Notes that are especially sensitive to interest rate, currency or marketrisks, are designed for specific investment objectives or strategies or have been structured to meet theinvestment requirements of limited categories of investors. These types of Notes generally would have amore limited secondary market and more price volatility than conventional debt securities. Illiquidity mayhave a severely adverse effect on the market value of Notes.

Exchange rate risks and exchange controlsThe Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certain risksrelating to currency conversions if an investor’s financial activities are denominated principally in a currencyor currency unit (the Investor’s Currency) other than the Specified Currency. These include the risk thatexchange rates may significantly change (including changes due to devaluation of the Specified Currencyor revaluation of the Investor’s Currency) and the risk that authorities with jurisdiction over the Investor’sCurrency may impose or modify exchange controls. An appreciation in the value of the Investor’s Currencyrelative to the Specified Currency would decrease (1) the Investor’s Currency-equivalent yield on the Notes,(2) the Investor’s Currency equivalent value of the principal payable on the Notes and (3) the Investor’sCurrency equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange controls thatcould adversely affect an applicable exchange rate. As a result, investors may receive less interest orprincipal than expected, or no interest or principal.

Interest rate risksInvestment in Fixed Rate Notes involves the risk that subsequent changes in market interest rates mayadversely affect the value of the Fixed Rate Notes.

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Credit ratings may not reflect all risksOne or more independent credit rating agencies may assign credit ratings to the Notes. The ratings maynot reflect the potential impact of all risks related to structure, market, additional factors discussed above,and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy,sell or hold securities and may be revised or withdrawn by the rating agency at any time.

Legal investment considerations may restrict certain investmentsThe investment activities of certain investors are subject to legal investment laws and regulations, or reviewor regulation by certain authorities. Each potential investor should consult its legal advisers to determinewhether and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral forvarious types of borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financialinstitutions should consult their legal advisers or the appropriate regulators to determine the appropriatetreatment of Notes under any applicable risk-based capital or similar rules.

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Documents Incorporated by Reference

The following documents which have previously been published or are published simultaneously with thisOffering Circular and have been approved by the Financial Services Authority or filed with it shall bedeemed to be incorporated in, and to form part of, this Offering Circular:

(a) the auditors’ report and the audited consolidated and non-consolidated financial statements of theIssuer for the 12 months ended 28th February 2010; and

(b) the auditors’ report and the audited consolidated and non-consolidated restated financial statementsof the Issuer for the 14 months ended 28th February 2009,

save that any statement contained herein or in a document which is deemed to be incorporated byreference herein shall be deemed to be modified or superseded for the purpose of this Offering Circular tothe extent that a statement contained in any document which is subsequently incorporated by referenceherein by way of a supplement prepared in accordance with Article 16 of the Prospectus Directive modifiesor supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement somodified or superseded shall not, except as so modified or superseded, constitute part of this OfferingCircular.

Copies of documents incorporated by reference in this Offering Circular can be obtained from theregistered office of the Issuer and from the specified offices of the Paying Agents for the time being.

Any documents themselves incorporated by reference in the document incorporated by reference in thisOffering Circular shall not form part of this Offering Circular.

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Supplements and New Offering Circulars

In the event of any significant new factor, material mistake or inaccuracy relating to information includedin this Offering Circular which is capable of affecting the assessment of any Notes arising or being notedbetween the approval of this Offering Circular by the UK Listing Authority and the commencement oftrading of such Notes on any EEA State Stock Exchange or the final closing of the offer of such Notes tothe public in any EEA State, as the case may be, the Issuer will prepare a supplement to this OfferingCircular or publish a new Offering Circular for use in connection with such Notes and any subsequent issueof Notes.

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Form of the Notes

Each Tranche of Notes will initially be represented by a temporary global Note without receipts, interestcoupons or talons. If the global Notes are intended to be issued in new global note (NGN) form, as statedin the applicable Final Terms, the temporary global Note will be delivered on the original issue date of theTranche to a common safekeeper (the Common Safekeeper) for Euroclear Bank SA/NV (Euroclear) andClearstream Banking, société anonyme (Clearstream, Luxembourg); and if the global Notes are notintended to be issued in NGN form, the temporary global Note will be delivered on the original issue dateof the Tranche to a common depositary (the Common Depositary) for Euroclear and Clearstream,Luxembourg and/or any other agreed clearing system. Whilst any Note is represented by a temporary globalNote, payments of principal and interest (if any) due prior to the Exchange Date (as defined below) will bemade (against presentation of the temporary global Note if the temporary global Note is not intended tobe issued in NGN form) only to the extent that certification (in a form to be provided) to the effect that thebeneficial owners of interests in such Note are not U.S. persons or persons who have purchased for resaleto any U.S. person, as required by U.S. Treasury regulations, has been received by Clearstream, Luxembourgand/or Euroclear and Clearstream, Luxembourg and/or Euroclear, as applicable, has given a like certification(based on the certifications it has received) to the Agent (as defined on page 51). Any reference in thissection “Form of the Notes” to Clearstream, Luxembourg and/or Euroclear shall, whenever the context sopermits, be deemed to include a reference to any additional or alternative clearing system approved by theIssuer, the Agent and the Trustee.

On and after the date (the Exchange Date) which is 40 days after the date on which any temporary globalNote is issued, interests in such temporary global Note will be exchangeable (free of charge) upon a requestas described therein either for interests in a permanent global Note without receipts, interest coupons ortalons or for definitive Notes with, where applicable, receipts, interest coupons and talons attached (asindicated in the applicable Final Terms and subject, in the case of definitive Notes, to such notice period asis specified in the applicable Final Terms) in each case against certification of beneficial ownership asdescribed in the second sentence of the immediately preceding paragraph unless such certification hasalready been given. If any further Notes to be consolidated and form a single Series with any series ofoutstanding Notes are issued prior to the exchange of interests in the temporary global Note for interestsin the permanent global Note representing such outstanding Notes, then the Exchange Date may beextended, without the consent of the holders, to a date which is not earlier than 40 days after the date ofissue of such further Notes provided that the Exchange Date would not thereby fall on or after the firstinterest payment date for such outstanding Notes. The holder of a temporary global Note will not beentitled to collect any payment of interest or principal due on or after the Exchange Date unless upon duecertification exchange of the temporary global Note is improperly withheld or refused. Pursuant to theAgency Agreement (as defined on page 51) the Agent shall arrange that, where a further Tranche of Notesis issued, the Notes of such Tranche shall be assigned a common code and ISIN by Clearstream,Luxembourg and Euroclear which are different from the common code and ISIN assigned to Notes of anyother Tranche of the same Series until at least 40 days (as notified by the Agent to the relevant Dealer or,in the case of a syndicated issue, the lead manager) after the completion of the distribution of the Notesof such Tranche.

Payments of principal and interest (if any) on a permanent global Note will be made through Clearstream,Luxembourg and/or Euroclear (against presentation or surrender (as the case may be) of such permanentglobal Note if the permanent global Note is not intended to be issued in NGN form) without anyrequirement for certification. The applicable Final Terms will specify that either (i) a permanent global Notewill be exchangeable (free of charge), in whole but not in part, for definitive Notes with, where applicable,receipts, interest coupons and talons attached upon not less than 60 days’ written notice from Clearstream,Luxembourg and/or Euroclear (acting on the instructions of any holder of an interest in such permanentglobal Note) to the Agent as described therein or (ii) a permanent global Note will be exchangeable (freeof charge), in whole but not in part, for definitive Notes with, where applicable, receipts, interest couponsand talons attached upon the occurrence of an Exchange Event. Exchange Event means (i) an Event ofDefault has occurred and is continuing, (ii) the Issuer has been notified by the Agent that eitherClearstream, Luxembourg or Euroclear has been closed for business for a continuous period of 14 days(other than by reason of holiday, statutory or otherwise) or has announced an intention permanently tocease business or has in fact done so and no alternative clearing system satisfactory to the Trustee isavailable or (iii) the Issuer has or will become obliged to pay additional amounts as provided for or referredto in Condition 7 which would not be required were the Notes represented by such permanent global Notein definitive form. The Issuer will promptly give notice to Noteholders in accordance with Condition 13 if

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an Exchange Event occurs. In the event of the occurrence of an Exchange Event, Clearstream, Luxembourgand/or Euroclear (acting on the instructions of any holder of an interest in such permanent global Note) orthe Trustee may give notice to the Agent requesting exchange and, in the event of the occurrence of anExchange Event as described in (iii) above, the Issuer may also give notice to the Agent requestingexchange. Any such exchange shall occur not later than 60 days after the date of receipt of the first relevantnotice by the Agent.

Global Notes and definitive Notes will be constituted by, or pursuant to, the Trust Deed (as defined onpage 51) and issued in accordance with the provisions of the Agency Agreement.

The following legend will appear on all global Notes, definitive Notes, receipts, interest coupons and talonsrelating to such Notes:

“Any United States person who holds this obligation will be subject to limitations under the United Statesincome tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal RevenueCode.”

The Sections referred to provide that United States holders, with certain exceptions, will not be entitled todeduct any loss on Notes, receipts or interest coupons and will not be entitled to capital gains treatmentof any gain on any sale, disposition, redemption or payment of principal in respect of Notes, receipts orinterest coupons.

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Form of Final Terms

Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued underthe Programme with a denomination of less than EUR 50,000 (or its equivalent in another currency):

[Date]

Tesco Personal Finance PLC

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]under the £2,000,000,000 Euro Note Programme

[The Offering Circular referred to below (as completed by these Final Terms) has been prepared on the basisthat, except as provided in sub-paragraph (ii) below, any offer of Notes in any Member State of theEuropean Economic Area which has implemented the Prospectus Directive (2003/71/EC) (each, a RelevantMember State) will be made pursuant to an exemption under the Prospectus Directive, as implementedin that Relevant Member State, from the requirement to publish a prospectus for offers of the Notes.Accordingly any person making or intending to make an offer of the Notes may only do so:

(i) in circumstances in which no obligation arises for the Issuer or any Dealer to publish a prospectuspursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16of the Prospectus Directive, in each case, in relation to such offer; or

(ii) in those Public Offer Jurisdictions mentioned in Paragraph 32 of Part A below, provided such personis one of the persons mentioned in Paragraph 32 of Part A below and that such offer is made duringthe Offer Period specified for such purpose therein.

Neither the Issuer nor any Dealer has authorised, nor do they authorise, the making of any offer of Notesin any other circumstances.]1

[The Offering Circular referred to below (as completed by these Final Terms) has been prepared on the basisthat any offer of Notes in any Member State of the European Economic Area which has implemented theProspectus Directive (2003/71/EC) (each, a Relevant Member State) will be made pursuant to anexemption under the Prospectus Directive, as implemented in that Relevant Member State, from therequirement to publish a prospectus for offers of the Notes. Accordingly any person making or intendingto make an offer in that Relevant Member State of the Notes may only do so in circumstances in which noobligation arises for the Issuer or any Dealer to publish a prospectus pursuant to Article 3 of the ProspectusDirective or supplement a prospectus pursuant to Article 16 of the Prospectus Directive, in each case, inrelation to such offer. Neither the Issuer nor any Dealer has authorised, nor do they authorise, the makingof any offer of Notes in any other circumstance].2

Part A — Contractual Terms

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions ofthe Notes set forth in the Offering Circular dated 5th August, 2010 which[, as modified by a supplementto the Offering Circular dated [date of supplement],] constitutes a base prospectus for the purposes ofDirective 2003/71/EC of 4th November 2003 of the European Parliament and the Council of the EuropeanUnion (the Prospectus Directive). This document constitutes the Final Terms of the Notes described hereinfor the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with theOffering Circular[and such supplement to the Offering Circular]. Full information on the Issuer and the offerof the Notes is only available on the basis of the combination of these Final Terms [and/,] the OfferingCircular[and the supplement to the Offering Circular dated [date of supplement]]. The Offering Circular[and such supplement] [is/are] available for viewing during normal business hours and copies may beobtained from the registered office of the Issuer and from the specified office of the Paying Agents for thetime being.

[The following alternative language applies if the first tranche of an issue which is being increased wasissued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions ofthe Notes (the Conditions) set forth in the Offering Circular dated [specify date applicable to first trancheof Series]. This document constitutes the Final Terms of the Notes described herein for the purposes of

27

1 Consider including this legend where a non-exempt offer of Notes is anticipated.2 Consider including this legend where only an exempt offer of Notes is anticipated.

Article 5.4 of Directive 2003/71/EC of 4th November 2003 of the European Parliament and the Council ofthe European Union (the Prospectus Directive) and must be read in conjunction with the Offering Circulardated 5th August, 2010 [as modified by the supplement to the Offering Circular dated [date ofsupplement],] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive,save in respect of the Conditions which are extracted from the Offering Circular dated [original date] andare attached hereto. Full information on the Issuer and the offer of the Notes is only available on the basisof the combination of these Final Terms [and/,] the Offering Circulars dated 5th August, 2010 and [originaldate][and the supplement to the Offering Circular dated [date of supplement]]. Copies of such OfferingCirculars [and such supplement] are available for viewing during normal business hours and copies may beobtained from the registered office of the Issuer and from the specified office of the Paying Agents for thetime being.]

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numberingshould remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote directions for completing the Final Terms.]

[When adding any other final terms or information consideration should be given as to whether such termsor information constitute a “significant new factor” and consequently trigger the need for a supplement tothe Offering Circular under Article 16 of the Prospectus Directive.]

1. [(i)] Series Number: [ ]

[(ii) Tranche Number: [ ]

(If fungible with an existing Series, details of that Series,including the date on which the Notes become fungible)]

2. Specified Currency or Currencies: [ ]

3. Aggregate Nominal Amount:

(i) Tranche: [ ]

(ii) Series: [ ]

4. Issue Price: [ ] per cent. of the Aggregate Nominal Amount[plus accrued interest from [insert date]] (if applicable)

5. (i) Specified Denominations: [ ]

(N.B. If an issue of Notes is (i) not admitted to trading on anEuropean Economic Area exchange; and (ii) only offered inthe European Economic Area in circumstances where aprospectus is not required to be published under theProspectus Directive the €1,000 minimum denomination isnot required.)

(ii) Calculation Amount: [ ]

(If only one Specified Denomination, insert the SpecifiedDenomination.

If more than one Specified Denomination, insert the highestcommon factor. Note: There must be a common factor inthe case of two or more Specified Denominations.)

6. (i) Issue Date: [ ]

(ii) Interest Commencement Date: [Specify/Issue Date/Not Applicable]

(N.B. An Interest Commencement Date will not be relevantfor certain Notes, for example Zero Coupon Notes)

7. Maturity Date: [Fixed rate — specify date/Floating rate — Interest PaymentDate falling in [specify month]]

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8. Interest Basis: [Fixed Rate][Floating Rate][Zero Coupon][Index Linked Interest][Dual Currency Interest][specify other](further particulars specified below)

9. Redemption/Payment Basis: [Redemption at par][Index Linked Redemption][Dual Currency Redemption][Partly Paid][Instalment][specify other]

(N.B. If the Final Redemption Amount is less than100 per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

10. [Specify details of any provision for change of Notes intoanother Interest Basis or Redemption/Payment Basis]

11. Put/Call Options: [Investor Put][Issuer Call][(further particulars specified below)]

12. Method of distribution: [Syndicated/Non-syndicated]

Provisions Relating to Interest (if any) Payable13. Fixed Rate Note Provisions [Applicable/Not Applicable]

(If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semiannually/quarterly/other (specify)] in arrear]

(ii) Interest Payment Date(s): [[ ] in each year up to and including the Maturity Date]/[specify other] (NB: This will need to be amended in the caseof long or short coupons)

(iii) Fixed Coupon Amount(s): [ ] per [ ] Calculation Amount(Applicable to Notes indefinitive form)

(iv) [ ] per Calculation Amount, payable on the InterestPayment Date falling [in/on] [ ]

(v) Fixed Day Count Fraction: [Actual/Actual (ICMA) or 30/360 or specify other]

(vi) Determination Date(s): [ ] in each year

[Insert interest payment dates, ignoring issue date ormaturity date in the case of a long or short first or lastcoupon]

(NB: This will need to be amended in the case of regularinterest payment dates which are not of equal duration)

(NB: Only relevant where Fixed Day Count Fraction isActual/Actual (ICMA))

Broken Amount(s):(Applicable to Notes indefinitive form)

Change of Interest Basis orRedemption/Payment Basis:

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(vii) [None/Give details]

14. Floating Rate Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) [ ]

(ii) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/[specifyother]]

(iii) Additional Business Centre(s): [ ]

(iv) [Screen Rate Determination/ISDA Determination/specifyother]

(v) [ ]

(vi) Screen Rate Determination:

— Reference Rate: [ ]

(Either LIBOR, EURIBOR or other, although additionalinformation is required if other — including any amendmentto fallback provisions in the Agency Agreement)

— [ ]

(Second London business day prior to the start of eachInterest Period if LIBOR (other than Sterling or euro LIBOR),first day of the Interest Period if Sterling LIBOR and secondday on which the TARGET2 System is open prior to the startof each Interest Period if EURIBOR or euro LIBOR)

— Relevant Screen Page: [ ]

(In the case of EURIBOR, if not Reuters EURIBOR01 ensure itis a page which shows a composite rate or amend the fallback provisions appropriately)

(vii) ISDA Determination:

— Floating Rate Option: [ ]

— Designated Maturity: [ ]

— Reset Date: [ ]

(viii) Margin(s): [+/-] [ ] per cent. per annum

(ix) Minimum Rate of Interest: [ ] per cent. per annum

(x) Maximum Rate of Interest: [ ] per cent. per annum

(xi) Floating Day Count Fraction: [Actual/Actual (ISDA)Actual/365 (Fixed)Actual/365 (Sterling)Actual/3603 0/3 6030E/36030E/360 (ISDA)Other](See Condition 4 for alternatives)

Interest DeterminationDate(s):

Party responsible forcalculating the Rate of Interestand Interest Amount (if notthe Agent):

Manner in which the Rate ofInterest and Interest Amountis to be determined:

Specified Period(s)/SpecifiedInterest Payment Dates:

Other terms relating to themethod of calculating interestfor Fixed Rate Notes:

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(xii) [ ]

15. Zero Coupon Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Accrual Yield: [ ] per cent. per annum

(ii) Reference Price: [ ]

(iii) [ ]

(Consider applicable day count fraction if eurodenominated)

16. Index Linked Interest Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(N.B. If the Final Redemption Amount is other than100 per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [give name (and, if the Notes are derivative securities towhich Annex XII of the Prospectus Directive regulationapplies, address)]

(iii) [ ]

(iv) [need to include a description of market disruption orsettlement disruption events and adjustment provisions]

(v) [ ]

(vi) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/specifyother]

(vii) Additional Business Centre(s): [ ]

(viii) Minimum Rate of Interest: [ ] per cent. per annum

(ix) Maximum Rate of Interest: [ ] per cent. per annum

(x) Day Count Fraction: [ ]

17. Dual Currency Interest Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)


Provisions for determiningCoupon where calculation byreference to Index and/orFormula is impossible orimpracticable:

Party responsible forcalculating the Rate of Interest(if not the Calculation Agent)and Interest Amount (if notthe Agent):

Any other formula/basis ofdetermining amount payable:

Fall back provisions, roundingprovisions and any otherterms relating to the methodof calculating interest onFloating Rate Notes, ifdifferent from those set out inthe Terms and Conditions:

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(i) [give or annex details]

(ii) [ ]

(iii) [need to include a description of market disruption orsettlement disruption events and adjustment provisions]

(iv) [ ]

Provisions Relating to Redemption18. Issuer Call [Applicable/Not Applicable]

(If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) [[ ] per Calculation Amount/specify other/see Appendix]

(iii) If redeemable in part:

(a) [ ]

(b) [ ]

(iv) [ ]

(N.B. If setting notice periods which are different to thoseprovided in the Conditions, the Issuer is advised to considerthe practicalities of distribution of information throughintermediaries, for example, clearing systems and custodiansas well as any other notice requirements which may apply,for example, as between the Issuer and the Agent orTrustee)

19. Investor Put [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)



(iii) [ ]

(N.B. If setting notice periods which are different to thoseprovided in the Conditions, the Issuer is advised to consider

Notice period (if other than asset out in the Conditions):

Optional RedemptionAmount(s) and method, ifany, of calculation of suchamount(s):


Higher RedemptionAmount:

Minimum RedemptionAmount:


Person at whose optionSpecified Currency(ies) is/arepayable:

Provisions applicable wherecalculation by reference toRate of Exchange impossibleor impracticable:

Party, if any, responsible forcalculating the principaland/or interest due (if not theAgent):

Rate of Exchange/method ofcalculating Rate of Exchange:

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the practicalities of distribution of information throughintermediaries, for example, clearing systems and custodiansas well as any other notice requirements which may apply,for example, as between the Issuer and the Agent orTrustee)

20. Final Redemption Amount [[ ] per Calculation Amount/specify other/see Appendix]

(N.B. If the Final Redemption Amount is other than100 per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply. [If applicable,consider the need to include a description of marketdisruption or settlement disruption events and adjustmentprovisions.])

21. [[ ] per Calculation Amount/specify other/see Appendix]

General Provisions Applicable to the Notes22. (a) Form of Notes: [Temporary Global Note exchangeable for a Permanent

Global Note which is exchangeable for Definitive Notes [on60 days’ notice given at any time/only upon an ExchangeEvent].]

[Temporary Global Note exchangeable for Definitive Noteson and after the Exchange Date.]

(b) New Global Note: [Yes] [No]

23. [Not Applicable/give details]

(Note that this paragraph relates to the place of paymentand not Interest Period end dates to which paragraphs 14(iii)and 16(vii) relate)

24. [Yes/No. If yes, give details]

25. Details relating to Partly Paid Notes: [Not Applicable/give details]

(NB: New forms of Global Note may be required for PartlyPaid Notes)

[If applicable, specify] [amountof each payment comprising theIssue Price and date on whicheach payment is to be madeand, if different from thosespecified in the TemporaryGlobal Note, consequences offailure to pay, including anyright of the Issuer to forfeit theNotes and interest due on latepayment:]

Talons for future Coupons orReceipts to be attached toDefinitive Notes (and dates onwhich such Talons mature):

Additional Financial Centre(s) orother special provisions relatingto Payment Dates:

Early Redemption Amount(s)payable on redemption for taxationreasons or on event of defaultand/or the method of calculatingthe same (if required or if differentfrom that set out in Condition 6(e)):

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26. Details relating to Instalment Notes: [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Instalment Amount(s) [If Applicable, specify]

(ii) Instalment Date(s) [If Applicable, specify]

27. Redenomination: Redenomination [not] applicable(if Redenomination is applicable, specify the terms of theredenomination in an Annex to the Final Terms)

28. Other final terms: [Not Applicable/give details]

(When adding any other final terms consideration should begiven as to whether such terms constitute a “significant newfactor” and consequently trigger the need for a supplementto the Offering Circular under Article 16 of the ProspectusDirective.)

Distribution29. [Not Applicable/give names addresses and underwriting

commitments]

(Include names and addresses of entities agreeing tounderwrite the issue on a firm commitment basis and namesand addresses of the entities agreeing to place the issuewithout a firm commitment or on a “best efforts” basis ifsuch entities are not the same as the Managers.)

[ ]

(iii) Stabilising Manager(s) (if any): [Not Applicable/give name]

30. [Not Applicable/give name and address]

31. Total commission and concession: [ ] per cent. of the Aggregate Nominal Amount

32. Non exempt Offer: [Not Applicable] [An offer of the Notes may be made by theManagers [and [specify names of other financialintermediaries/placers making non-exempt offers, to theextent known or consider a generic description of otherparties involved in non- exempt offers (e.g. “other partiesauthorised by the Managers”) or (if relevant) note that otherparties may make non-exempt offers in the Public OfferJurisdictions during the Offer Period, if not known]](together with the Managers, the FinancialIntermediaries) other than pursuant to Article 3(2) of theProspectus Directive in [specify relevant Member State(s) —which must be jurisdictions where the Offering Circular andany supplements have been passported (in addition to thejurisdiction where approved and published)] (Public OfferJurisdictions) during the period from [specify date] until[specify date or a formula such as “the Issue Date” or “thedate which falls [ ] Business Days thereafter”] (OfferPeriod). See further Paragraph 10 of Part B below.

If non-syndicated, name andaddress of relevant Dealer:

(ii) Date of [Subscription]Agreement:

(i) If syndicated, names andaddresses of Managers andunderwritingcommitments:

34

(N.B. Consider any local regulatory requirements necessaryto be fulfilled so as to be able to make a non-exempt offerin relevant jurisdictions. No such offer should be made inany relevant jurisdiction until those requirements have beenmet. Non- exempt offers may only be made into jurisdictionsin which the base prospectus (and any supplement) hasbeen notified/passported.)

33. Additional selling restrictions: [Not Applicable/give details]

Purpose of Final TermsThese Final Terms comprise the final terms required for issue [and] [public offer in the Public OfferJurisdictions] [and] [admission to trading on [the London Stock Exchange’s regulated market] and listing on[the Official List of the UK Listing Authority] of the Notes described herein] pursuant to the £2,000,000,000Euro Note Programme of Tesco Personal Finance PLC.

ResponsibilityThe Issuer accepts responsibility for the information contained in these Final Terms. [[ ] has beenextracted from [ ]. The Issuer confirms that such information has been accurately reproduced and that,so far as it is aware and is able to ascertain from information published by [ ], no facts have been omittedwhich would render the reproduced information inaccurate or misleading.]

Signed on behalf of Tesco Personal Finance PLC:

By: –––––––––––––––––––––––Duly authorised

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Part B — Other Information

1. [Application has been made by the Issuer (or on its behalf)for the Notes to be admitted to trading on [the LondonStock Exchange’s regulated market] and listing on [theOfficial List of the UK Listing Authority] with effect from[ ].]

[Application is expected to be made by the Issuer (or on itsbehalf) for the Notes to be admitted to trading on [theLondon Stock Exchange’s regulated market] and listing on[the Official List of the UK Listing Authority] with effect from[ ].] [Not Applicable.]

(Where documenting a fungible issue need to indicate thatoriginal Notes are already admitted to trading.)

2. RATINGS

Ratings: The Notes to be issued have been rated:

[S&P: [ ]]

[Moody’s: [ ]]

[Fitch: [ ]]

[[Other]: [ ]]

[Need to include a brief explanation of the meaning of theratings if this has previously been published by the ratingprovider.]

(The above disclosure should reflect the rating allocated toNotes of the type being issued under the Programmegenerally or, where the issue has been specifically rated, thatrating.)

3. INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE

[Save for any fees payable to the Dealers, so far as the Issuer is aware, no person involved in the issue ofthe Notes has an interest material to the offer. — Amend as appropriate if there are other interests]

[(When adding any other description, consideration should be given as to whether such matters describedconstitute “significant new factors” and consequently trigger the need for a supplement to the OfferingCircular under Article 16 of the Prospectus Directive.)]

4. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES

[(i) Reasons for the offer [ ]

(See “Use of Proceeds” wording in Offering Circular — ifreasons for offer different from making profit and/orhedging certain risks will need to include those reasonshere.)]

[(ii)] Estimated net proceeds: [ ]

(If proceeds are intended for more than one use will need tosplit out and present in order of priority. If proceedsinsufficient to fund all proposed uses state amount andsources of other funding.)

[(iii)] Estimated total expenses: [ ]. [Include breakdown of expenses]

(If the Notes are derivative securities to which Annex XII ofthe Prospectus Directive Regulation applies it is onlynecessary to include disclosure of net proceeds and totalexpenses at (ii)) and (iii) above where disclosure is includedat (i) above.)

LISTING AND ADMISSION TOTRADING

36

5. [ ]

[Calculated as [include details of method of calculation insummary form] on the Issue Date.]

The yield is calculated at the Issue Date on the basis of theIssue Price. It is not an indication of future yield.

6. [HISTORIC INTEREST RATES (Floating Rate Notes only)] [Details of historic [LIBOR/EURIBOR/other]rates can be obtained from [Reuters].]

7. [PERFORMANCE OF INDEX/FORMULA, EXPLANATION OF EFFECT ON VALUE OF INVESTMENTAND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNING THE UNDERLYING (Indexlinked Notes only)]

[If there is a derivative component in the interest or the Notes are derivative securities to which Annex XIIof the Prospectus Directive Regulation applies, need to include a clear and comprehensive explanation ofhow the value of the investment is affected by the underlying and the circumstances when the risks aremost evident.]

(N.B. The requirements below only apply if the Notes are derivative securities to which Annex XII of theProspectus Directive Regulation applies.)

[Need to include details of where past and future performance and volatility of the index/formula can beobtained.]

[Where the underlying is an index, need to include the name of the index and a description if composedby the Issuer and if the index is not composed by the Issuer need to include details of where the informationabout the index can be obtained.]

[Include other information concerning the underlying required by paragraph 4.2 of Annex XII of theProspectus Directive Regulation.]

[(When completing the above paragraphs, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement to theOffering Circular under Article 16 of the Prospectus Directive.)]

The Issuer [intends to provide post-issuance information [specify what information will be reported andwhere it can be obtained]] [does not intend to provide post-issuance information.]

8. [PERFORMANCE OF RATE[S] OF EXCHANGE AND EXPLANATION OF EFFECT ON VALUE OFINVESTMENT (Dual Currency Notes only)]

[If there is a derivative component in the interest or the Notes are derivative securities to which Annex XIIof the Prospectus Directive Regulation applies, need to include a clear and comprehensive explanation ofhow the value of the investment is affected by the underlying and the circumstances when the risks aremost evident.]

(N.B. The requirement below only applies if the Notes are derivative securities to which Annex XII of theProspectus Directive Regulation applies.)

[Need to include details of where past and future performance and volatility of the relevant rates can beobtained.]

[(When completing this paragraph, consideration should be given as to whether such matters describedconstitute “significant new factors” and consequently trigger the need for a supplement to the OfferingCircular under Article 16 of the Prospectus Directive.)]

9. OPERATIONAL INFORMATION

(i) ISIN Code: [ ]

(ii) Common Code: [ ]

[Not Applicable/give name(s) and number(s)](iii) Any clearing system(s)other than Euroclear BankS.A./N.V. and ClearstreamBanking, société anonymeand the relevantidentification number(s):

[YIELD (Fixed Rate Notes only)]Indication of yield:

37

(iv) Delivery: Delivery [against/free of] payment

[ ]

[Yes] [No]

[Note that the designation “yes” simply means that theNotes are intended upon issue to be deposited with one ofthe ICSDs as common safekeeper and does not necessarilymean that the Notes will be recognised as eligible collateralfor Eurosystem monetary policy and intra-day creditoperations by the Eurosystem either upon issue or at any orall times during their life. Such recognition will depend uponsatisfaction of the Eurosystem eligibility criteria.] [includethis text if “yes” selected in which case the Notes must beissued in NGN form]

10. TERMS AND CONDITIONS OF THE OFFER

Offer Price: [Issue Price/Not Applicable/specify]

[Not Applicable/give details]








[Not Applicable/give details][Process for notification toapplicants of the amountallotted and the indicationwhether dealing may beginbefore notification is made:]

[Categories of potential investorsto which the Notes are offeredand whether tranche(s) havebeen reserved for certaincountries:]

[Procedure for exercise of anyright of pre-emption,negotiability of subscriptionrights and treatment ofsubscription rights notexercised:]

[Manner in and date on whichresults of the offer are to bemade public:]

[Details of the method and timelimits for paying up anddelivering the Notes:]

[Description of possibility toreduce subscriptions andmanner for refunding excessamount paid by applicants]:

[Details of the minimum and/ormaximum amount ofapplication]:

[Description of the applicationprocess]:

[Conditions to which the offer issubject:]

(vi) Intended to be held in amanner which would allowEurosystem eligibility:

(v) Names and addresses ofadditional Paying Agent(s)(if any):

38


[None/give details][Name(s) and address(es), to theextent known to the Issuer, ofthe placers in the variouscountries where the offer takesplace.]

[Amount of any expenses andtaxes specifically charged to thesubscriber or purchaser:]

39

Form of Final Terms

Set out below is the form of Final Terms which will be completed for each Tranche of Notes issued underthe Programme with a denomination of at least EUR 50,000 (or its equivalent in another currency):

[Date]


Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]under the £2,000,000,000 Euro Note Programme

Part A — Contractual Terms

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions ofthe Notes set forth in the Offering Circular dated 5th August, 2010 which[, as modified by a supplementto the Offering Circular dated [date of supplement],] constitutes a base prospectus for the purposes ofDirective 2003/71/EC of 4th November 2003 of the European Parliament and the Council of the EuropeanUnion (the Prospectus Directive). This document constitutes the Final Terms of the Notes described hereinfor the purposes of Article 5.4 of the Prospectus Directive and must be read in conjunction with theOffering Circular[and such supplement to the Offering Circular]. Full information on the Issuer and the offerof the Notes is only available on the basis of the combination of these Final Terms [and/,] the OfferingCircular[and the supplement to the Offering Circular dated [date of supplement]]. The Offering Circular[and such supplement] [is/are] available for viewing during normal business hours and copies may beobtained from the registered office of the Issuer and from the specified office of the Paying Agents for thetime being.

[The following alternative language applies if the first tranche of an issue which is being increased wasissued under an Offering Circular with an earlier date.

Terms used herein shall be deemed to be defined as such for the purposes of the Terms and Conditions ofthe Notes (the Conditions) set forth in the Offering Circular dated [specify date applicable to first trancheof Series]. This document constitutes the Final Terms of the Notes described herein for the purposes ofArticle 5.4 of Directive 2003/71/EC of 4th November 2003 of the European Parliament and the Council ofthe European Union (the Prospectus Directive) and must be read in conjunction with the Offering Circulardated 5th August, 2010 [as modified by the supplement to the Offering Circular dated [date ofsupplement],] which [together] constitute[s] a base prospectus for the purposes of the Prospectus Directive,save in respect of the Conditions which are extracted from the Offering Circular dated [original date] andare attached hereto. Full information on the Issuer and the offer of the Notes is only available on the basisof the combination of these Final Terms [and/,] the Offering Circulars dated 5th August, 2010 and [originaldate][and the supplement to the Offering Circular dated [date of supplement]]. Copies of such OfferingCirculars [and such supplement] are available for viewing during normal business hours and copies may beobtained from the registered office of the Issuer and from the specified office of the Paying Agents for thetime being.]

[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numberingshould remain as set out below, even if “Not Applicable” is indicated for individual paragraphs orsubparagraphs. Italics denote directions for completing the Final Terms.]

[When adding any other final terms or information consideration should be given as to whether such termsor information constitute a “significant new factor” and consequently trigger the need for a supplement tothe Offering Circular under Article 16 of the Prospectus Directive.]

1. [(i)] Series Number: [ ]

[(ii)] Tranche Number: [ ]

(If fungible with an existing Series, details of that Series,including the date on which the Notes become fungible)]

2. Specified Currency or Currencies: [ ]

3. Aggregate Nominal Amount:

(i) Tranche: [ ]

(ii) Series: [ ]

40

4. Issue Price: [ ] per cent. of the Aggregate Nominal Amount

[plus accrued interest from [insert date]] (if applicable)

5. (i) Specified Denominations: [ ][ ]

(Note — where multiple denominations above €50,000 orequivalent are being used the following sample wordingshould be followed:

“[€50,000] and integral multiples of [€1,000] in excessthereof up to and including [€99,000]. No Notes indefinitive form will be issued with a denomination above[€99,000]”

(N.B. If an issue of Notes is (i) not admitted to trading on anEuropean Economic Area exchange; and (ii) only offered inthe European Economic Area in circumstances where aprospectus is not required to be published under theProspectus Directive the €50,000 minimum denomination isnot required.)

(ii) Calculation Amount: [ ]

(If only one Specified Denomination, insert the SpecifiedDenomination).

If more than one Specified Denomination, insert the highestcommon factor. Note: There must be a common factor inthe case of two or more Specified Denominations.)

6. (i) Issue Date: [ ]

(ii) Interest Commencement Date: [specify/Issue Date/Not Applicable]

(N.B. An Interest Commencement Date will not be relevantfor certain Notes, for example Zero Coupon Notes.)

7. Maturity Date: [Fixed rate — specify date/Floating rate — Interest PaymentDate falling in [specify month]]

8. Interest Basis: [Fixed Rate][Floating Rate][Zero Coupon][Index Linked Interest][Dual Currency Interest][specify other](further particulars specified below)

9. Redemption/Payment Basis: [Redemption at par][Index Linked Redemption][Dual Currency Redemption][Partly Paid][Instalment][specify other]

(N.B. If the Final Redemption Amount is less than100 per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply.)

10. [Specify details of any provision for change of Notes intoanother Interest Basis or Redemption/Payment Basis]

11. Put/Call Options: [Investor Put][Issuer Call][(further particulars specified below)]

Change of Interest Basis orRedemption/Payment Basis:

41

12. Method of distribution: [Syndicated/Non-syndicated]

Provisions Relating to Interest (if any) Payable13. Fixed Rate Note Provisions [Applicable/Not Applicable]

(If not applicable, delete the remaining subparagraphs ofthis paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semiannually/quarterly/other (specify)] in arrear]

(ii) Interest Payment Date(s): [[ ] in each year up to and including the MaturityDate]/[specify other] (NB: This will need to be amendedin the case of long or short coupons)

(iii) Fixed Coupon Amount(s): [ ] per Calculation Amount(Applicable to Notes indefinitive form.)

(iv) [ ] per Calculation Amount payable on the InterestPayment Date falling [in/on] [ ]

(v) Fixed Day Count Fraction: [Actual/Actual (ICMA) or 30/360 or specify other]

(vi) Determination Date(s): [ ] in each year

[Insert interest payment dates, ignoring issue date ormaturity date in the case of a long or short first or lastcoupon]

(NB: This will need to be amended in the case of regularinterest payment dates which are not of equal duration)

(NB: Only relevant where Fixed Day Count Fraction isActual/Actual (ICMA))

(vii) [None/Give details]

14. Floating Rate Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphs ofthis paragraph)

(i) [ ]

(ii) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/[specifyother]]

(iii) Additional Business Centre(s): [ ]

(iv) [Screen Rate Determination/ISDA Determination/specifyother]

(v) [ ]

(vi) Screen Rate Determination:

Party responsible forcalculating the Rate ofInterest and Interest Amount(if not the Agent):

Manner in which the Rate ofInterest and Interest Amountis to be determined:


Other terms relating to themethod of calculatinginterest for Fixed Rate Notes:

Broken Amount(s):(Applicable to Notes indefinitive form.)

42

— Reference Rate: [ ]

(Either LIBOR, EURIBOR or other, although additionalinformation is required if other — including any amendmentto fallback provisions in the Agency Agreement)

[ ]

(Second London business day prior to the start of eachInterest Period if LIBOR (other than Sterling or euro LIBOR),first day of the Interest Period if Sterling LIBOR and secondday on which the TARGET2 System is open prior to the startof each Interest Period if EURIBOR or euro LIBOR)

— Relevant Screen Page: [ ]

(In the case of EURIBOR, if not Reuters EURIBOR01 ensure itis a page which shows a composite rate or amend the fallback provisions appropriately)

(vii) ISDA Determination:

— Floating Rate Option: [ ]

— Designated Maturity: [ ]

— Reset Date: [ ]

(viii) Margin(s): [+/-] [ ] per cent. per annum

(ix) Minimum Rate of Interest: [ ] per cent. per annum

(x) Maximum Rate of Interest: [ ] per cent. per annum

(xi) Floating Day Count Fraction: [Actual/Actual (ISDA)Actual/365 (Fixed)Actual/365 (Sterling)Actual/3603 0/3 6030E/36030E/360 (ISDA)Other](See Condition 4 for alternatives)

(xii) [ ]

15. Zero Coupon Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphs ofthis paragraph)

(i) Accrual Yield: [ ] per cent. per annum

(ii) Reference Price: [ ]

(iii) [ ]

(Consider applicable day count fraction if eurodenominated)

16. Index Linked Interest Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphs ofthis paragraph)

Any other formula/basis ofdetermining amount payable:

Fall back provisions,rounding provisions and anyother terms relating to themethod of calculatinginterest on Floating RateNotes, if different fromthose set out in the Termsand Conditions:

— Interest DeterminationDate(s):

43


(i) Index/Formula: [give or annex details]

(ii) Calculation Agent: [give name (and, if the Notes are derivative securities towhich Annex XII of the Prospectus Directive Regulationsapplies, address)]

(iii) [ ]

(iv) [need to include a description of market disruption orsettlement disruption events and adjustment provisions]

(v) [ ]

(vi) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/specifyother]

(vii) Additional Business Centre(s): [ ]

(viii) Minimum Rate of Interest: [ ] per cent. per annum

(ix) Maximum Rate of Interest: [ ] per cent. per annum

(x) Day Count Fraction: [ ]

17. [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphs ofthis paragraph)


Dual Currency Interest NoteProvisions


Provisions for determiningCoupon where calculation byreference to Index and/orFormula is impossible orimpracticable:

Party responsible forcalculating the Rate ofInterest (if not theCalculation Agent) andInterest Amount (if notthe Agent):

44

(i) [give or annex details]

(ii) [ ]

(iii) [need to include a description of market disruption orsettlement disruption events and adjustment provisions]

(iv) [ ]

Provisions Relating to Redemption18. Issuer Call [Applicable/Not Applicable]

(If not applicable, delete the remaining subparagraphs ofthis paragraph)



(iii) If redeemable in part:

(a) [ ]

(b) [ ]

(iv) [ ]


19. Investor Put [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphs ofthis paragraph)


(ii) [[ ] per Calculation Amount/specify other/see Appendix]Optional RedemptionAmount(s) and method, ifany, of calculation of suchamount(s):


Higher RedemptionAmount:

Minimum RedemptionAmount:


Person at whose optionSpecified Currency(ies) is/arepayable:

Provisions applicable wherecalculation by reference toRate of Exchange impossibleor impracticable:

Calculation Party, if any,responsible for calculatingthe principal and/or interestdue (if not the Agent):

Rate of Exchange/method ofcalculating Rate of Exchange:

45

(iii) [ ]


20. Final Redemption Amount [[ ] per Calculation Amount/specify other/see Appendix]

(N.B. If the Final Redemption Amount is less than100 per cent. of the nominal value the Notes will bederivative securities for the purposes of the ProspectusDirective and the requirements of Annex XII to theProspectus Directive Regulation will apply. [If applicable,consider the need to include a description of marketdisruption or settlement disruption events and adjustmentprovisions.])

21. [[ ] per Calculation Amount/specify other/see Appendix]

General Provisions Applicable to the Notes22. (i) Form of Notes: [Temporary Global Note exchangeable for a Permanent

Global Note which is exchangeable for Definitive Notes [on60 days’ notice given at any time/only upon an ExchangeEvent].]

[Temporary Global Note exchangeable for Definitive Noteson and after the Exchange Date.]

(N.B. The exchange upon notice/at any time options shouldnot be expressed to be applicable if the SpecifiedDenomination of the Notes in paragraph 5 includeslanguage substantially to the following effect: “[€50,000]and integral multiples of [€1,000] in excess thereof up toand including [€99,000].” Furthermore, such SpecifiedDenomination construction is not permitted in relation toany issue of Notes which is to be represented on issue by aTemporary Global note exchangeable for Definitive Notes.)

(ii) New Global Note: [Yes] [No]

23. [Not Applicable/give details]

(Note that this paragraph relates to the place of paymentand not Interest Period end dates to which sub-paragraphs15(iii) and 17(viii) relate)

24. [Yes/No. If yes, give details]Talons for future Coupons orReceipts to be attached toDefinitive Notes (and dateson which such Talonsmature):

Additional Financial Centre(s)or other special provisionsrelating to Payment Dates:

Early Redemption Amount(s)payable on redemption fortaxation reasons or on eventof default and/or the methodof calculating the same(if required or if differentfrom that set out inCondition 6(e)):

Notice period (if other thanas set out in the Conditions):

46

25. Details relating to Partly Paid Notes: [Not Applicable/give details](NB: New forms of Global Note may be required for PartlyPaid Notes)

26. Details relating to Instalment Notes: [Applicable/Not Applicable](If not applicable, delete the remaining subparagraphs ofthis paragraph)

(i) Instalment Amount(s) [If Applicable, specify]

(ii) Instalment Date(s) [If Applicable, specify]

27. Redenomination: Redenomination [not] applicable

(if Redenomination is applicable, specify the terms of theredenomination in an Annex to the Final Terms)

28. Other final terms: [Not Applicable/give details]

(When adding any other final terms consideration should begiven as to whether such terms constitute a “significant newfactor” and consequently trigger the need for a supplementto the Offering Circular under Article 16 of the ProspectusDirective.)

(Consider including a term providing for tax certification ifrequired to enable interest to be paid gross by issuers.)

Distribution29. (i) [Not Applicable/give names]

(If the Notes are derivative securities to which Annex XII ofthe Prospectus Directive Regulation applies, include namesof entities agreeing to underwrite the issue on a firmcommitment basis and names of the entities agreeing toplace the issue without a firm commitment or on a “bestefforts” basis if such entities are not the same as theManagers.)

(ii) [ ]

(The above is only relevant if the Notes are derivativesecurities to which Annex XII of the Prospectus Directiveapplies).

(iii) Stabilising Manager(s) (if any): [Not Applicable/give name]

30. [Not Applicable/give name]

31. Additional selling restrictions: [Not Applicable/give details]

If non-syndicated, name ofrelevant Dealer:

Date of [Subscription]Agreement:

If syndicated, names ofManagers:

[If applicable, specify][amount of each paymentcomprising the Issue Priceand date on which eachpayment is to be made and,if different from thosespecified in the TemporaryGlobal Note, consequencesof failure to pay, includingany right of the Issuer toforfeit the Notes and interestdue on late payment:]

47

Purpose of Final TermsThese Final Terms comprise the final terms required for issue and admission to trading on the London StockExchange’s regulated market and listing on the Official List of the UK Listing Authority of the Notesdescribed herein pursuant to the £2,000,000,000 Euro Note Programme of Tesco Personal Finance PLC.

ResponsibilityThe Issuer accepts responsibility for the information contained in these Final Terms. [[ ] has beenextracted from [ ]. The Issuer confirms that such information has been accurately reproduced and that,so far as it is aware and is able to ascertain from information published by [ ], no facts have been omittedwhich would render the reproduced information inaccurate or misleading.]

Signed on behalf of Tesco Personal Finance PLC:

By: –––––––––––––––––––––––Duly authorised

48

Part B — Other Information

1. LISTING AND ADMISSION TO TRADING

(i) [Application has been made by the Issuer (or on its behalf]for the Notes to be admitted to trading on the London StockExchange’s regulated market and listing on the Official Listof the UK Listing Authority with effect from[ ].] [Application is expected to be made by the Issuer (oron its behalf) for the Notes to be admitted to trading on [theLondon Stock Exchange’s regulated market] and listing on[the Official List of the UK Listing Authority] with effect from[ ].] [Not Applicable.]

(ii) [ ]

2. RATINGS

Ratings: The Notes to be issued have been rated:

[S&P: [ ]]

[Moody’s: [ ]]

[Fitch: [ ]]

[[Other]: [ ]]

(The above disclosure should reflect the rating allocated toNotes of the type being issued under the Programmegenerally or, where the issue has been specifically rated, thatrating.)

3. INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE

[Save for any fees payable to the Dealers, so far as the Issuer is aware, no person involved in the issue ofthe Notes has an interest material to the offer. — Amend as appropriate if there are other interests]

[(When adding any other description, consideration should be given as to whether such matters describedconstitute “significant new factors” and consequently trigger the need for a supplement to the OfferingCircular under Article 16 of the Prospectus Directive.)]

4. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES

[(i) Reasons for the offer [ ]

[(ii) Estimated net proceeds: [ ]

[(iii) Estimated total expenses: [ ].

(Delete unless the Notes are derivative securities to whichAnnex XII of the Prospectus Directive Regulation applies, inwhich case (i) above is required where the reasons for theoffer are different from making profit and/or hedgingcertain risks and, where such reasons are inserted in (i),disclosure of net proceeds and total expenses at (ii) and (iii)above are also required.)]

5. [ ]

The yield is calculated at the Issue Date on the basis of theIssue Price. It is not an indication of future yield.

YIELD (Fixed RateNotes only)]Indication of yield:

Estimate of total expensesrelated to admission totrading:

Listing and Admission totrading:

49

6. PERFORMANCE OF INDEX/FORMULA, EXPLANATION OF EFFECT ON VALUE OFINVESTMENT AND ASSOCIATED RISKS AND OTHER INFORMATION CONCERNING THEUNDERLYING (Index-linked Notes only)

[Need to include details of where past and future performance and volatility of the index/formula can beobtained.]

[Where the underlying is an index need to include the name of the index and a description if composed bythe Issuer and if the index is not composed by the Issuer need to include details of where the informationabout the index can be obtained.]

[Include other information concerning the underlying required by paragraph 4.3 of Annex XII of theProspectus Directive Regulation.]

[(When completing the above paragraphs, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement to theOffering Circular under Article 16 of the Prospectus Directive.)]

The Issuer [intends to provide post-issuance information [specify what information will be reported andwhere it can be obtained]] [does not intend to provide post-issuance information].

(N.B. This paragraph 6 only applies if the Notes are derivative securities to which Annex XII of theProspectus Directive Regulation applies.)

7. [PERFORMANCE OF RATE[S] OF EXCHANGE (Dual Currency Notes only)]

[Need to include details of where past and future performance and volatility of the relevant rates can beobtained.]

[(When completing this paragraph, consideration should be given as to whether such matters describedconstitute “significant new factors” and consequently trigger the need for a supplement to the OfferingCircular under Article 16 of the Prospectus Directive.)]

(N.B. This paragraph 7 only applies if the Notes are derivative securities to which Annex XII of theProspectus Directive Regulation applies.)

8. OPERATIONAL INFORMATION

(i) ISIN Code: [ ]

(ii) Common Code: [ ]

(iii) [Not Applicable/give name(s) and number(s)]

(iv) Delivery: Delivery [against/free of] payment

(v) [ ]

(vi) [Yes] [No]

[Note that the designation “yes” simply means that theNotes are intended upon issue to be deposited with one ofthe ICSDs as common safekeeper and does not necessarilymean that the Notes will be recognised as eligible collateralfor Eurosystem monetary policy and intra-day creditoperations by the Eurosystem either upon issue or at any orall times during their life. Such recognition will depend uponsatisfaction of the Eurosystem eligibility criteria.] [includethis text if “yes” selected in which case the Notes must beissued in NGN form]

Intended to be held in amanner which would allowEurosystem eligibility:

Names and addresses ofadditional Paying Agent(s)(if any):

Any clearing system(s) otherthan Euroclear Bank S.A./N.V.and Clearstream Banking,société anonyme and therelevant identificationnumber(s):

50

Terms and Conditions of the Notes

The following are the Terms and Conditions of the Notes which will be incorporated by reference into eachglobal Note and each definitive Note, in the latter case only if permitted by the relevant stock exchange orother relevant authority (if any) and agreed by the Issuer and the relevant Dealer at the time of issue but,if not so permitted and agreed, such definitive Note will have endorsed thereon or attached thereto suchTerms and Conditions. The applicable Final Terms in relation to any Tranche of Notes may specify otherterms and conditions which shall, to the extent so specified or to the extent inconsistent with the followingTerms and Conditions, replace or modify the following Terms and Conditions for the purpose of suchNotes. The applicable Final Terms (or the relevant provisions thereof) will be endorsed upon, or attachedto, each temporary global Note, permanent global Note and definitive Note. Reference should be made to“Form of Final Terms” above for the form of Final Terms which will include the meaning of certain termsused in the following Terms and Conditions or specify which of such terms are to apply in relation to therelevant Notes.

This Note is one of a Series (as defined below) of Notes issued by Tesco Personal Finance PLC (the Issuer)constituted by a Trust Deed (as modified and/or supplemented and/or restated from time to time, the TrustDeed) dated 5th August, 2010 made between the Issuer and Capita Trust Company Limited (the Trustee,which expression shall include any successor as trustee).

References herein to the Notes shall be references to the Notes of this Series and shall mean:

(i) in relation to any Notes represented by a global Note, units of each Specified Denomination in theSpecified Currency;

(ii) definitive Notes issued in exchange for a global Note; and

(iii) any global Note.

The Notes, the Receipts (as defined below) and the Coupons (as defined below) also have the benefit ofan Agency Agreement (as modified and/or supplemented and/or restated from time to time, the AgencyAgreement) dated 5th August, 2010 and made among the Issuer, HSBC Bank plc, as issuing and principalpaying agent and agent bank (the Agent, which expression shall include any successor agent specified inthe applicable Final Terms), any other paying agent named therein (together with the Agent, the PayingAgents, which expression shall include any additional or successor paying agents) and the Trustee.

Interest bearing definitive Notes (unless otherwise indicated in the applicable Final Terms) have interestcoupons (Coupons) and, if indicated in the applicable Final Terms, talons for further Coupons (Talons)attached on issue. Any reference herein to Coupons or coupons shall, unless the context otherwiserequires, be deemed to include a reference to Talons or talons. Definitive Notes repayable in instalmentshave receipts (Receipts) for the payment of the instalments of principal (other than the final instalment)attached on issue.

The final terms for this Note (or the relevant provisions thereof) are set out in Part A of the Final Termsattached to or endorsed on this Note and which supplement these Terms and Conditions (the Conditions)and may specify other terms and conditions which shall, to the extent so specified or to the extentinconsistent with these Conditions, replace or modify these Conditions for the purposes of this Note.References to the “applicable Final Terms” are to Part A of the Final Terms (or the relevant provisionsthereof) attached to or endorsed on this Note.

The Trustee acts for the benefit of the holders of the Notes (the Noteholders, which expression shall, inrelation to any Notes represented by a global Note, be construed as provided below), the holders of theReceipts (the Receiptholders) and the holders of the Coupons (the Couponholders, which expressionshall, unless the context otherwise requires, include the holders of the Talons), all in accordance with theprovisions of the Trust Deed.

As used herein, Tranche means Notes which are identical in all respects (including as to listing andadmission to trading) and Series means a Tranche of Notes together with any further Tranche or Tranchesof Notes which are (i) expressed to be consolidated and form a single series and (ii) identical in all respects(including as to listing and admission to trading) except for their respective Issue Dates, InterestCommencement Dates and/or Issue Prices. The following statements include summaries of, and are subjectto, the detailed provisions of the Trust Deed and the applicable Final Terms. Copies of the Trust Deed andthe Agency Agreement are available for inspection during normal business hours at the principal office ofthe Trustee, being at 5th August, 2010 at Phoenix House, 18 King William Street, London EC4N 7HE, andat the specified office of each of the Paying Agents. Copies of the applicable Final Terms are available for

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viewing and copies may be obtained from the registered office of the Issuer and from the specified officeof the Paying Agents save that, if this Note is neither admitted to trading on a regulated market in an EEAState nor offered to the public in an EEA State in circumstances where a prospectus is required to bepublished under the Prospectus Directive, the applicable Final Terms will only be obtainable by a Noteholderholding one or more Notes and such Noteholder must produce evidence satisfactory to the Issuer or, as thecase may be, the relevant Paying Agent as to its holding of such Notes and identity.

The Noteholders, the Receiptholders and the Couponholders are deemed to have notice of, and are entitledto the benefit of, all the provisions of the Trust Deed, the Agency Agreement and the applicable Final Termswhich are binding on them.

Words and expressions defined in the Trust Deed or the Agency Agreement or used in the applicable FinalTerms shall have the same meanings where used in these Conditions unless the context otherwise requiresor unless otherwise stated and provided that, in the event of any inconsistency between the AgencyAgreement and the Trust Deed, the Trust Deed will prevail and, in the event of any inconsistency betweenthe Agency Agreement or the Trust Deed and the applicable Final Terms, the applicable Final Terms willprevail.

1. Form, Denomination and Title

The Notes are in bearer form and, in the case of definitive Notes, serially numbered, in the SpecifiedCurrency and the Specified Denomination(s). Notes of one Specified Denomination may not be exchangedfor Notes of another Specified Denomination.

This Note is a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Index Linked Interest Note, aDual Currency Interest Note or a combination of any of the foregoing, depending upon the Interest Basisshown in the applicable Final Terms.

This Note may be an Index Linked Redemption Note, an Instalment Note, a Dual Currency RedemptionNote, a Partly Paid Note or a combination of any of the foregoing, depending on the Redemption/PaymentBasis shown in the applicable Final Terms.

Definitive Notes are issued with Coupons attached, unless they are Zero Coupon Notes in which casereferences to Coupons and Couponholders in these Terms and Conditions are not applicable.

Subject as set out below, title to the Notes, Receipts and Coupons will pass by delivery. The Issuer, theTrustee, the Agent and any Paying Agent may deem and treat the bearer of any Note, Receipt or Couponas the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership orwriting thereon or notice of any previous loss or theft thereof) for all purposes but, in the case of any globalNote, without prejudice to the provisions set out in the next succeeding paragraph. For so long as any ofthe Notes is represented by a global Note held on behalf of Clearstream Banking, société anonyme(Clearstream, Luxembourg) and/or Euroclear Bank S.A./N.V. (Euroclear) each person (other thanClearstream, Luxembourg or Euroclear) who is for the time being shown in the records of Clearstream,Luxembourg or of Euroclear as the holder of a particular nominal amount of such Notes (in which regardany certificate or other document issued by Clearstream, Luxembourg or Euroclear as to the nominalamount of such Notes standing to the account of any person shall be conclusive and binding for allpurposes save in the case of manifest error) shall be treated by the Issuer, the Trustee, the Agent and anyother Paying Agent as the holder of such nominal amount of such Notes for all purposes other than withrespect to the payment of principal or interest on such nominal amount of such Notes, for which purposethe bearer of the relevant global Note shall be treated by the Issuer, the Trustee, the Agent and any otherPaying Agent as the holder of such nominal amount of such Notes in accordance with and subject to theterms of the relevant global Note and the expressions “Noteholder” and “holder of Notes” and relatedexpressions shall be construed accordingly. Notes which are represented by a global Note will betransferable only in accordance with the rules and procedures for the time being of Clearstream,Luxembourg or of Euroclear, as the case may be. In determining whether a particular person is entitled toa particular nominal amount of Notes as aforesaid, the Trustee may rely on such evidence and/orinformation and/or certification as it shall, in its absolute discretion, think fit and, if it does so rely, suchevidence and/or information and/or certification shall, in the absence of manifest or proven error, beconclusive and binding on all concerned.

References to Clearstream, Luxembourg and/or Euroclear shall, whenever the context so permits, bedeemed to include a reference to any additional or alternative clearing system approved by the Issuer, theTrustee and the Agent.

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2. Status of the Notes

The Notes and the relative Receipts and Coupons are direct, unconditional, unsubordinated and (subject tothe provisions of Condition 3) unsecured obligations of the Issuer and rank pari passu among themselvesand (save for certain debts preferred by law) equally with all other unsecured obligations (other thansubordinated obligations, if any) of the Issuer, from time to time outstanding.

3. Negative Pledge

So long as any of the Notes remains outstanding (as defined in the Trust Deed) neither the Issuer nor anyof its Subsidiaries (as defined in the Trust Deed) will create any mortgage, standard security, assignation insecurity, charge, pledge, lien or other security interest (other than a Permitted Security Interest) on any ofits present or future undertaking or assets or enter into any arrangement, the practical effect of which isto grant similar security (other than a Permitted Security Interest), in either case in respect of(i) any Obligation of the Issuer or any other person or (ii) any guarantee or indemnity in respect of anyObligation of the Issuer or any other person, without at the same time securing the Notes, the Receipts andthe Coupons and all amounts payable under the Trust Deed equally and rateably therewith to thesatisfaction of the Trustee or providing such other security therefor which the Trustee in its absolutediscretion shall deem not materially less beneficial to the Noteholders or as shall be approved by anExtraordinary Resolution (as defined in the Trust Deed) of the Noteholders.

Obligation means any present or future indebtedness evidenced by notes, bonds, debentures (as definedin Section 738 of the Companies Act 2006) or other securities which, except where it is the intention ofthe Issuer or the relevant Subsidiary that such securities will not be so quoted or traded, are, at the requestor with the concurrence of the Issuer or such Subsidiary, quoted or traded for the time being on any stockexchange or other generally recognised market for securities, excluding (i) any secured loan stock listed onthe Official List denominated or payable in Sterling and initially distributed primarily to investors in theUnited Kingdom and (ii) any such indebtedness incurred by a newly established Subsidiary of the Issuer (theNew Subsidiary) and applied for the purpose of acquiring assets from the Issuer or any other person andin respect of which the person to whom such indebtedness is owed has no recourse whatsoever to theIssuer, the New Subsidiary or any other Subsidiary, as the case may be, for repayment other than (A)recourse to the relevant New Subsidiary for amounts limited to the cash flow or net cash flow (other thanhistorical cash flow or historical net cash flow) from the asset or assets which were so acquired by the NewSubsidiary, and available receipts from liquidity drawings and hedge counterparties which are related to theindebtedness to be repaid by the New Subsidiary, in each case which are the subject of such security or (B)recourse to the Issuer or other person, as the case may be, directly or indirectly under any form of obligationor warranty in respect of the acquisition of such assets, which recourse is limited to a claim for a breach ofsuch obligation or warranty (not being a payment obligation or an obligation to procure payment byanother or an indemnity in respect of the indebtedness incurred for the purposes of funding the acquisitionitself) by the person against whom such recourse is available.

Permitted Security Interest means a lien arising by operation of law or any security interest created either(i) by any Subsidiary of the Issuer over the whole or any part of the present or future assets, undertakingsor revenues of such Subsidiary or (ii) by the Issuer over a specifically indentified Asset Pool (as such term indefined in the Regulated Covered Bonds Regulations 2008 (as the same may be amended or re-enacted)),provided that in either case the creation of such security interest is pursuant to or in accordance with therelevant contractual arrangements or, as the case may be, specific provisions of the laws of England andWales or Scotland relating to covered bonds (howsoever described) applicable at the time of creation ofsuch security interest.

4. Interest

(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest from (and including) the InterestCommencement Date at the rate(s) per annum equal to the Rate(s) of Interest payable in arrear onthe Interest Payment Date(s) in each year and on the Maturity Date if that does not fall on an InterestPayment Date.

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If the notes are in definitive form, except as provided in the applicable Final Terms, the amount ofinterest payable on each Interest Payment Date will amount to the Fixed Coupon Amount. Paymentsof interest on any Interest Payment Date in respect of the Fixed Interest Period ending on (butexcluding) such date will, if so specified in the applicable Final Terms, amount to the BrokenAmount(s) so specified.

As used in these Terms and Conditions, Fixed Interest Period means the period from (and including)an Interest Payment Date (or the Interest Commencement Date) to (but excluding) the next (or first)Interest Payment Date.

Except in the case of Notes in definitive form where an applicable Fixed Coupon Amount or BrokenAmount is specified in the applicable Final Terms, interest shall be calculated in respect of any periodby applying the Rate of Interest to:

(A) in the case of Fixed Rate Notes which are represented by a Global Note, the aggregateoutstanding nominal amount of the Fixed Rate Notes represented by such Global Note (or, ifthey are Partly Paid Notes, the aggregate amount paid up); or

(B) in the case of Fixed Rate Notes in definitive form, the Calculation Amount;

and, in each case, multiplying such sum by the applicable Fixed Day Count Fraction, and rounding theresultant figure to the nearest sub-unit of the relevant Specified Currency, half of any such sub-unitbeing rounded upwards or otherwise in accordance with applicable market convention. Where theSpecified Denomination of a Fixed Rate Note in definitive form is a multiple of the CalculationAmount, the amount of interest payable in respect of such Fixed Rate Note shall be the product ofthe amount (determined in the manner provided above) for the Calculation Amount and the amountby which the Calculation Amount is multiplied to reach the Specified Denomination, without anyfurther rounding.

In these Terms and Conditions:

Fixed Day Count Fraction means:

(i) if “Actual/Actual (ICMA)” is specified in the applicable Final Terms:

(a) in the case of Notes where the number of days in the relevant period from (and including)the most recent Interest Payment Date (or, if none, the Interest Commencement Date) to(but excluding) the relevant payment date (the Accrual Period) is equal to or shorter thanthe Determination Period during which the Accrual Period ends, the number of days insuch Accrual Period divided by the product of (1) the number of days in suchDetermination Period and (2) the number of Determination Dates (as specified in theapplicable Final Terms) that would occur in one calendar year; or

(b) in the case of Notes where the Accrual Period is longer than the Determination Periodduring which the Accrual Period ends, the sum of:

(1) the number of days in such Accrual Period falling in the Determination Period inwhich the Accrual Period begins divided by the product of (x) the number of days insuch Determination Period and (y) the number of Determination Dates (as specifiedin the applicable Final Terms) that would occur in one calendar year; and

(2) the number of days in such Accrual Period falling in the next Determination Perioddivided by the product of (x) the number of days in such Determination Period and(y) the number of Determination Dates that would occur in one calendar year; and

(ii) if “30/360” is specified in the applicable Final Terms, the number of days in the period from(and including) the most recent Interest Payment Date (or, if none, the Interest CommencementDate) to (but excluding) the relevant payment date (such number of days being calculated onthe basis of 12 30-day months) divided by 360;

Determination Period means the period from (and including) a Determination Date to(but excluding) the next Determination Date (including, where either the Interest CommencementDate or the final Interest Payment Date is not a Determination Date, the period commencing on thefirst Determination Date prior to, and ending on the first Determination Date falling after, suchdate); and

sub-unit means, with respect to any currency other than euro, the lowest amount of such currencythat is available as legal tender in the country of such currency and, with respect to euro, means onecent.

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(b) Interest on Floating Rate Notes and Index Linked Interest Notes:

(i) Interest Payment Dates: Each Floating Rate Note and Index Linked Interest Note bears interestfrom (and including) the Interest Commencement Date and such interest will be payable inarrear on either:

(A) the Specified Interest Payment Date(s) in each year specified in the applicable Final Terms;or

(B) if no Specified Interest Payment Date(s) is/are specified in the applicable Final Terms, eachdate (each such date, together with each Specified Interest Payment Date, an InterestPayment Date) which falls the number of months or other period specified as theSpecified Period in the applicable Final Terms after the preceding Interest Payment Dateor, in the case of the first Interest Payment Date, after the Interest Commencement Date.

Such interest will be payable in respect of each Interest Period (which expression shall, in theseTerms and Conditions, mean the period from (and including) an Interest Payment Date (or theInterest Commencement Date) to (but excluding) the next (or first) Interest Payment Date).

If a Business Day Convention is specified in the applicable Final Terms and (x) if there is nonumerically corresponding day on the calendar month in which an Interest Payment Date shouldoccur or (y) if any Interest Payment Date would otherwise fall on a day which is not a BusinessDay, then, if the Business Day Convention specified is:

(1) in any case where Specified Periods are specified in accordance with Condition 4(b)(i)(B)above, the Floating Rate Convention, such Interest Payment Date (i) in the case of (x)above, shall be the last day that is a Business Day in the relevant month and the provisionsof (B) below shall apply mutatis mutandis or (ii) in the case of (y) above, shall be postponedto the next day which is a Business Day unless it would thereby fall into the next calendarmonth, in which event (A) such Interest Payment Date shall be brought forward to theimmediately preceding Business Day and (B) each subsequent Interest Payment Date shallbe the last Business Day in the month which falls the Specified Period after the precedingInterest Payment Date occurred; or

(2) the Following Business Day Convention, such Interest Payment Date shall be postponed tothe next day which is a Business Day; or

(3) the Modified Following Business Day Convention, such Interest Payment Date shall bepostponed to the next day which is a Business Day unless it would thereby fall into thenext calendar month, in which event such Interest Payment Date shall be brought forwardto the immediately preceding Business Day; or

(4) the Preceding Business Day Convention, such Interest Payment Date shall be broughtforward to the immediately preceding Business Day.

In this Condition, Business Day means a day which is both:

(A) a day on which commercial banks and foreign exchange markets settle payments and areopen for general business (including dealing in foreign exchange and foreign currencydeposits) in London and any Additional Business Centre specified in the applicable FinalTerms; and

(B) either (1) in relation to any sum payable in a Specified Currency other than euro, a day onwhich commercial banks and foreign exchange markets settle payments in the principalfinancial centre of the country of the relevant Specified Currency (if other than Londonand any Additional Business Centre and which, if the Specified Currency is New Zealanddollars or Australian dollars, shall be Auckland and Sydney, respectively) or (2) in relationto any sum payable in euro, a day on which the TARGET2 System is open. In these Termsand Conditions, TARGET2 System means the Trans-European Automated Real-TimeGross Settlement Express Transfer (TARGET2) System.

(ii) Rate of Interest: The Rate of Interest payable from time to time in respect of Floating Rate Notesand Index Linked Interest Notes will be determined in the manner specified in the applicableFinal Terms.

(A) ISDA Determination for Floating Rate Notes: Where ISDA Determination is specified in theapplicable Final Terms as the manner in which the Rate of Interest is to be determined, the

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Rate of Interest for each Interest Period will be the relevant ISDA Rate plus or minus (asindicated in the applicable Final Terms) the Margin (if any). For the purposes of this sub-paragraph (A), ISDA Rate for an Interest Period means a rate equal to the Floating Ratethat would be determined by the Agent under an interest rate swap transaction if theAgent were acting as Calculation Agent for that swap transaction under the terms of anagreement incorporating the 2006 ISDA Definitions, as amended and updated as at theIssue Date of the first Tranche of the Notes and as published by the International Swapsand Derivatives Association, Inc. (the ISDA Definitions) and under which: (1) the FloatingRate Option is as specified in the applicable Final Terms; (2) the Designated Maturity is aperiod specified in the applicable Final Terms; and (3) the relevant Reset Date is either (i)if the applicable Floating Rate Option is based on the London inter-bank offered rate(LIBOR) or on the Euro-zone inter-bank offered rate (EURIBOR) for a currency, the firstday of that Interest Period or (ii) in any other case, as specified in the applicable FinalTerms.

For the purposes of this sub-paragraph (A), “Floating Rate”, “Calculation Agent”,“Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meaningsgiven to those terms in the ISDA Definitions.

(B) Screen Rate Determination for Floating Rate Notes: Where Screen Rate Determination isspecified in the applicable Final Terms as the manner in which the Rate of Interest is to bedetermined, the Rate of Interest for each Interest Period will, subject as provided below,be either:

(1) the offered quotation; or

(2) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.000005being rounded upwards) of the offered quotations,

(expressed as a percentage rate per annum) for the Reference Rate which appears or appear, asthe case may be, on the Relevant Screen Page as at 11.00 a.m. (London time, in the case ofLIBOR, or Brussels time, in the case of EURIBOR) on the Interest Determination Date in questionplus or minus (as indicated in the applicable Final Terms) the Margin (if any), all as determinedby the Agent. If five or more of such offered quotations are available on the Relevant ScreenPage, the highest (or, if there is more than one such highest quotation, one only of suchquotations) and the lowest (or, if there is more than one such lowest quotation, one only ofsuch quotations) shall be disregarded by the Agent for the purpose of determining thearithmetic mean (rounded as provided above) of such offered quotations.

The Agency Agreement contains provisions for determining the Rate of Interest in the event thatthe Relevant Screen Page is not available or if, in the case of (1) above, no such quotationappears or, in the case of (2) above, fewer than three such offered quotations appear, in eachcase as at the time specified in the preceding paragraph.

If the Reference Rate from time to time in respect of Floating Rate Notes is specified in theapplicable Final Terms as being other than LIBOR or EURIBOR, the Rate of Interest in respect ofsuch Notes will be determined as provided in the applicable Final Terms.

(iii) Minimum and/or Maximum Interest Rate: If the applicable Final Terms specifies a Minimum Rateof Interest for any Interest Period, then, in the event that the Rate of Interest in respect of suchInterest Period determined in accordance with the provisions of paragraph (ii) above is less thansuch Minimum Rate of Interest, the Rate of Interest for such Interest Period shall be suchMinimum Rate of Interest. If the applicable Final Terms specifies a Maximum Rate of Interest forany Interest Period, then, in the event that the Rate of Interest in respect of such Interest Perioddetermined in accordance with the provisions of paragraph (ii) above is greater than suchMaximum Rate of Interest, the Rate of Interest for such Interest Period shall be such MaximumRate of Interest.

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(iv) Determination of Rate of Interest and calculation of Interest Amounts: The Agent, in the caseof Floating Rate Notes, and the Calculation Agent, in the case of Index Linked Interest Notes,will at or as soon as practicable after each time at which the Rate of Interest is to be determined,determine the Rate of Interest for the relevant Interest Period. In the case of Index LinkedInterest Notes, the Calculation Agent will notify the Agent of the Rate of Interest for therelevant Interest Period as soon as practicable after calculating the same.

The Agent will calculate the amount of interest (the Interest Amount) payable on the FloatingRate Notes or Index Linked Interest Notes for the relevant Interest Period by applying the Rateof Interest to:

(A) in the case of Floating Rate Notes or Index Linked Interest Notes which are represented bya Global Note, the aggregate outstanding nominal amount of the Notes represented bysuch Global Note (or, if they are Partly Paid Notes, the aggregate amount paid up); or

(B) in the case of Floating Rate Notes or Index Linked Interest Notes in definitive form, theCalculation Amount;

and, in each case, multiplying such sum by the applicable Floating Day Count Fraction, androunding the resultant figure to the nearest sub-unit of the relevant Specified Currency, half ofany such sub-unit being rounded upwards or otherwise in accordance with applicable marketconvention. Where the Specified Denomination of a Floating Rate Note or an Index LinkedInterest Note in definitive form is a multiple of the Calculation Amount, the Interest Amountpayable in respect of such Note shall be the product of the amount (determined in the mannerprovided above) for the Calculation Amount and the amount by which the Calculation Amountis multiplied to reach the Specified Denomination, without any further rounding.

Floating Day Count Fraction means, in respect of the calculation of an amount of interest forany Interest Period in accordance with this Condition 4(b):

(i) if “Actual/Actual” or “Actual/Actual (ISDA)” is specified in the applicable Final Terms, theactual number of days in the Interest Period divided by 365 (or, if any portion of thatInterest Period falls in a leap year, the sum of (A) the actual number of days in that portionof the Interest Period falling in a leap year divided by 366 and (B) the actual number ofdays in that portion of the Interest Period falling in a non-leap year divided by 365);

(ii) if “Actual/365 (Fixed)” is specified in the applicable Final Terms, the actual number of daysin the Interest Period divided by 365;

(iii) if “Actual/360” is specified in the applicable Final Terms, the actual number of days in theInterest Period divided by 360;

(iv) if “30/360”, “360/360” or “Bond Basis” is specified in the applicable Final Terms, thenumber of days in the Interest Period divided by 360, calculated on a formula basis asfollows:

[360 x (Y2– Y1)] + [30 x (M2

– M1)] + (D2– D1)

Day Count Fraction = ––––––––––––––––––––––––––––––––––––––360

where:

“Y1” is the year, expressed as a number, in which the first day of the Interest Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the lastday of the Interest Period falls;

“M1”is the calendar month, expressed as a number, in which the first day of the InterestPeriod falls;

“M2”is the calendar month, expressed as a number, in which the day immediatelyfollowing the last day of the Interest Period falls;

“D1” is the first calendar day, expressed as a number, of the Interest Period, unless suchnumber is 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Interest Period, unless such number would be 31 and D1 is greater than29, in which case D2 will be 30;

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(v) if “30E/360” or “Eurobond Basis” is specified in the applicable Final Terms, the numberof days in the Interest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2– Y1)] + [30 x (M2

– M1)] + (D2– D1)


where:





“D1” is the first calendar day, expressed as a number, of the Interest Period, unless suchnumber would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Interest Period, unless such number would be 31, in which case D2 will be30;

(vi) if “30E/360 (ISDA)” is specified in the applicable Final Terms, the number of days in theInterest Period divided by 360, calculated on a formula basis as follows:

[360 x (Y2– Y1)] + [30 x (M2

– M1)] + (D2– D1)


where:





“D1” is the first calendar day, expressed as a number, of the Interest Period, unless (i) thatday is the last day of February or (ii) such number would be 31, in which case D1 will be30; and

“D2” is the calendar day, expressed as a number, immediately following the last dayincluded in the Interest Period, unless (i) that day is the last day of February but not theMaturity Date or (ii) such number would be 31, in which case D2 will be 30.

(v) Notification of Rate of Interest and Interest Amounts: The Agent will cause the Rate of Interestand each Interest Amount for each Interest Period and the relevant Interest Payment Date to benotified to the Issuer and any stock exchange on which the relevant Floating Rate Notes or IndexLinked Interest Notes are for the time being listed and notice thereof to be published inaccordance with Condition 13 as soon as possible after their determination but in no event laterthan the fourth London Business Day thereafter. Each Interest Amount and Interest PaymentDate so notified may subsequently be amended (or appropriate alternative arrangements madeby way of adjustment) without prior notice in the event of an extension or shortening of theInterest Period. Any such amendment will be promptly notified to each stock exchange onwhich the relevant Floating Rate Notes or Index Linked Interest Notes are for the time beinglisted and to the Noteholders in accordance with Condition 13. For the purposes of thisparagraph, the expression London Business Day means a day (other than a Saturday orSunday) on which banks and foreign exchange markets are open for general business inLondon.

(vi) Determination or Calculation by Trustee: If for any reason the Agent or, as the case may be, theCalculation Agent at any time after the Issue Date defaults in its obligation to determine the

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Rate of Interest or the Agent defaults in its obligation to calculate any Interest Amount inaccordance with sub-paragraph (ii)(A) or (B) above or as otherwise specified in the applicableFinal Terms, as the case may be, and in each case in accordance with paragraph (iv) above, theTrustee shall determine the Rate of Interest at such rate as, in its absolute discretion (havingsuch regard as it shall think fit to the foregoing provisions of this Condition, but subject alwaysto any Minimum Rate of Interest or Maximum Rate of Interest specified in the applicable FinalTerms), it shall deem fair and reasonable in all the circumstances or, as the case may be, theTrustee shall calculate the Interest Amount(s) in such manner as it shall deem fair andreasonable in all the circumstances and each such determination or calculation shall be deemedto have been made by the Agent (and, where practicable, in accordance with this Condition).

(vii) Certificates to be Final: All certificates, communications, opinions, determinations, calculations,quotations and decisions given, expressed, made or obtained for the purposes of the provisionsof this Condition 4(b), whether by the Agent or the Trustee or, if applicable, the CalculationAgent, shall (in the absence of wilful default, bad faith or manifest error) be binding on theIssuer, the Agent, the Trustee, the Calculation Agent (if applicable), the other Paying Agents andall Noteholders, Receiptholders and Couponholders and (in the absence as aforesaid) no liabilityto the Issuer, the Noteholders, the Receiptholders or the Couponholders shall attach to theAgent, the Trustee or the Calculation Agent (if applicable) in connection with the exercise ornon-exercise by it of its powers, duties and discretions pursuant to such provisions.

(c) Dual Currency Interest Notes: In the case of Dual Currency Interest Notes, if the rate or amount ofinterest falls to be determined by reference to an exchange rate, the rate or amount of interestpayable shall be determined in the manner specified in the applicable Final Terms.

(d) Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero CouponNotes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and otherwiseas specified in the applicable Final Terms.

(e) Accrual of Interest: Each Note (or in the case of the redemption of part only of a Note, that part onlyof such Note) will cease to bear interest (if any) from the date for its redemption unless payment ofprincipal is improperly withheld or refused. In such event, interest will continue to accrue as providedin the Trust Deed.

5. Payments

(a) Method of Payment:

Subject as provided below:

(i) payments in a Specified Currency other than euro will be made by transfer to an account in therelevant Specified Currency maintained by the payee with, or by a cheque in such SpecifiedCurrency drawn on, a bank in the principal financial centre of the country of such SpecifiedCurrency (which, if the Specified Currency is New Zealand dollars or Australian dollars, shall beAuckland and Sydney, respectively); and

(ii) payments in euro will be made by credit or transfer to a euro account (or any other account towhich euro may be credited or transferred) specified by the payee or by a euro cheque.

Payments will be subject in all cases to any fiscal or other laws and regulations applicable thereto inthe place of payment, but without prejudice to the provisions of Condition 7. References to“Specified Currency” will include any successor currency under applicable law.

(b) Presentation of Notes, Receipts and Coupons: Payments of principal in respect of definitive Notes will(subject as provided below) be made in the manner provided in paragraph (a) above only againstsurrender of definitive Notes, and payments of interest in respect of definitive Notes will (subject asprovided below) be made as aforesaid only against surrender of Coupons, in each case at thespecified office of any Paying Agent outside the United States (which expression, as used herein,means the United States of America (including the States and the District of Columbia and itspossessions)).

Payments of instalments of principal (if any), other than the final instalment, will (subject as providedbelow) be made in the manner provided in paragraph (a) above only against surrender of the relevantReceipt. Payment of the final instalment will be made in the manner provided in paragraph (a) aboveonly against surrender of the relevant Note. Each Receipt must be presented for payment of the

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relevant instalment together with the definitive Note to which it appertains. Receipts presentedwithout the definitive Note to which they appertain do not constitute valid obligations of the Issuer.Upon the date on which any definitive Note becomes due and repayable, unmatured Receipts (if any)relating thereto (whether or not attached) shall become void and no payment shall be made in respectthereof.

Fixed Rate Notes in definitive form (other than Dual Currency Notes or Index Linked Notes) should bepresented for payment together with all unmatured Coupons appertaining thereto (which expressionshall for this purpose include Coupons falling to be issued on exchange of matured Talons), failingwhich the amount of any missing unmatured Coupon (or, in the case of payment not being made infull, the same proportion of the amount of such missing unmatured Coupon as the sum so paid bearsto the sum due) will be deducted from the sum due for payment. Each amount of principal sodeducted will be paid in the manner mentioned above against surrender of the relative missingCoupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 7)in respect of such principal (whether or not such Coupon would otherwise have become void underCondition 8) or, if later, five years from the date on which such Coupon would otherwise havebecome due, but in no event thereafter.

Upon any Fixed Rate Note becoming due and repayable prior to its Maturity Date, all unmaturedTalons (if any) appertaining thereto will become void and no further Coupons will be issued in respectthereof.

Upon the date on which any Floating Rate Note, Dual Currency Note or Index Linked Note in definitiveform becomes due and repayable, unmatured Coupons and Talons (if any) relating thereto (whetheror not attached) shall become void and no payment or, as the case may be, exchange for furtherCoupons shall be made in respect thereof.

If the due date for redemption of any definitive Note is not an Interest Payment Date, interest (if any)accrued in respect of such Note from (and including) the preceding Interest Payment Date or, as thecase may be, the Interest Commencement Date shall be payable only against surrender of the relevantdefinitive Note.

Payments of principal and interest (if any) in respect of Notes represented by any global Note will(subject as provided below) be made in the manner specified above in relation to definitive Notes orotherwise in the manner specified in the relevant global Note, where applicable, against presentationor surrender, as the case may be, of such global Note at the specified office of any Paying Agent. Arecord of each payment made, distinguishing between any payment of principal and any payment ofinterest, will be made on such global Note either by such Paying Agent or in the records of Euroclearand Clearstream, Luxembourg, as applicable.

The holder of a global Note shall be the only person entitled to receive payments in respect of Notesrepresented by such global Note and the Issuer will be discharged by payment to, or to the order of,the holder of such global Note in respect of each amount so paid. Each of the persons shown in therecords of Clearstream, Luxembourg or Euroclear as the beneficial holder of a particular nominalamount of Notes represented by such global Note must look solely to Clearstream, Luxembourg orEuroclear, as the case may be, for his share of each payment so made by the Issuer to, or to the orderof, the holder of such global Note.

Notwithstanding the foregoing, if any amount of principal and/or interest in respect of this Note ispayable in U.S. dollars, such U.S. dollar payments of principal and/or interest in respect of this Notewill be made at the specified office of a Paying Agent in the United States if:

(i) the Issuer has appointed Paying Agents with specified offices outside the United States with thereasonable expectation that such Paying Agents would be able to make payment in U.S. dollarsat such specified offices outside the United States of the full amount of principal and intereston the Notes in the manner provided above when due;

(ii) payment of the full amount of such principal and interest at all such specified offices outsidethe United States is illegal or effectively precluded by exchange controls or other similarrestrictions on the full payment or receipt of principal and interest in U.S. dollars; and

(iii) such payment is then permitted under United States law without involving, in the opinion ofthe Issuer, adverse tax consequences to the Issuer.

(c) Payment Day: If the date for payment of any amount in respect of any Note, Receipt or Coupon isnot a Payment Day, the holder thereof shall not be entitled to payment until the next following

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Payment Day in the relevant place and shall not be entitled to further interest or other payment inrespect of such delay. For these purposes, Payment Day means any day which (subject to Condition8) is:

(i) a day on which commercial banks and foreign exchange markets settle payments and are openfor general business (including dealing in foreign exchange and foreign currency deposits) in:(A) in the case of definitive notes only, the relevant place of presentation (B) any AdditionalFinancial Centre specified in the applicable Final Terms; and

(ii) either (1) in relation to any sum payable in a Specified Currency other than euro, a day on whichcommercial banks and foreign exchange markets settle payments in the principal financialcentre of the country of the relevant Specified Currency (which, if the Specified Currency is NewZealand dollars or Australian dollars, shall be Auckland and Sydney, respectively) or (2) inrelation to any sum payable in euro a day on which the TARGET2 system is open.

(d) Interpretation of Principal and Interest: Any reference in these Terms and Conditions to principal inrespect of the Notes shall be deemed to include, as applicable:

(i) any additional amounts which may be payable with respect to principal under Condition 7 orpursuant to any undertaking given in addition thereto or in substitution therefor pursuant tothe Trust Deed;

(ii) the Final Redemption Amount of the Notes;

(iii) the Early Redemption Amount of the Notes;

(iv) the Optional Redemption Amount(s) (if any) of the Notes;

(v) in relation to Notes redeemable in instalments, the Instalment Amounts;

(vi) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined in Condition 6(e)(iii));and

(vii) any premium and any other amounts (other than interest) which may be payable by the Issuerunder or in respect of the Notes.

Any reference in these Terms and Conditions to interest in respect of the Notes shall be deemed toinclude, as applicable, any additional amounts which may be payable with respect to interest underCondition 7 or pursuant to any undertakings given in addition thereto or in substitution thereforpursuant to the Trust Deed.

6. Redemption and Purchase

(a) At Maturity: Unless previously redeemed or purchased and surrendered for cancellation as specifiedbelow, each Note (including each Index Linked Redemption Note and Dual Currency RedemptionNote) will be redeemed by the Issuer at its Final Redemption Amount specified in, or determined inthe manner specified in, the applicable Final Terms in the relevant Specified Currency on the MaturityDate.

(b) Redemption for Tax Reasons: The Notes may be redeemed at the option of the Issuer in whole, butnot in part, at any time (if this Note is neither a Floating Rate Note nor an Index Linked Interest Note)or on any Interest Payment Date (if this Note is either a Floating Rate Note or an Index Linked InterestNote), on giving not less than 30 nor more than 60 days’ notice to the Trustee and, in accordancewith Condition 13, the Noteholders (which notice shall be irrevocable), if the Issuer satisfies theTrustee immediately before the giving of the aforementioned notice that:

(i) on the occasion of the next payment due under the Notes, the Issuer has or will become obligedto pay additional amounts as provided or referred to in Condition 7 as a result of any changein, or amendment to, the laws or regulations of the United Kingdom or any political subdivisionor any authority thereof or therein having power to tax, or any change in the application orofficial interpretation of such laws or regulations, which change or amendment becomeseffective on or after the Issue Date of the first Tranche of the Notes; and

(ii) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliestdate on which the Issuer would be obliged to pay such additional amounts were a payment in respectof the Notes then due.

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Prior to the publication of any notice of redemption pursuant to this Condition, the Issuer shall deliverto the Trustee a certificate signed by two Directors of the Issuer stating that the Issuer is entitled toeffect such redemption and setting forth a statement of facts showing that the conditions precedentto the right of the Issuer so to redeem have occurred, and an opinion of independent legal advisersof recognised standing to the effect that the Issuer has or will become obliged to pay such additionalamounts as a result of such change or amendment, and the Trustee shall be entitled to accept thecertificate as sufficient evidence of the satisfaction of the conditions precedent set out above, inwhich event it shall be conclusive and binding on the Noteholders, the Receiptholders and theCouponholders.

Notes redeemed pursuant to this Condition 6(b) will be redeemed at their Early Redemption Amountreferred to in paragraph (e) below together (if appropriate) with interest accrued to (but excluding)the date of redemption.

(c) Redemption at the Option of the Issuer (Issuer Call): If Issuer Call is specified in the applicable FinalTerms, the Issuer shall, having given not less than 10 nor more than 30 days’ notice to theNoteholders in accordance with Condition 13 (which notice shall be irrevocable), redeem all or someonly of the Notes then outstanding on any Optional Redemption Date and at the OptionalRedemption Amount(s) specified in, or determined in the manner specified in, the applicable FinalTerms together, if appropriate, with interest accrued to (but excluding) the relevant OptionalRedemption Date. Any such redemption must be of a nominal amount not less than the MinimumRedemption Amount or not more than the Higher Redemption Amount, in each case as may bespecified in the applicable Final Terms. In the case of a partial redemption of Notes, the Notes to beredeemed (Redeemed Notes) will be selected individually by lot, in the case of Redeemed Notesrepresented by definitive Notes, and in accordance with the rules of Clearstream, Luxembourg and/orEuroclear (to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a poolfactor or a reduction in nominal amount, at their discretion), in the case of Redeemed Notesrepresented by a global Note, not more than 30 days prior to the date fixed for redemption (such dateof selection being hereinafter called the Selection Date). In the case of Redeemed Notes representedby definitive Notes, a list of the serial numbers of such Redeemed Notes will be published inaccordance with Condition 13 not less than 10 days prior to the date fixed for redemption. Noexchange of the relevant global Note will be permitted during the period from and including theSelection Date to and including the date fixed for redemption pursuant to this paragraph (c) andnotice to that effect shall be given by the Issuer to the Noteholders in accordance with Condition 13at least 5 days prior to the Selection Date.

(d) Redemption at the Option of the Noteholders (Investor Put): If Investor Put is specified in theapplicable Final Terms, upon the holder of any Note giving to the Issuer in accordance with Condition13 not less than 15 nor more than 30 days’ notice (which notice shall be irrevocable) the Issuer will,upon the expiry of such notice, redeem, subject to, and in accordance with, the terms specified in theapplicable Final Terms, in whole (but not in part), such Note on the Optional Redemption Date andat the Optional Redemption Amount together, if appropriate, with interest accrued to (but excluding)the Optional Redemption Date. It may be that before an Investor Put can be exercised, certainconditions and/or circumstances will need to be satisfied. Where relevant, the provisions will be setout in the applicable Final Terms.

If this Note is in definitive form, to exercise the right to require redemption of this Note the holder ofthis Note must deliver, at the specified office of any Paying Agent at any time during normal businesshours of such Paying Agent falling within the notice period, a duly completed and signed notice ofexercise in the form (for the time being current) obtainable from any specified office of any PayingAgent (a Put Notice) and in which the holder must specify a bank account (or, if payment is bycheque, an address) to which payment is to be made under this Condition accompanied by this Noteor evidence satisfactory to the Paying Agent concerned that this Note will, following delivery of thePut Notice, be held to its order or under its control. If this Note is represented by a global Note or isin definitive form and held through Euroclear or Clearstream, Luxembourg, to exercise the right torequire redemption of this Note the holder of this Note must, within the notice period, give notice tothe Agent of such exercise in accordance with the standard procedures of Euroclear and Clearstream,Luxembourg (which may include notice being given on his instruction by Euroclear or Clearstream,Luxembourg or any common depositary or common safekeeper, as the case may be, for them to theAgent by electronic means) in a form acceptable to Euroclear and Clearstream, Luxembourg fromtime to time and, if this Note is represented by a global Note the terms of which require presentation

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for recording changes to its nominal amount, at the same time present or procure the presentationof the relevant global Note to the Agent for notation accordingly.

Any Put Notice given by a holder of any Note pursuant to this paragraph shall be irrevocable unlessthe Issuer otherwise agrees.

(e) Early Redemption Amounts: For the purpose of paragraph (b) above and Condition 9, the Notes willbe redeemed at the Early Redemption Amount calculated as follows:

(i) in the case of Notes with a Final Redemption Amount equal to the Issue Price, at the FinalRedemption Amount thereof;

(ii) in the case of Notes (other than Zero Coupon Notes but including Instalment Notes and PartlyPaid Notes) with a Final Redemption Amount which is or may be less or greater than the IssuePrice or which is payable in a Specified Currency other than that in which the Notes aredenominated, at the amount specified in, or determined in the manner specified in, theapplicable Final Terms or, if no such amount or manner is so specified in the applicable FinalTerms, at their nominal amount; or

(iii) in the case of Zero Coupon Notes, at an amount (the Amortised Face Amount) calculated inaccordance with the following formula:

Early Redemption Amount = RP x (1 + AY)y

RP means the Reference Price;

AY means the Accrual Yield expressed as a decimal; and

y is a fraction the numerator of which is equal to the number of days (calculated on the basisof a 360-day year consisting of 12 months of 30 days each in the case of any currency otherthan Sterling and euro and on the basis of a year of 365 days, or 366 days in the case of a leapyear, in the case of Sterling and euro from (and including) the Issue Date of the first Tranche ofthe Notes to (but excluding) the date fixed for redemption or (as the case may be) the date uponwhich such Note becomes due and repayable and the denominator of which is 360 in the caseof any currency other than Sterling and euro and 365, or 366 in the case of a leap year, in thecase of Sterling and euro, or on such other basis as may be specified in the applicable FinalTerms.

(f) Instalments: Instalment Notes will be redeemed in the Instalment Amounts and on the InstalmentDates. In the case of early redemption, the Early Redemption Amount will be determined pursuant toparagraph (e) above.

(g) Partly Paid Notes: Partly Paid Notes will be redeemed, whether at maturity, early redemption orotherwise, in accordance with the provisions of this Condition and the applicable Final Terms.

(h) Purchases: The Issuer or any of its Subsidiaries may at any time purchase Notes (provided that, in thecase of definitive Notes, all unmatured Receipts, Coupons and Talons appertaining thereto arepurchased therewith) at any price in the open market or otherwise. Such Notes may be held, reissued,resold or, at the option of the Issuer, surrendered to any Paying Agent for cancellation.

(i) Cancellation: All Notes which are redeemed will forthwith be cancelled (together with all unmaturedReceipts, Coupons and Talons attached thereto or surrendered therewith at the time of redemption).All Notes so cancelled and Notes purchased and surrendered for cancellation pursuant toparagraph (h) above (together with all unmatured Receipts, Coupons and Talons cancelled therewith)shall be forwarded to the Agent and cannot be reissued or resold.

(j) Late payment on Zero Coupon Notes: If the amount payable in respect of any Zero Coupon Noteupon redemption of such Zero Coupon Note pursuant to paragraph (a), (b), (c) or (d) above or uponits becoming due and repayable as provided in Condition 9 is improperly withheld or refused, theamount due and repayable in respect of such Zero Coupon Note shall be the amount calculated asprovided in paragraph (e)(iii) above as though the references therein to the date fixed for theredemption or the date upon which such Zero Coupon Note becomes due and repayable werereplaced by references to the date which is the earlier of:

(i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and

(ii) five days after the date on which the full amount of the moneys payable has been received bythe Agent or the Trustee and notice to that effect has been given to the Noteholders inaccordance with Condition 13.

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7. Taxation

All payments of principal and interest in respect of the Notes, Receipts and Coupons by or on behalf of theIssuer will be made without withholding or deduction for or on account of any present or future taxes orduties of whatever nature imposed or levied by or on behalf of the United Kingdom or any politicalsubdivision or any authority thereof or therein having power to tax unless such withholding or deductionis required by law. In such event, the Issuer will pay such additional amounts as shall be necessary in orderthat the net amounts received by the holders of the Notes, Receipts or Coupons after such withholding ordeduction shall equal the respective amounts of principal and interest which would otherwise have beenreceived in respect of the Notes, Receipts or Coupons, as the case may be, in the absence of suchwithholding or deduction; except that no such additional amount shall be payable with respect to any Note,Receipt or Coupon:

(i) presented for payment by or on behalf of a Noteholder, Receiptholder or Couponholder who is liablefor such taxes or duties in respect of such Note, Receipt or Coupon by reason of his having someconnection with the United Kingdom other than the mere holding of such Note, Receipt or Coupon;or

(ii) presented for payment more than 30 days after the Relevant Date (as defined below) except to theextent that the holder thereof would have been entitled to such additional amount on presenting thesame for payment on such thirtieth day assuming that day to have been a Payment Day (as definedin Condition 5 — Payments); or

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

(iv) presented for payment by or on behalf of a holder who would have been able to avoid suchwithholding or deduction by presenting the relevant Note, Receipt or Coupon to another PayingAgent in a Member State of the European Union; or

(v) presented for payment in the United Kingdom; or

(vi) where such withholding or deduction would have been avoided by the Noteholder, Receiptholder orCouponholder (or a person on behalf of the Noteholder, Receiptholder or Couponholder) complyingwith any statutory requirement or by making a declaration of non-residence or other similar claim forexemption to any relevant taxing authority of or in the United Kingdom.

(vii) As used herein, the Relevant Date means the date on which such payment first becomes due, exceptthat, if the full amount of the moneys payable has not been duly received by the Agent or the Trusteeon or prior to such due date, it means the date on which, the full amount of such moneys havingbeen so received, notice to that effect is duly given to the Noteholders in accordance with Condition13.

8. Prescription

The Notes, Receipts and Coupons will become void unless claims in respect of principal and/or interest aremade within a period of 10 years (in the case of principal) and five years (in the case of interest) after theRelevant Date (as defined in Condition 7) therefor.

There shall not be included in any Coupon sheet issued on exchange of a Talon any Coupon the claim forpayment in respect of which would be void pursuant to this Condition or Condition 5(b) or any Talon whichwould be void pursuant to Condition 5(b).

9. Events of Default

The Trustee at its discretion may, and if so requested in writing by the holders of at least one-fifth innominal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of theNoteholders shall (subject in each case to being indemnified and/or secured and/or prefunded to itssatisfaction), (but, in the case of the happening of any of the events mentioned in sub-paragraphs (ii) to(viii) inclusive below (other than the winding-up of, or the appointment of an administrative or otherreceiver of the whole or any part of the undertaking or assets of, the Issuer), only if the Trustee shall havecertified in writing that such event is, in its opinion, materially prejudicial to the interests of theNoteholders), give notice to the Issuer that the Notes are, and they shall accordingly thereby forthwith

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become, immediately due and payable at the Early Redemption Amount (as defined in Condition 6(e)),together with accrued interest as provided in the Trust Deed, if any of the following events shall occur andbe continuing:

(i) if default is made for a period of seven days or more in the payment of any principal in respect of theNotes or any of them or for a period of 14 days or more in the payment of any interest in respect ofthe Notes or any of them; or

(ii) if an order is made or an effective resolution passed for winding-up the Issuer or any MaterialSubsidiary (as defined below) (except, in the case of a Material Subsidiary, a winding-up for thepurpose of a reconstruction or amalgamation, the terms of which have previously been approved inwriting by the Trustee, or a voluntary solvent winding-up in connection with the transfer of all or themajor part of the business, undertaking and assets of such Material Subsidiary to the Issuer or aSubsidiary); or

(iii) if the Issuer or any Material Subsidiary stops or threatens to stop payment generally or ceases orthreatens to cease to carry on all or substantially all of its business (except, in the case of a MaterialSubsidiary, a cessation or threatened cessation for the purpose of a reconstruction or amalgamationthe terms of which have previously been approved in writing by the Trustee, or in connection withthe transfer of all or substantially all of the business, undertaking and assets of such MaterialSubsidiary to the Issuer or a Subsidiary); or

(iv) if an encumbrancer takes possession or an administrative or other receiver is appointed of the wholeor any material part of the undertaking or assets of the Issuer or any Material Subsidiary or if adistress, execution, attachment, arrestment, diligence or any similar proceeding is levied or enforcedupon or sued out against any of the chattels or property of the Issuer or any Material Subsidiary andis not discharged within 21 days; or

(v) if the Issuer or any Material Subsidiary is deemed unable to pay its debts within the meaning ofSection 123(1)(b), (c) or (d) of the Insolvency Act l986, or the Issuer or any Material Subsidiarybecomes unable to pay its debts as they fall due or the value of its assets falls to less than the amountof its liabilities (taking into account for both these purposes its contingent and prospective liabilities)or the Issuer or any Material Subsidiary otherwise becomes insolvent, or the Issuer or any MaterialSubsidiary suspends making payments (whether of principal or interest) with the respect to all or anyclass of its debts or announces an intention to do so or if an administration order in relation to theIssuer or any Material Subsidiary is made; or

(vi) if any kind of composition, scheme of arrangement, compromise or other similar arrangementinvolving the Issuer or any Material Subsidiary and the creditors of any of them generally (or any classof such creditors) is entered into or made; or

(vii) if any indebtedness for Moneys Borrowed (as defined below) having an aggregate outstandingprincipal amount of at least £25,000,000 (or its equivalent in any other currency or currencies at thedate declared due) of the Issuer or any Material Subsidiary shall be or be declared due and payableprior to the date on which the same would otherwise become due and payable by reason of theoccurrence of an event of default (howsoever described) in relation thereto or the Issuer or anyMaterial Subsidiary defaults in the repayment of any indebtedness for Moneys Borrowed having anaggregate outstanding principal amount of at least £25,000,000 (or its equivalent in any othercurrency or currencies at the date of maturity) at the maturity thereof or at the expiry of anyapplicable grace period or any guarantee of any such indebtedness given by the Issuer or any MaterialSubsidiary shall not be paid when due and called upon save in any such case where there is a bonafide dispute as to whether payment or repayment is due; or

(viii) if default is made by the Issuer in the performance or observance of any obligation, condition orprovision binding on it under the Notes or the Trust Deed (other than any obligation for the paymentof any principal or interest in respect of the Notes) and, except where, in the opinion of the Trustee,such default is not capable of remedy (in which case the Notes will become due and repayable subjectto, and immediately upon, the Trustee certifying and giving notice as aforesaid), such defaultcontinues for 30 days after written notice thereof by the Trustee to the Issuer requiring the same tobe remedied.

Material Subsidiary means (a) a Subsidiary of the Issuer whose profits before tax and extraordinary itemsor whose net assets (in each case attributable to the Issuer) calculated by reference to its latest auditedaccounts represent ten (10) per cent. or more of the consolidated profits before tax and extraordinary items

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or net assets (in each case attributable to the Issuer), as the case may be, of the Issuer and its Subsidiariessimilarly calculated, all as more particularly defined in the Trust Deed, and (b) in addition, for the purposesof sub-paragraph (vii) above, a Subsidiary which has outstanding any notes, bonds or other like securitiesof which the Trustee is trustee. A certificate of any two directors of the Issuer that in their opinion aSubsidiary is or is not or was or was not at any particular time a Material Subsidiary shall, in the absence ofmanifest error, be conclusive and binding on all parties.

Moneys Borrowed means (a) borrowed moneys, and (b) liabilities under any note, bond, bill, debenture,loan stock or other security in each case issued for cash or in respect of acceptance credit facilities or asconsideration for assets or services but excluding such liabilities incurred in relation to the acquisition ofgoods or services in the ordinary course of trading.

At any time after the Notes become due and repayable and have not been repaid, the Trustee may at itsdiscretion and without further notice take such proceedings against the Issuer as it may think fit to enforcethe obligations of the Issuer under the Trust Deed and the Notes and the relative Receipts and Coupons,but it shall not be bound to take any such proceedings or any other action unless (i) it shall have been sodirected by an Extraordinary Resolution of the holders of the Notes or so requested in writing by holdersof at least one-fifth in nominal amount of the Notes then outstanding and (ii) it shall have been indemnifiedand/or secured and/or prefunded to its satisfaction. No holder of a Note, or of a Receipt or Couponappertaining thereto, shall be entitled to proceed directly against the Issuer unless the Trustee, havingbecome bound so to do, fails to do so within a reasonable period and such failure is continuing.

10. Replacement of Notes, Receipts, Coupons and Talons

Should any Note, Receipt, Coupon or Talon be lost, stolen, mutilated, defaced or destroyed, it may bereplaced at the specified office of the Agent, or any other place approved by the Trustee of which noticeshall have been published in accordance with Condition 13, upon payment by the claimant of such costsand expenses as may be incurred in connection therewith and on such terms as to evidence and indemnityas the Issuer may reasonably require. Mutilated or defaced Notes, Receipts, Coupons or Talons must besurrendered before replacements will be issued.

11. Agent and Paying Agents

The names of the initial Agent in respect of the Notes and the other initial Paying Agents in respect of theNotes and their initial specified offices are set out below.

The Issuer is, with the prior written approval of the Trustee, entitled to vary or terminate the appointmentof any Paying Agent and/or appoint additional or other Paying Agents and/or approve any change in thespecified office through which any Paying Agent acts, provided that:

(i) so long as the Notes are listed on any stock exchange, there will at all times be a Paying Agent witha specified office in such place as may be required by the rules and regulations of the relevant stockexchange or any other relevant authority;

(ii) the Issuer undertakes that it will ensure that it maintains at all times a Paying Agent in a MemberState of the European Union that is not obliged to withhold or deduct tax pursuant to EuropeanCouncil Directive 2003/48/EC or any law implementing or complying with or introduced in order toconfirm to, such Directive;

(iii) there will at all times be an Agent; and

(iv) there will at all times be a Paying Agent in a jurisdiction in Europe, other than the jurisdiction in whichthe Issuer is incorporated.

In addition, the Issuer shall forthwith appoint a Paying Agent having a specified office in New York City inthe circumstances described in the final paragraph of Condition 5(b). Any variation, termination,appointment or change shall only take effect (other than in the case of insolvency, when it shall be ofimmediate effect) if not less than 30 nor more than 45 days’ prior notice thereof shall have been given tothe Noteholders in accordance with Condition 13.

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12. Exchange of Talons

On and after the Interest Payment Date on which the final Coupon comprised in any Coupon sheetmatures, the Talon (if any) forming part of such Coupon sheet may be surrendered at the specified officeof the Agent or any other Paying Agent in exchange for a further Coupon sheet including (if such furtherCoupon sheet does not include Coupons to (and including) the final date for the payment of interest duein respect of the Note to which it appertains) a further Talon, subject to the provisions of Condition 8.

13. Notices

All notices regarding the Notes will be valid if published in a leading English language daily newspaper ofgeneral circulation in London. It is expected that such publication will be made in the Financial Times or anyother daily newspaper in London approved by the Trustee or, if this is not possible, in another Englishlanguage daily newspaper approved by the Trustee with general circulation in Europe. The Issuer shall alsoensure that notices are duly published in a manner which complies with the rules and regulations of anyother stock exchange or other relevant authority on which the Notes are for the time being listed or bywhich they have been admitted to trading. Any such notice will be deemed to have been given on the dateof the first publication or, where required to be published in more than one newspaper, on the first dateon which publication has been made in all the required newspapers.

Until such time as any definitive Notes are issued, there may (provided that, in the case of Notes listed ona stock exchange or admitted to trading by any other relevant authority, such stock exchange or otherrelevant authority permits), so long as the global Note(s) is or are held in its/their entirety on behalf ofClearstream, Luxembourg and Euroclear, be substituted for such publication in such newspaper(s) thedelivery of the relevant notice to Clearstream, Luxembourg and Euroclear for communication by them tothe holders of the Notes. Any such notice shall be deemed to have been given to the holders of the Noteson the day after the day on which the said notice was given to Clearstream, Luxembourg and Euroclear.

Notices to be given by any holder of the Notes shall be in writing and given by lodging the same, togetherwith the relative Note or Notes, with the Agent. Whilst any of the Notes are represented by a global Note,such notice may be given by any holder of a Note to the Agent via Clearstream, Luxembourg and/orEuroclear, as the case may be, in such manner as the Agent and Clearstream, Luxembourg and/orEuroclear, as the case may be, may approve for this purpose.

14. Meetings of Noteholders, Modification and Waiver

The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matteraffecting their interests, including the sanctioning by Extraordinary Resolution of a modification of any ofthese Terms and Conditions, the Notes, the Receipts, the Coupons or certain provisions of the Trust Deed.Such a meeting may be convened by the Issuer or the Trustee or by Noteholders holding not less than10 per cent. in nominal amount of the Notes for the time being remaining outstanding. The quorum at anysuch meeting for passing an Extraordinary Resolution will be one or more persons holding or representinga clear majority in nominal amount of the Notes for the time being outstanding, or at any adjournedmeeting one or more persons being or representing Noteholders whatever the nominal amount of theNotes so held or represented, except that at any meeting the business of which includes the modificationof certain provisions of these Terms and Conditions, the Notes, Receipts or Coupons (including modifyingthe date of maturity of the Notes or any date for payment of interest thereon, reducing or cancelling theamount of principal or the rate of interest payable in respect of the Notes or altering the currency ofpayment of the Notes, Receipts or Coupons) or certain of the provisions of the Trust Deed, the necessaryquorum for passing an Extraordinary Resolution will be one or more persons holding or representing notless than two- thirds, or at any adjourned such meeting not less than a clear majority, in nominal amountof the Notes for the time being outstanding. The Trust Deed provides that (i) a resolution passed at ameeting duly convened and held in accordance with the Trust Deed by a majority consisting of not less thanthree-fourths of the votes cast on such resolution, (ii) a resolution in writing signed by or on behalf of theholders of not less than three-fourths in principal amount of the Notes for the time being outstanding or(iii) consent given by way of electronic consents through the relevant clearing system(s) (in a formsatisfactory to the Trustee) by or on behalf of the holders of not less than three-fourths in principal amountof the Notes for the time being outstanding, shall, in each case, be effective as an Extraordinary Resolutionof the Noteholders. An Extraordinary Resolution passed by the Noteholders shall be binding on all the

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Noteholders, whether or not they are present at any meeting and whether or not they voted on theresolution, and on all Receiptholders and Couponholders.

The Trust Deed provides that the Trustee may agree, without the consent of the Noteholders,Receiptholders or Couponholders, to any modification of, or to any waiver or authorisation of any breachor proposed breach of, any of these Terms and Conditions or any of the provisions of the Trust Deed, ormay determine that any condition, event or act which, but for such determination, would constitute anEvent of Default, shall not be treated as such which in any such case, in the opinion of the Trustee, is notmaterially prejudicial to the interests of the Noteholders or to any modification of any of these Terms andConditions, the Notes, the Receipts, the Coupons or any of the provisions of the Trust Deed which is of aformal, minor or technical nature or which is made to correct a manifest error or an error which is, in theopinion of the Trustee, proven. Any such modification, waiver, authorisation or determination shall bebinding on the Noteholders, Receiptholders and Couponholders and, unless the Trustee agrees otherwise,any such modification shall be notified to the Noteholders as soon as practicable thereafter in accordancewith Condition 13.

In connection with the exercise by it of any of its trusts, powers, authorities or discretions (including, butwithout limitation, any modification, waiver, authorisation or substitution), the Trustee shall have regard tothe interests of the Noteholders as a class and, in particular, but without limitation, shall not have regardto the consequences of such exercise for individual Noteholders, Receiptholders or Couponholders resultingfrom their being for any purpose domiciled or resident in, or otherwise connected with, or subject to thejurisdiction of, any particular territory and the Trustee shall not be entitled to require, nor shall anyNoteholder, Receiptholder or Couponholder be entitled to claim, from the Issuer or any other person anyindemnification or payment in respect of any tax consequence of any such exercise upon individualNoteholders, Receiptholders or Couponholders except to the extent already provided for in Condition 7and/or any undertaking given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed.

15. Further Issues

The Issuer shall be at liberty from time to time (but subject always to the terms of the Trust Deed) withoutthe consent of the Noteholders, Receiptholders or Couponholders to create and issue further notes havingterms and conditions the same as the Notes or the same in all respects save for the amount and date ofthe first payment of interest thereon and so that the same shall be consolidated and form a single Serieswith the outstanding Notes.

16. Substitution

The Trustee may, without the consent of the Noteholders, the Receiptholders or the Couponholders, agreewith the Issuer to the substitution of any new holding company or Subsidiary of the Issuer in place of theIssuer (or of any previous substitute under this provision) as the principal debtor under the Notes, theReceipts, the Coupons and the Trust Deed, subject to the Trustee being satisfied that the interests of theNoteholders will not be materially prejudiced thereby and certain other conditions set out in the Trust Deedbeing complied with.

17. Indemnification

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief fromresponsibility in certain circumstances including provisions relieving it from instituting proceedings toenforce repayment unless indemnified and/or secured and/or prefunded to its satisfaction.

18. Governing Law and Submission to Jurisdiction

The Trust Deed, the Agency Agreement, the Notes, the Receipts, the Coupons, the Talons and anynon-contractual obligations arising out of or in connection with any of them are governed by, and shall beconstrued in accordance with, English law.

19. Contracts (Rights of Third Parties) Act 1999

No rights are conferred on any person under the Contracts (Rights of Third Parties) Act 1999 to enforceany term of this Note, but this does not affect any right or remedy of any person which exists or is availableapart from that Act.

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Use of Proceeds

The net proceeds from each issue of Notes will be applied by the Issuer for its general corporate purposes.If, in respect of any particular issue, there is a particular identified use of proceeds, this will be stated in theapplicable Final Terms.

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Selected Financial Information

The following table sets out summary financial information relating to the Company for the two financialperiods ended 28th February 2010. This information has been extracted without material adjustment fromthe Company’s audited financial statements for the two financial periods ended 28th February 2010.

In the prior period of 31st December 2008 to 28th February 2009, the Company changed its accountingreference date and consequently the comparative figures presented within these financial statements coverthe 14 month period from 1st January 2008 to 28th February 2009.

The financial information is only a summary and should be read in conjunction with and is qualified byreference to the financial information and notes included elsewhere in this Offering Circular.

Income StatementRestated

12 months to 14 Months to 28th February 28th February

2010 2009(£’000) (£’000)

–––––––––– ––––––––––Interest and similar income ............................................................ 367,169 538,670Interest expense and similar charges .............................................. (135,860) (377,234)

–––––––– ––––––––Net Interest Income .................................................................... 231,309 161,436

–––––––– –––––––––––––––– ––––––––Fees and commissions income ....................................................... 347,980 465,888Fees and commissions expense ...................................................... (120,988) (15,793)

–––––––– ––––––––Net Fees and commissions income............................................ 226,992 450,095

–––––––– –––––––––––––––– ––––––––Dividend income............................................................................ 28,216 24,591Net fair value gains/(losses) on derivatives...................................... 1,100 (30,972)Realised gain on investment securities ........................................... 139 —Other operating income................................................................. 4,235 1,548

–––––––– ––––––––Non-interest income ................................................................... 260,682 445,262

–––––––– –––––––––––––––– ––––––––Total Income................................................................................ 491,991 606,698

–––––––– –––––––––––––––– ––––––––Administrative expenses................................................................. (292,041) (285,178)Depreciation and amortisation ....................................................... (6,346) (8,554)

–––––––– ––––––––Operating expenses.................................................................... (298,387) (293,732

–––––––– ––––––––)–––––––– ––––––––Impairment loss on loans and advances ......................................... (176,633) (153,519)Profit before taxation................................................................. 16,971 159,447Income tax expense ....................................................................... 2,278 (32,728)Profit for the period ................................................................... 19,249 126,719Profit attributable to equity holders of the parent.......................... 19,249 126,719

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Statement of Comprehensive IncomeRestated


2010 2009(£’000) (£’000)

–––––––––– ––––––––––Profit for the period ................................................................... 19,249 126,719Net gains on available for sale investment securities:Unrealised net gains during period, before tax............................... 1,163 —Cash flow hedges:Net (losses)/ gains arising on hedges recognised in other comprehensive income, before tax .................................. (1,821) 446Income tax relating to components of other comprehensive income............................................................... 59 —

–––––––– ––––––––Total comprehensive income for the year................................ 18,650 127,165

–––––––– –––––––––––––––– ––––––––Total comprehensive income attributable to equity holders of the parent ...................................................... 18,650 127,165

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Statement of Financial PositionRestated

12 months to 14 Months to28th February 28th February

2010 2009(£’000) (£’000)

–––––––––– ––––––––––AssetsCash and balances with central banks ........................................... 181,748 2,753Loans and advances to banks ........................................................ 61,937 1,457,962Loans and advances to customers.................................................. 4,297,217 3,689,636Derivative financial instruments...................................................... 1,547 1,541Investment securities:Available for sale ........................................................................... 604,262 —Loans and receivables .................................................................... 258,500 258,500Prepayments and accrued income.................................................. 91,000 82,717Other assets................................................................................... 142,981 143,848Investment in group undertaking................................................... — —Investment in associate .................................................................. 2,857 —Current income tax asset ............................................................... 18,451 5,272Deferred income tax asset ............................................................. 4,930 11,631Intangible assets ............................................................................ 60,328 —Property, plant and equipment ...................................................... 61,125 23,675

––––––––– –––––––––Total assets.................................................................................. 5,786,883 5,677,535

––––––––– –––––––––––––––––– –––––––––LiabilitiesDeposits from banks ...................................................................... 29,856 24,020Deposits from customers ............................................................... 4,370,225 4,547,316Debt securities in issue................................................................... 224,390 224,550Derivative financial instruments...................................................... 64,759 42,265Provisions for liabilities and charges ............................................... 100,000 —Accruals and deferred income ....................................................... 119,118 61,474Other liabilities............................................................................... 12,836 36,995Subordinated liabilities................................................................... 190,000 160,000

––––––––– –––––––––Total liabilities............................................................................. 5,111,184 5,096,620

––––––––– –––––––––––––––––– –––––––––Equity:Shareholders’ funds:— Called up share capital.............................................................. 47,790 24,790— Share premium account ............................................................ 430,110 223,110— Retained earnings ..................................................................... 152,952 287,569— Other reserves........................................................................... (153) 446Subordinated notes ....................................................................... 45,000 45,000

––––––––– –––––––––Total equity ................................................................................. 675,699 580,915

––––––––– –––––––––––––––––– –––––––––Total liabilities and equity ......................................................... 5,786,883 5,677,535

––––––––– –––––––––––––––––– –––––––––

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Statement of Changes in EquityRestated


2010 2009(£’000) (£’000)

–––––––––– ––––––––––Balance at the beginning of the yearShare Capital ................................................................................. 24,790 24,790Share premium .............................................................................. 223,110 223,110Retained earnings .......................................................................... 287,569 268,416Subordinated Notes ....................................................................... 45,000 45,000Other reserves ............................................................................... 446 —

––––––––– –––––––––Total .............................................................................................. 580,915 561,316

––––––––– –––––––––Comprehensive incomeProfit for the yearRetained earnings .......................................................................... 19,249 126,719

––––––––– –––––––––Total .............................................................................................. 19,249 126,719

––––––––– –––––––––Other comprehensive incomeNet gains on available for sale investment securitiesOther reserves ............................................................................... 837 —

––––––––– –––––––––Total .............................................................................................. 837 —

––––––––– –––––––––Net losses on cash flow hedgesOther reserves ............................................................................... (1,436) —

––––––––– –––––––––Total .............................................................................................. (1,436) —

––––––––– –––––––––Net gains on cash flow hedges ...................................................... — 446Other reserves ...............................................................................

––––––––– –––––––––Total .............................................................................................. (599) 446

––––––––– –––––––––Total comprehensive income ..................................................... 18,650 127,165

––––––––– –––––––––––––––––– –––––––––Transactions with ownersShares issued in the yearShare Capital ................................................................................. 23,000 —Share premium .............................................................................. 207,000 —

––––––––– –––––––––Total .............................................................................................. 230,000 —

––––––––– –––––––––Dividends to ordinary shareholdersRetained earnings .......................................................................... (152,800) (104,000)

––––––––– –––––––––Total .............................................................................................. (152,800) (104,000)

––––––––– –––––––––Dividends to other equity holdersRetained earnings .......................................................................... (1,066) (3,566)

––––––––– –––––––––Total .............................................................................................. (1,066) (3,566)

––––––––– –––––––––Total transactions with owners................................................. 76,134 (107,566)

––––––––– –––––––––––––––––– –––––––––Balance at the end of the yearShare Capital ................................................................................. 47,790 24,790Share premium .............................................................................. 430,110 223,110Retained earnings .......................................................................... 152,952 287,569Subordinated Notes ....................................................................... 45,000 45,000Other reserves ............................................................................... (153) 446

––––––––– –––––––––Total ............................................................................................. 675,699 580,915

––––––––– –––––––––––––––––– –––––––––

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Cash Flow StatementRestated

12 months to 14 Months to28th February 28th February

2010 2009(£’000) (£’000)

–––––––––– ––––––––––Operating activitiesProfit before taxation..................................................................... 16,971 159,447Adjusted for:Non-cash items included in profit before taxation .............................................................................. 164,391 120,626Changes in operating assets and liabilities......................................................................................... (820,042) (2,463,539)Income taxes paid.......................................................................... (13,625) (58,370)

––––––––– –––––––––Cash flows from operating activities ........................................ (652,305) (2,241,836)

––––––––– –––––––––––––––––– –––––––––Investing activitiesPurchase of non-current assets ...................................................... (68,741) (11,682)Purchase of available for sale investment securities...................................................................... (482,304) —Sale of available for sale investment securities........................................................................................ 50,004 —Investment in associate .................................................................. (2,857) —

––––––––– –––––––––Cash flows from investing activities ......................................... (503,898) (11,682)

––––––––– –––––––––––––––––– –––––––––Financing activitiesProceeds from issue of debt securities ........................................... — 224,550Proceeds from issue of subordinated liabilities......................................................................................... 30,000 —Proceeds from issue of share capital .............................................. 230,000 —Dividends paid to equity holders .................................................... (153,735) (107,566)Interest paid on subordinated liabilities .......................................... (2,663) (11,985)

––––––––– –––––––––Cash flows from financing activities......................................... 103,602 104,999

––––––––– –––––––––––––––––– –––––––––Net decrease in cash and cash equivalents .............................. (1,052,601) (2,148,519)

––––––––– –––––––––––––––––– –––––––––Cash and cash equivalents at thebeginning of the period ............................................................. 1,457,962 3,606,481

––––––––– –––––––––––––––––– –––––––––Cash and cash equivalents at the end of the period........................................................................ 405,361 1,457,962

––––––––– –––––––––––––––––– –––––––––

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OverviewThe Issuer is a wholly owned subsidiary of Tesco Personal Finance Group Limited (TPFG). TPFG in turn is awholly owned subsidiary of Tesco PLC (Tesco), the holding company of the Tesco group (the TescoGroup). The Issuer provides a wide range of retail financial service products, primarily in the UnitedKingdom, to personal customers.

For the year ended 28th February 2010, the Issuer’s total income was £491,991,000 and as at28th February 2010 the Issuer’s total assets were £5,786,883,000.

History and Development of Tesco Personal Finance PLCTPFG was established in 1997 originally as a joint venture between Tesco and the Royal Bank of Scotlandplc (RBS). In December 2008, Tesco acquired RBS’s 50 per cent. shareholding in TPFG to become the soleshareholder of TPFG (the Change of Control Transaction).

The Issuer was incorporated in Scotland under the name Roboscot (27) Limited on 5th March 1997, as aprivate limited company with limited liability. It changed its name to Tesco Personal Finance Limited witheffect from 25th April 1997. It was re registered as a public limited company under the legal name TescoPersonal Finance PLC pursuant to the Companies Act 1985 on 22nd December 2008. The Issuer rebrandedits business by changing its trading name to Tesco Bank on 29th June 2009. The Issuer’s decision to changeits trading name to Tesco Bank formed part of the Issuer’s strategic objective to communicate its broadenedbanking proposition to its customers.

The registered office of the Issuer is Interpoint Building, 22 Haymarket Yards, Edinburgh EH12 5BH. Thetelephone number of the Issuer’s registered office is 0131 479 1000. The company number of the Issuer isSC173199.

The Issuer currently has an issued share capital of £62,690,000, comprising 626,900,000 ordinary sharesof 10 pence each, all of which are fully paid.

The Issuer maintains a robust funding and liquidity position. As at 28th February 2010, the Issuer had aCore Tier One capital ratio of 12.9 per cent. (12.8 per cent. as at 28th February 2009).

Organisational Structure

Current Organisational Structure

Since the financial year end the Issuer’s subsidiaries, TPF ATM Services Limited and TPF Services LimitedLiability Partnership, have been placed into voluntary liquidation. This is following a review of the corporatestructure in relation to the management of the ATM business which was undertaken during the year.

Tesco PLC

TPF Group Limited

The Issuer

100%

100%

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Business OverviewThe Issuer offers a range of retail financial service products to customers predominantly located within theUnited Kingdom. A significant proportion of the Issuer’s United Kingdom customer base are existing TescoGroup customers that utilise other retail services offered by Tesco. The Issuer currently has approximately6.2 million customers domiciled in the United Kingdom. The products and services offered by the issuer areadvertised through and can be purchased by customers from the store network of Tesco, over thetelephone and on the worldwide web via the website tesco.com. As at the date of this Offering Circular,the Issuer generates approximately 62 per cent. of the sale of its retail financial service products from onlinesales to its customers through tesco.com.

The Issuer offers a range of retail financial service products through the following categories: generalinsurance, credit cards, personal loans, personal savings products and a network of automated tellermachines (ATMs).

The Issuer utilises the business systems and infrastructure of The Royal Bank of Scotland PLC to offer andmaintain a significant proportion of its products and services. As a result of the Change of ControlTransaction in December 2008, the Issuer entered into a period of significant change and investment as itsought to develop and embed its own business systems and infrastructure in order to allow it to migratebusiness systems and infrastructure and customer support from the RBS infrastructure. This migrationprogramme is expected to conclude within the next two years during which time RBS will continue tosupport the Issuer’s business through the ongoing provision of systems and infrastructure. Please see thePersonal Banking and General Insurance sections below for further details on the relationship between theIssuer and RBS.

Personal BankingThe Issuer offers lending products in the form of credit cards and personal unsecured loans. As at28th February 2010, personal banking represented 71.3 per cent. of the Issuer’s 2010 total income.

The Issuer currently has approximately a 5.8 per cent. share of the United Kingdom credit card market (GfKNOP Financial Research Survey, Stock Holding share, 3 months ending June 2010) and had total credit cardreceivables of approximately £2.419 billion and 1.6 million active credit card accounts, in each case as at28th February 2010. A significant enticement to customers to utilise a credit card issued by the Issuer isthat a customer may benefit by earning reward points on all amounts spent on their credit card. Suchreward points may be redeemed against further purchases made from sales mediums within the TescoGroup. The Issuer believes that it has a high quality and low risk portfolio of credit card customers. This isevidenced by the low level of credit card accounts that are three months or more in arrears being as at28th February 2010, approximately 4.2 per cent. of credit card balances.

As at 28th February 2010, the value of the Issuer’s loan book was £2.191 billion and the Issuer hadapproximately 276,790 personal loan customers. The Issuer currently has approximately a 2.3 per cent.share of the United Kingdom personal loan market (GfK NOP Financial Research Survey, Stock Holdingshare, 3 months ending June 2010).

As at 28th February 2010, the Issuer had approximately 527,000 savings account customers and totalsavings balances of £4.358 billion in instant access savings products such as Tesco Internet SavingsAccounts and Tesco Instant Access Savings Accounts. The Issuer currently has approximately a 0.7 per cent.share of the United Kingdom savings market (GfK NOP Financial Research Survey, Stock Holding share, 3months ending June 2010).

The Issuer and RBS entered into a commercial services agreement (CSA), where RBS will provide bankingoperations for a maximum period of three years until December 2011.

Pursuant to the terms of the CSA, RBS provides to the Issuer loans and savings operations (includingaccount opening and account management services through a dedicated team of RBS staff), credit cardoperations (provided on a shared service basis by both the Issuer and RBS) and provides infrastructure forsecurity, systems maintenance and change, business continuity, payment clearing and settlementoperations.

The relationship created by the CSA is closely managed through a series of regular operational,management and executive review meetings. RBS must provide the Issuer with agreed monthly indicatorsto demonstrate its performance against agreed pre-determined levels of service. The CSA provides theIssuer with audit and access rights to enable it to monitor RBS’s compliance with its CSA-relatedobligations.

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The provisions of the CSA envisage that during the term of the CSA, the Issuer will pursue a strategy todevelop and embed its own business systems and infrastructure. The CSA provides a mechanism tofacilitate the migration of business systems and infrastructure from RBS to the Issuer. This migration processis expected to conclude by December 2011.

Automated Teller MachinesThe Issuer operates one of the largest networks of ATMs in the United Kingdom. The Issuer has over 3,200ATMs within its network which process in excess of 28 million cash withdrawal transactions a month. TheIssuer has outsourced the management of its ATMs to RBS. The Issuer’s ATM business is a significant andreliable source of earnings for the Issuer as a result of their fee generating ability through the LINK systemi.e. on each occasion when a customer uses an ATM, that customer’s card issuing bank will pay an‘interchange fee’ to RBS through the LINK system. A proportion of the interchange fee is paid to the Issuerby RBS. Interchange fees are set annually based upon an agreed mechanism with the proposed fees beingvoted upon by LINK members. The Issuer’s ATM network experiences a high level of usage which resultsfrom each ATM’s convenient location within Tesco stores. The Issuer intends to pursue a strategy to expandits ATM network — predominantly through installation of new ATMs at new-build Tesco Express stores.

General InsuranceThe Issuer has a significant insurance business offering a range of general insurance products such as car,home, travel, breakdown, pet insurance and a range of personal protection insurance (which comprises life,health, payment protection and dental insurance). The Issuer currently has in issue approximately2.5 million insurance policies through its distribution arrangements with the insurance underwriters. As at28th February 2010, insurance represented 28.7 per cent. of the Issuer’s 2010 total income. The Issuer isone of the leading distributors of motor insurance in the United Kingdom with approximately 1.1 millioncar insurance policies in issue and a share of 4 per cent. of the United Kingdom motor insurance market(GfK NOP Financial Research Survey, Stock Holding share, 3 months ending June 2010). The Issuer currentlyhas a 2.1 per cent. share of the United Kingdom home insurance market and a 0.5 per cent. share of theUnited Kingdom life assurance market (GfK NOP Financial Research Survey, Stock Holding share, 3 monthsending June 2010).

The Issuer acts as an “introducer” of motor, home, travel, pet and breakdown insurance (InsuranceProducts) to UK Insurance Limited (UKI) (a wholly owned subsidiary of RBS Insurance Limited, pursuant tothe terms of a general insurance distribution agreement entered into by the Issuer and UKI (GIDA).Pursuant to the terms of the GIDA, the Issuer markets and promotes the Insurance Products to its customersand UKI provides quotation, sales, underwriting, administration of policies, claims handling, and relatedservices in respect of the Insurance Products.

The relationship is managed by the (i) Underwriting and Operations Committee which considers issuesrelated to operations, reinsurance and investment strategy and (ii) Pricing Committee which discusses andagrees pricing and underwriting issues subject always to an agreed loss ratio that has been established byagreement between the Issuer and UKI. The Issuer has significant capital invested in UKI from which itreceives a return which reflects the underwriting risk, cost and income of the Insurance Products. The GIDAis scheduled to terminate (unless renewed) on 18th December 2011.

As part of the Issuer’s strategic development of the operational platform and technical expertise of itsgeneral insurance business, the Issuer entered into an agreement in September 2009 with Fortis (UK) Ltd(Fortis) for its motor and home insurance products. Pursuant to the terms of the agreement, the Issuer willassume primary responsibility to build sales and service capability and to act as an intermediary and Fortiswill provide expertise in claims-handling and underwriting. Pursuant to the agreement, the Issuer and Fortishave established a company (Shoo 471 Limited which is 49.9 per cent. owned by the Issuer) to provide anunderwriting and claims handling service. The new arrangement, implementation of which is subject to theprior approval of the Financial Services Authority, will provide the Issuer with significant control over itsinsurance business providing a greater ability to meet the needs of Tesco customers along with flexibilityand sustainability over the longer term. Importantly, customer pricing and sales and service activity will, asa result of this agreement, all be under the direct control of the Issuer. It is intended that Shoo 471 Limitedwill begin selling, underwriting and servicing the Issuer’s new insurance business in the last quarter of 2010and that the Issuer’s existing insurance policy renewals and quotations that were created pursuant to theprovisions of the GIDA will begin migrating to this new company in the last quarter of 2010. The provisionsof the GIDA provide arrangements for and place obligations on its parties to ensure that the migration

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process occurs smoothly. The Issuer is engaging with both UKI and Fortis to prepare for the migrationprocess.

Other insurance such as life and dental care cover are distributed by the Issuer by means of a commission —based introduction agreement with a range of third party insurance companies.

International Business

Republic of IrelandThe Issuer is an authorised ‘credit institution’ under the laws of the Republic of Ireland. The activities of anauthorised credit institution are directly regulated by the Irish Financial Regulator. By virtue of its authorisedcredit institution status, the Issuer is authorised to issue credit cards within the Republic of Ireland. As at30th May 2010, the Issuer had approximately 32,440 credit card accounts within the Republic of Ireland.Under a distribution arrangement, the Issuer acts as an introducer by marketing car insurance underwrittenby RSA Insurance Ireland Limited to its customers. The Issuer operates its insurance business in Ireland underan FSA passport (for insurance intermediation).

Funding and LiquidityFunding is predominantly provided by its retail deposits and as at 28th February 2010, the Issuer had totalsavings balances of £4.36 billion.

Wholesale funding is provided to the Issuer by means of a £225 million bond maturing in 2012 which wasissued under the UK Government’s Credit Guarantee Scheme.

The Issuer has also swapped AAA rated securities backed by credit card receivables with the Bank ofEngland under the UK’s Special Liquidity Scheme, receiving UK Treasury Bills in return. The total value ofUK Treasury Bills held by the Issuer as at 28th February 2010 was £501 million of which £100 million werereturned to the Bank of England in March 2010. The Issuer will redeliver the remainder of the UK TreasuryBills to the Bank of England in December 2011 and January 2012 or earlier.

The Issuer’s liquid assets, net short term wholesale cash and investment grade assets totalled £1.3 billionas at 28th February 2010. The Issuer uses a range of liquidity risk metrics and provides liquidity returns tothe FSA in accordance with the new reporting requirements. A contingency funding plan is in place andhas been tested under stress scenarios.

Business TrendsThe Issuer continues to trade successfully within a difficult retail financial services market delivering steadyincome growth, on a like-for-like basis, within the context of a challenging economic climate. Bad debtshave risen, with the bad debt asset ratio increasing from 3.5 per cent. to 4.1 per cent. during the year to28th February 2010, but are now showing signs of stabilising and the Issuer believes that they remainbelow industry averages. Significant investment in new systems and employee growth has increased thecost base in line with the Issuer’s strategy to deliver new banking systems and infrastructure and preparefor a faster rate of growth.

The Issuer’s parent company, Tesco, increased its investment in the Issuer by £230,000,000 during the yearto 28th February 2010 and provided capital injections in the form of share capital of £149,000,000subsequent to that date.

A dividend on ordinary share capital of £150,000,000 was paid to the parent company in February 2010.

New premises have been acquired on a long-lease basis for banking and insurance operations in Glasgowand Newcastle. Both premises will open in mid-2010.

As at 28th February 2010, the Issuer had capital commitments of £39,224,000 which were in respect ofinformation technology software development and building fit-out purchases. The Issuer will meet thiscapital commitment through future net revenues and funding that it generates.

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Business StrategyThe Issuer intends to increase its participation within the fast growing United Kingdom financial servicesmarket in order to grow from an offeror of popular financial service products into a full service retail bankwhich maximises its existing relationship with its customers by supplying them with innovative services andproducts which are focussed on offering them more choice, greater value and lower complexity through afamiliar sales environment so affording the Issuer with the benefit of a greater share of consumer spendingin the United Kingdom on retail financial services and products.

The Issuer intends to pursue its strategic objective by (i) overseeing the development and embedding of itsown banking systems and infrastructure and deploying a migration process that will see it migrate itssystems and customer support service from RBS — its current banking systems and infrastructure provider— within the next two years; (ii) increasing the range of the services and products that it offers to itscustomers which, subject to regulatory approval, will eventually comprise new savings products andresidential mortgages and current accounts; and (iii) increasing the physical presence of Tesco Bank withinTesco’s retail stores.

Administrative, Management and Supervisory Bodies

Board of Directors of the IssuerAs at the date of this Offering Circular, the Directors of the Issuer, the business address of each of whomis Interpoint Building, 22 Haymarket Yards, Edinburgh EH12 5BH, and their functions and principal activitiesoutside the Issuer, where these are significant with respect to the Issuer, are as follows:

Name Principal activities outside the Issuer––––– ––––––––––––––––––––––––––––Andrew Higginson Executive Director of Tesco PLCChairman Non-Executive Director of BskyB PLC

Executive Director of Tesco Stores LimitedExecutive Director of Tesco Personal Finance Compare LimitedExecutive Director of Tesco Personal Finance Group LimitedExecutive Director of TPF ATM Services Limited

Benny Higgins Executive Director of Tesco Personal Finance Compare LimitedChief Executive Executive Director of Tesco Personal Finance Group Limited

Executive Director of TPF ATM Services LimitedMember of the Scottish Government’s Financial Services Advisory Board

Iain Clink Executive Director of Tesco Personal Finance Compare LimitedFinance and International Director Executive Director of Tesco Personal Finance Group Limited

Executive Director of TPF ATM Services Limited

Shaun Doherty Executive Director of Tesco Personal Finance Compare LimitedOperations & IT Director Executive Director of Tesco Personal Finance Group Limited

Executive Director of TPF ATM Services Limited

Adrian Hill Non-Executive Director of:Independent Non-Executive Director Opportunity Microfinance Investments Limited

Bayv Investments LimitedBayv Investments (EBT) LimitedOpportunity International United KingdomStirring Stuff LimitedLowell Group LimitedTesco Personal Finance Compare LimitedTesco Personal Finance Group LimitedTPF ATM Services Limited

Name Principal activities outside the Issuer––––– ––––––––––––––––––––––––––––Adrian Hill Director of:

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(continued) British Credit Trust Collections LtdBritish Credit Trust Conduit LtdBritish Credit Trust Finance LtdBritish Credit Trust Holdings LtdBritish Credit Trust LtdBritish Credit Trust Management LtdConsumer Finance Acquisitions Co LtdSwiftarrow Services Ltd

Bill Main Non-Executive Director of Tyser & Co. LimitedIndependent Non-Executive Director Non-Executive Director of Tesco Personal Finance

Compare LimitedNon-Executive Director of Tesco Personal Finance Group LimitedNon-Executive Director of TPF ATM Services LimitedNon-Executive Director of Hawkes Bay Holdings LtdNon-Executive Director of MFORM LtdNon-Executive Director of MFORM.CO.UK LtdNon-Executive Director of MFORM Holdings LtdNon-Executive Director of Thomas Miller Investment Holding LimitedNon-Executive Director of Aquila Underwriting LLPDirector of Clare Park Private Retirement Residences Limited,an exempt charity

Graham Pimlott Non-Executive Director of Inchcape plcIndependent Non-Executive Director Non-Executive Director of Tesco Personal Finance

Compare LimitedNon-Executive Director of Tesco Personal Finance Group LimitedNon-Executive Director of TPF ATM Services LimitedNon-Executive Director of Grosvenor LimitedNon-Executive Director of Graham Pimlott LtdNon-Executive Director of Grosvenor UK Finance plc

Ray Pierce Chairman of Ortus VCT plcIndependent Non-Executive Director Non-Executive Director of:

Tesco Personal Finance Compare LimitedTesco Personal Finance Group LimitedTPF ATM Services Limited

Director of:Succession Advisory Services LimitedNational Motor Museum Trading LtdNational Motor Museum Trust LtdNew Quay Holdings LtdNew Quay LtdQuay Dynamics LtdPuma High Income VCT plcParagroup LtdParagroup Management LtdParasol LtdParasol Management LtdCredit Solutions holdings LtdCrucible Debt Purchase Company LtdPurely Accounting (Holdings) Services Ltd

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Name Principal activities outside the Issuer––––– ––––––––––––––––––––––––––––Laura Wade Gery Chief Executive of tesco.comNon-Executive Director Non-Executive Director of Tesco Personal Finance Compare

LimitedNon-Executive Director of Tesco Personal Finance Group LimitedNon-Executive Director of TPF ATM Services LimitedNon-Executive Director of Trinity Mirror plc

Alison Horner Non-Executive Director of:Non-Executive Director Tesco Personal Finance Compare Limited

Tesco Personal Finance Group LimitedTPF ATM Services Limited

None of the directors of the Issuer have any actual or potential conflict between their duties to the TescoGroup or the Issuer and their private interests or other duties as listed above.

Board PracticesAs a wholly owned subsidiary of Tesco, the Issuer is required to meet the standards of internal corporategovernance required for all subsidiaries in the Tesco Group, as modified to reflect the fact that the Issueris regulated by the FSA.

BoardThe Board has overall responsibility for the management of the business and acts as the main decisionmaking forum for Tesco Personal Finance plc. It sets the strategic aims for the business, within a frameworkof prudent and effective controls, which enables risk to be assessed and managed.

The Board is responsible for approval of the Issuer's business plans; approval of the Internal CapitalAdequacy Assessment Programme (ICAAP); approval of Risk Appetite; approval of Treating CustomersFairly policy; approval and oversight of the risk and control processes of the Issuer; and approval of anymaterial new product lines.

The Board monitors the Issuer’s risk management profile and capital adequacy position.

The Board has appointed independent Non-Executive Directors who provide insight and challenge to theIssuer's plans and performance.

Executive CommitteeThe role of the Executive Committee is to assist the Chief Executive in the performance of his duties;provide general executive management of the business; and facilitate cross functional communication andliaison. The operational management of the Issuer’s business has been delegated by the Issuer’s Board ofDirectors to the Executive Committee. This is consistent with the overall control procedures determined bythe Issuer’s Board of Directors. The Executive Committee reviews and directs the ongoing operations of theIssuer’s business within the strategic framework, operational plans and risk appetite agreed by the Issuer’sBoard of Directors. It monitors the Issuer’s trade and financial performance on a regular basis and overseesrisks and controls across the business. It seeks to promote a culture of fairness and to actively promote andencourage the Issuer’s business values.

The Executive Committee makes key decisions on running the business, but it does delegate certaindecision-making capabilities to the relevant Executive Committee members and their teams who take day-to-day responsibility for management of the Issuer’s business areas. The relevant Executive Committeemember will establish an appropriate management structure and governance framework within theirbusiness area, to manage the performance of the business in line with the Issuer’s strategic plan and riskappetite. Any decisions that are required to be made by an Executive Committee member that are of amaterial nature and which will impact on another business area of the Issuer; or which will impactsignificantly on customers or products; or are on matters that are out of line with the Board of Directors’approved risk appetite, require escalation to the Executive Committee for review and challenge. TheExecutive Committee will further escalate issues, as is deemed appropriate, to the Issuer’s Board ofDirectors, another board or committee for detailed review.

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Audit CommitteeThe role of the Issuer’s Audit Committee is to review the Issuer’s financial statements and to monitor theIssuer’s accounting policies and practices for compliance with relevant accounting, legal and regulatorystandards. The Audit Committee reviews arrangements in place to enable management to ensure that theIssuer complies with requirements and standards under applicable regulations. The Audit Committeeoversees the internal audit function and the audit programme, as well as managing the relationship withthe Issuer’s external auditor, PricewaterhouseCoopers LLP.

The Audit Committee meets a minimum of four times per year, with additional ad-hoc meetings scheduledas required. It is comprised of independent Non-Executive Directors who currently are: Adrian Hill, Bill Main,Graham Pimlott and Ray Pierce. The Audit Committee operates under delegated authority from the Issuer’sBoard of Directors.

Risk CommitteeThe Board Risk Committee seeks to align overall business strategy with the Board’s risk appetite. The BoardRisk Committee will seek to identify and control risks and to satisfy itself that policies and processes are inplace to control identified risks. A forward-looking approach is taken to the prediction of possible economictrends and risks, informed by analysis of appropriate information, and the consideration of potentialimpacts on the business. The Board Risk Committee seeks to encourage the embedding of a supportive riskculture so that all employees are alert to the wider impact on the whole organisation of their actions anddecisions.

Remuneration CommitteeThe role of the Remuneration Committee is to determine and approve remuneration arrangements for theTesco Bank Leadership Team and approve a remuneration framework for employees below the leadershiplevel. The Remuneration Committee will seek to ensure that the levels and structures of remuneration aredesigned to attract, retain, and motivate the management talent needed to run the business of Tesco Bankin a way which is consistent with the risk appetite and ongoing sustainability of the business and to becompliant with all applicable legislation and guidelines.

Related Party TransactionsThere are no transactions to which the Issuer is a party which are material to the Issuer, or to the Issuer’sknowledge which were not made in the ordinary course of business, or that are unusual in their nature orconditions.

Regulation

Overview of United Kingdom RegulationThe cornerstone of the regulatory regime in the United Kingdom is the Financial Services and Markets Act2000 (FSMA) which came into force on 1st December 2001. The FSA has responsibility under the FSMAfor the regulation and oversight of a wide range of financial services activities in the United Kingdom. TheFSA is responsible for the authorisation and supervision of institutions that perform regulated activities asdefined in the FSMA. As part of its authorisation process, the FSA reviews applicants to ensure that theysatisfy the necessary criteria, including suitability, competence and financial soundness, to engage inregulated activity.

These responsibilities include the regulation of deposit-taking, mortgage lending, sales and administration(October 2004) and general insurance sales and administration (January 2005). More recently, on1st November 2009, responsibility for the regulation of banking conduct of business and for paymentservices, under the Payment Services Regulations 2009, transferred to the FSA.

The Financial Services Act 2010 (the FS Act) received Royal Assent on 8th April 2010. The FS Act establishesa new consumer financial education body, amends the FSMA to provide the FSA with a new financialstability statutory objective, gives the FSA powers to make rules on remuneration arrangements, shortselling, living wills, consumer redress schemes, and extends its enforcement powers. The FSA is currentlyconsulting on implementing certain powers in the FS Act.

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Significant changes to the United Kingdom regulatory regime have been proposed and are in theconsultation phase. Such proposals are currently not in final form. The proposal is to remove the tripartiteregulatory system, consisting of the Bank of England, the FSA and the Treasury, and instead place the Bankof England as the single authority at the centre of the framework. Sub-committees will be formed withinthe Bank of England, which will take responsibility for particular regulatory issues, and the FSA will ceaseto exist. In addition to the Bank of England, a new Consumer Protection and Markets Authority (CPMA)will be established, which will handle the conduct of business and markets regulation, including regulationof Independent Financial Advisers (IFAs).

It is intended that the disbanding of the FSA and creation of the sub-committees in the Bank of Englandwill commence in 2011, subject to the outcome of the consultation programme.

Regulatory Approach of the FSAThe FSA’s regulatory approach aims to focus and reinforce the responsibility of senior management of afinancial institution to ensure that it takes reasonable care to organise and control its affairs responsibly andeffectively and that it develops and maintains adequate risk management systems.

A risk based approach for the supervision of all financial institutions is adopted by the FSA and the startingpoint for the FSA’s supervision is based on a systematic analysis of an institution’s risk profile. Havingdetermined the level of inherent risk, a minimum capital adequacy requirement is established, which theinstitution is required to meet at all times.

The FSA carries out its supervision of United Kingdom financial institutions through the collection ofinformation from a series of prudential returns covering sterling and non-sterling operations, on-sitereviews (through its ARROW reviews and through industry wide thematic reviews), desk based reviews,meetings with senior management and reports obtained from skilled persons. For major retail institutionssuch as the Issuer, a dedicated relationship team coordinates much of this activity via its “Close andContinuous” supervision regime.

Regular prudential reports required by the FSA include operating statements and returns covering (amongstother things) capital adequacy, liquidity, large single exposures and large exposures to related borrowers.Capital adequacy returns of the Issuer are submitted on a periodic basis. Regular non prudential reportsrequired by the FSA include complaints data, daily transaction reporting returns and product sales data. TheFSA reporting rules were revised through the introduction of the Integrated Regulatory ReportingProgramme, which came into effect in 2008.

The FSA Handbook sets out rules and guidance across a range of issues with which financial institutionsare required to comply. These include, amongst other things:

• Principles for Businesses — 11 high level principles to which financial institutions are required toadhere.

• Authorisation requirements — these are standards that need to be met in order to be authorised andcontinue to be met on an ongoing basis.

• Prudential rules — these relate to capital adequacy and liquidity.

• Systems and controls requirements that are appropriate to the volume and complexity of activityundertaken.

• Conduct of Business rules that set out the requirements for aspects such as advising and selling,product disclosure, financial promotions (including compliance with the requirement that suchpromotions should be clear, fair and not misleading), responsible lending and default.

• Reporting Requirements — these set out periodic reporting requirements and event drivennotifications that must be submitted to the FSA.

• Training and Competence rules — these are standards that apply to firms providing, amongst otherservices, advice to retail customers.

• Code of Market Conduct — this provides further rules and guidance on the market abuse offencesset out in the FSMA.

A key theme running through most of the FSA’s rules and regulations is the concept of Treating CustomersFairly (TCF), contained in Principle 6 of the FSA’s Principles for Businesses. From 31st December 2008, theFSA expects all firms to be able to demonstrate that full TCF compliance has been embedded within theirbusiness activities, operations and culture. As mentioned above, the FS Act amends the FSMA to provide

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the FSA with an added regulatory objective of ‘financial stability’, defined as ‘contributing to the protectionand enhancement of the stability of the United Kingdom financial system’. In considering this objective, theFSA must have regard to the economic and fiscal consequences for the United Kingdom of instability ofthe United Kingdom financial system, the effects on the growth of the United Kingdom economy of anyregulatory action taken to meet the financial stability objective and the impact on the stability of the UnitedKingdom financial system of events or circumstances outside the United Kingdom.

At this stage it is unclear how the addition of the financial stability objective will affect the operation of theFSA’s policy and supervisory functions. It is clear that it could have significant ramifications for the FSA’sapproach to the regulation of systemic organisations, particularly as regards the setting of capital andliquidity requirements, and potentially may affect the willingness of the FSA to allow organisations to growby acquisition where growth could have systemic implications.

The FS Act also gives the FSA a new financial stability information gathering power which applies toauthorised and unauthorised persons and is aimed at assisting the FSA in identifying threats to financialstability. In its consultation paper, the FSA proposes that, when deciding whether to impose a financialstability information requirement, factors it will take into account include: (i) the nature and extent of therisks to financial stability; (ii) whether the information is readily available from another source; and (iii)whether the information may assist the FSA in fulfilling its functions.

Other Bodies Impacting the Regulatory Regime

The Bank of England and HM TreasuryThe agreed framework for co operation in the field of financial stability in the financial markets is set outin detail in the Memorandum of Understanding published jointly by HM Treasury, the FSA and the Bank ofEngland at the end of October 1997 and updated in March 2006. The Bank of England has specificresponsibilities in relation to financial stability, including: (i) ensuring the stability of the monetary system;(ii) oversight of the financial system infrastructure, in particular payments systems at home and abroad; and(iii) maintaining a broad overview of the financial system through its monetary stability role and the deputygovernor’s membership of the FSA’s Board. HM Treasury, the FSA and the Bank of England (collectively thetri partite) work together to achieve stability in the financial markets.

United Kingdom GovernmentThe United Kingdom Government is responsible for the overall structure of financial regulation and thelegislation which governs it. It has no operational responsibility for the activities of the FSA or the Bank ofEngland. However, there are a variety of circumstances where the FSA and the Bank of England will needto alert HM Treasury (the representative of the United Kingdom Government) about possible problems, forexample, where there may be a need for a support operation or a problem arises which could cause widereconomic disruption.

In light of the current crisis in financial markets, the Banking Act 2009 secured Royal Assent in February2009 and certain provisions, including those relating to the Special Resolution Regime (SRR), bankinsolvency and bank administration, came into force at that time. The Banking Act provides the FSA, Bankof England and HM Treasury with tools for dealing with failing institutions as part of the SRR. These powersenable the Authorities to deal with and stabilise United Kingdom incorporated institutions with permissionto accept deposits pursuant to Part IV of the FSMA (each a relevant entity) that are failing or are likely tofail to satisfy the threshold conditions (within the meaning of section 41 of the FSMA).

The SRR consists of three stabilisation options: (i) transfer of all or part of the business of the relevant entityor the shares of the relevant entity to a private sector purchaser; (ii) transfer of all or part of the businessof the relevant entity to a “bridge bank” wholly owned by the Bank of England; and (iii) temporary publicownership of the relevant entity. HM Treasury may also take a parent company of a relevant entity intotemporary public ownership where certain conditions are met.

If a parent undertaking is taken into temporary public ownership, HM Treasury may take various actions inrelation to any securities issued by it without the consent of the holders thereof (Investors), including(among other things):

• transferring securities free from any restrictions on transfer and free from any trust, liability orencumbrance;

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• delisting the securities;

• converting securities into another form or class; or

• prescribing that the transfer of shares takes place free from any trust.

Accordingly, the taking of any such actions could adversely affect the rights of Investors, the price or valueof their investment, and the ability of such parent undertaking to satisfy its obligations under the issuedsecurities or the related contracts.

Where the stabilisation powers are exercised, HM Treasury must make statutory provision for a scheme orother arrangements for determining the compensation, if any, due to those affected by an exercise of thepowers. However, there can be no assurance that Investors would thereby recover compensation promptlyand equal to any loss actually incurred.

United Kingdom Financial Ombudsman Service (FOS)The FOS was established on 1st December 2001 pursuant to the FSMA to provide customers with a freeand independent service designed to resolve disputes where the customer is not satisfied with the responsereceived from the regulated firm. The FOS resolves disputes that cover most financial products and servicesprovided in (or from) the United Kingdom, from insurance and pension plans to bank accounts andinvestments, for eligible complainants, private individuals and small businesses, charities or trusts. Thejurisdiction of FOS was extended in 2007 to include firms conducting activities under the Consumer CreditAct. Although the FOS takes account of relevant regulation and legislation, its guiding principle is to resolvecases on the basis of what is fair and reasonable; in this regard, the FOS is not bound by law or even itsown precedent. The decisions made by the FOS are binding on firms.

Lending Standards BoardThe Lending Standards Board (formerly the Banking Code Standards Board) is responsible for monitoringand enforcing compliance with a new Lending Code introduced on 1st November 2009 which relates tolending to private customers and small businesses.

United Kingdom Office of Fair Trading (OFT)The OFT is the United Kingdom consumer and competition authority. Among other functions, the OFT isresponsible for the licensing and supervision of businesses which provide credit to consumers, reviewingproposed mergers, conducting market studies and ensuring compliance with competition and consumerlaw. The Issuer has a consumer credit licence provided by the OFT.

United Kingdom Information Commissioner’s OfficeThis office is responsible for overseeing implementation of the Data Protection Act 1998. This Act regulates,among other things, the retention and use of data relating to individual customers.

The Freedom of Information Act 2000 (the FOIA) sets out a scheme under which any person can obtaininformation held by, or on behalf of, a “public authority” without needing to justify the request. A publicauthority will not be required to disclose information if certain exemptions set out in the FOIA apply.

EU RegulationThe United Kingdom has implemented all of the directives introduced under the Financial Services ActionPlan which was intended to create a single market for financial services across the EU. However, thesedirectives are regularly reviewed at EU level and could be subject to change. The Issuer will continue tomonitor the progress of these initiatives and assess the likely impact on its business.

EU directives, which are required to be implemented in EU Member States through national legislation,have a strong influence over the framework for supervision and regulation of financial services in the UnitedKingdom. The directives aim to harmonise financial services regulation and supervision throughout the EUby setting standards in key areas such as capital adequacy, access to financial markets, consumer protectionand compensation schemes.

Financial institutions, such as the Issuer, are primarily regulated in their home state by a local regulator butthe EU directives prescribe criteria for the authorisation of such institutions and the prudential conduct ofbusiness supervision applicable to them.

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Other International RegulationThe Issuer has limited exposure to jurisdictions outside the United Kingdom and is subject to minimalreporting requirements and controls imposed by the relevant central banks and regulatory authorities.

In view of the global financial crisis and the increased scrutiny financial regulators have come under, it isalso expected that regulatory regimes in many jurisdictions will be significantly tightened. At a G20 meetingto tackle the financial crisis in November 2008, a set of common principles for the reform of financialmarkets was set out. These principles have been endorsed at subsequent G20 meetings and have the aimof strengthening transparency and accountability; enhancing sound regulation; promoting integrity infinancial markets; re enforcing international co operation and reforming international institutions.

Current Regulatory Themes

Regulatory themes which have a current bearing on the business of the Issuer include, but are not limitedto, the following:

Liquidity RegimeOn 5th October 2009 the FSA published its new liquidity rules which significantly broaden the scope of theexisting liquidity regime and are designed to enhance regulated firms’ liquidity risk management practicesand, in part, can be seen as a response to issues highlighted by the credit crisis. These new rates, whichapply to a wider range of entities than the current liquidity regime, are based on the over arching principleof regulated firms (their subsidiaries and branch offices) being self sufficient and having adequate liquidresources to withstand particular liquidity stresses. The rules specify that this will be delivered throughgreatly enhanced systems and controls requirements and a regular and comprehensive liquidity riskassessment of the business which will be linked to the supervisory process and monitored through moregranular and frequent reporting on the part of regulated firms. In particular, the rules have introducedenhanced quantification requirements which will ultimately require regulated firms to hold a greaterquantity of higher quality liquid assets as a buffer against liquidity stresses. It is noted that the specific rulesvary depending on the type of regulated firm and some regulated firms may be able to benefit fromparticular relaxations.

The new systems and controls requirements apply to most regulated firms from 1st December 2009 andthe enhanced quantitative requirements will be introduced in stages over the course of 1st June to1st November 2010.

The new requirements apply to the Issuer and the Issuer has established its present business model, thesystems that it has in place and the present basis of its reporting to meet the requirements.

Basel IIBasel II has been implemented throughout the EU through the Capital Requirements Directive. This cameinto force for all European banks on 1st January 2007. With effect from 1st January 2008, the Issuer hasadopted the standardised approach to the calculation of regulatory capital requirements for both credit riskand operational risk.

Retail Banking InvestigationOn 10th January 2007, the European Commission published the Final Report of its sector inquiry intoEuropean retail banking markets covering payment cards and (non card) payment systems and currentaccounts and related services. The European Commission found that markets were fragmented alongnational lines, limiting consumer choice and leading to higher costs for current accounts, loans orpayments.

High degrees of variation of prices, profit margins and selling patterns between EU Member States and highdegrees of homogeneity within EU Member States were found to be indicative of persisting regulatory orbehavioural barriers to competition.

The Final Report identified competition concerns in several areas of retail banking, including:

• the combination of sustained high profitability, high market concentration and evidence of entrybarriers in some Member States raise concerns about banks’ ability to influence the level of prices forconsumers and small firms;

• large variations in merchant and interchange fees between banks across the EU may indicatecompetition barriers;

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• the existence of high joining fees for payment cards, co branding, surcharging and the practice of“blending” card fees where a retailer is charged the same merchant fee irrespective of the differentcosts of card types;

• some credit registers, holding confidential data that lenders use to set loan rates, may be used toexclude new entrants to retail banking markets;

• some aspects of co operation among banks, including savings and co operative banks, can reducecompetition and deter market entry;

• product tying by banks is widespread in Member States and can reduce consumer choice and increasebanks’ power in the market place to influence prices; and

• obstacles to customer mobility in banking, notably the inconvenience of changing a current account,are high.

The Final Report also listed the following specific areas where enforcement action by the EuropeanCommission and the national competition authorities is appropriate:

• high interchange fees and merchant fees in some payment card networks;

• access barriers and discriminatory rules in relation to credit registers;

• tying of products by some banks; and

• bank co operation (in respect to which the European Commission indicated that it intended to gathermore information before acting).

Potential Legal ActionsThe Issuer may at any point in time in the future be subject to threatened or actual legal proceedings andregulatory challenge both in the United Kingdom and overseas. Any such material cases would beperiodically reassessed to determine the likelihood of the Issuer incurring a liability. The Issuer has set asidea £100 million provision for customer redress in its year ended 28th February 2010 financial statements toaddress any potential litigation that it may incur in the future. The Issuer will periodically re-assess theamount of its provision for customer redress.

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Taxation

United Kingdom TaxationThe following applies only to persons who are the beneficial owners of Notes and is a summaryof the Issuer’s understanding of current law and HM Revenue & Customs (HMRC) practice in theUnited Kingdom relating only to United Kingdom withholding tax treatment of payments ofinterest in respect of Notes. It is general in nature and does not deal with any other UnitedKingdom taxation implications of acquiring, holding or disposing of Notes. The United Kingdomtax treatment of prospective Noteholders depends on their individual circumstances and may besubject to change in the future. Prospective Noteholders who may be subject to tax in ajurisdiction other than the United Kingdom or who are or may be unsure as to their tax positionshould seek their own professional advice.

Payment of Interest on the NotesThe Issuer, provided that it continues to be a bank within the meaning of section 991 of the Income TaxAct 2007, and provided that the interest on the Notes is paid in the ordinary course of its business withinthe meaning of section 878 of the Income Tax Act 2007, will be entitled to make payments of interestwithout withholding or deduction for or on account of United Kingdom income tax.

Payments of interest on the Notes may also be made without deduction or withholding for or on accountof United Kingdom income tax provided that the Notes are and continue to be listed on a “recognisedstock exchange”, as defined in section 1005 Income Tax Act 2007. The London Stock Exchange is arecognised stock exchange. Securities will be treated as listed on the London Stock Exchange if they areincluded in the Official List within the meaning of and in accordance with the provisions of Part 6 of theFinancial Services and Markets Act 2000 and admitted to trading on the London Stock Exchange. Provided,therefore, that the Notes are and remain so listed, interest on the Notes will be payable withoutwithholding or deduction on account of United Kingdom income tax.

Interest on the Notes may also be paid without withholding or deduction on account of United Kingdomincome tax where interest on the Notes is paid by a company and, at the time the payment is made, thatcompany reasonably believes (and any person by or through whom interest on the Notes is paid reasonablybelieves) that the beneficial owner is within the charge to United Kingdom corporation tax as regards thepayment of interest or falls within various categories enjoying a special tax status (including specifiedpension funds) or are partnerships consisting of such persons, provided that HMRC has not given adirection (in circumstances where it has reasonable grounds to believe that the above exemption is notavailable in respect of such payment of interest at the time the payment is made) that the interest shouldbe paid under deduction of tax.

Interest on the Notes may also be paid without withholding or deduction on account of United Kingdomincome tax where the maturity of the Notes is less than 365 days after issue and those Notes do not formpart of a scheme or arrangement of borrowing intended to be capable of remaining outstanding for morethan 364 days.

In other cases, an amount must generally be withheld from payments of interest on the Notes on accountof United Kingdom income tax at the basic rate (currently 20 per cent.). However, where an applicabledouble tax treaty provides for a lower rate of withholding tax (or for no tax to be withheld) in relation toa Noteholder, HMRC can issue a notice to the Issuer to pay interest to the Noteholder without deductionof tax (or for interest to be paid with tax deducted at the rate provided for in the relevant double tax treaty).

Noteholders may wish to note that, in certain circumstances, HMRC has power to obtain information(including the name and address of the beneficial owner of the interest) from any person in the UnitedKingdom who either pays or credits interest to or receives interest for the benefit of a Noteholder. HMRCalso has power, in certain circumstances, to obtain information from any person in the United Kingdomwho pays amounts payable on the redemption of Notes which are deeply discounted securities for thepurposes of the Income Tax (Trading and Other Income) Act 2005 to or receives such amounts for thebenefit of another person, although HMRC published practice indicates that HMRC will not exercise thepower referred to above to require this information in respect of amounts payable on the redemption ofdeeply discounted securities where such amounts are paid on or before 5th April 2011. Such information

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may include the name and address of the beneficial owner of the amount payable on redemption. Anyinformation obtained may, in certain circumstances, be exchanged by HMRC with the tax authorities of thejurisdiction in which the Noteholder is resident for tax purposes.

EU Directive on the Taxation of Savings IncomeUnder EC Council Directive 2003/48/EC on the taxation of savings income, each Member State of theEuropean Union (each a Member State) is required to provide to the tax authorities of any other MemberState details of payments of interest (or similar income), which for this purpose may include payments onredemption of the Notes representing any discount on issue or premium payable on redemption, paid bya person within its jurisdiction to or for the benefit of, or collected by such person for, an individual residentin that other Member State or to certain limited types of entities established in that other Member State.However, for a transitional period, Luxembourg and Austria are instead required (unless during that periodthey elect otherwise) to operate a withholding system in relation to such payments (the ending of suchtransitional period being dependent upon the conclusion of certain other agreements relating toinformation exchange with certain other countries). A number of non-EU countries and territories includingSwitzerland have adopted similar measures (a withholding system in the case of Switzerland).

On 15th September 2008 the European Commission issued a report to the Council of the European Unionon the operation of the Directive, which included the Commission’s advice on the need for changes to theDirective. On 13th November 2008 the European Commission published a more detailed proposal foramendments to the Directive, which included a number of suggested changes. The European Parliamentapproved an amended version of this proposal on 24th April 2009 which is under discussion by theEuropean Council. If any of those proposed changes are made in relation to the Directive, they may amendor broaden the scope of the requirements described above.

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Subscription and Sale

The Dealers have, in an amended and restated dealer agreement dated 5th August, 2010 (as modifiedand/or supplemented and/or restated from time to time, the Dealer Agreement) agreed with the Issuer abasis upon which they or any of them may from time to time agree to purchase Notes. Any such agreementwill extend to those matters stated under “Form of the Notes” and “Terms and Conditions of the Notes”above. In the Dealer Agreement, the Issuer has agreed to reimburse the Dealers for certain of their expensesin connection with the establishment and any future update of the Programme and the issue of Notesunder the Programme.

United StatesThe Notes have not been and will not be registered under the Securities Act and may not be offered or soldwithin the United States or to, or for the account or benefit of, U.S. persons except in certain transactionsexempt from the registration requirements of the Securities Act.

Each Dealer has represented and agreed and each further Dealer appointed under the Programme will berequired to represent and agree that, except as permitted by the Dealer Agreement, it will not offer, sell ordeliver Notes (i) as part of their distribution at any time and (ii) otherwise until 40 days after the completionof the distribution, as determined and certified by the relevant Dealer or, in the case of an issue of Noteson a syndicated basis, the relevant lead manager, of all Notes of the Tranche of which such Notes are apart within the United States or to, or for the account or benefit of, U.S. persons. Each Dealer has furtheragreed, and each further Dealer appointed under the Programme will be required to agree, that it will sendto each dealer to which it sells Notes during the distribution compliance period a confirmation or othernotice setting forth the restrictions on offers and sales of the Notes within the United States or to, or forthe account or benefit of, U.S. persons. Terms used in the preceding paragraph and in this paragraph havethe meanings given to them by Regulation S under the Securities Act.

In addition, until 40 days after the completion of the distribution of all Notes of the Tranche of which suchNotes are a part, an offer or sale of Notes within the United States by any dealer (whether or notparticipating in the offering) may violate the registration requirements of the Securities Act.

The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within theUnited States or its possessions or to a United States person, except in certain transactions permitted byU.S. tax regulations. Terms used in this paragraph have the meanings given to them by the U.S. InternalRevenue Code and regulations thereunder.

Each issue of Index Linked Notes and Dual Currency Notes shall be subject to such additional U.S. sellingrestrictions as the Issuer and the relevant Dealer shall agree as a term of the issuance and purchase of suchNotes, which additional selling restrictions shall be set out in the applicable Final Terms. Each relevantDealer has agreed and each further Dealer appointed under the Programme will be required to agree thatit will offer, sell or deliver such Notes only in compliance with such additional U.S. selling restrictions.

Public Offer Selling Restriction under the Prospectus DirectiveIn relation to each EEA State which has implemented the Prospectus Directive (each a Relevant MemberState), each Dealer has represented and agreed, and each further Dealer appointed under the Programmewill be required to represent and agree, that with effect from and including the date on which theProspectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date)it has not made and will not make an offer of Notes which are the subject of the offering contemplatedby this Offering Circular as completed by the final terms in relation thereto to the public in that RelevantMember State except that it may, with effect from and including the Relevant Implementation Date, makean offer of such Notes to the public in that Relevant Member State:

(a) if the final terms in relation to the Notes specify that an offer of those Notes may be made other thanpursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a Non-exemptOffer), following the date of publication of a prospectus in relation to such Notes which has beenapproved by the competent authority in that Relevant Member State or, where appropriate, approvedin another Relevant Member State and notified to the competent authority in that Relevant MemberState, provided that any such prospectus has subsequently been completed by the final terms

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contemplating such Non-exempt Offer, in accordance with the Prospectus Directive in the periodbeginning and ending on the dates specified in such prospectus or final terms, as applicable;

(b) at any time to legal entities which are authorised or regulated to operate in the financial markets or,if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

(c) at any time to any legal entity which has two or more of (1) an average of at least 250 employeesduring the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annualnet turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

(d) at any time to fewer than 100 natural or legal persons (other than qualified investors as defined inthe Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealersnominated by the Issuer for any such offer; or

(e) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Notes referred to in (b) to (e) above shall require the Issuer or any Dealer topublish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuantto Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an offer of Notes to the public in relation to any Notesin any Relevant Member State means the communication in any form and by any means of sufficientinformation on the terms of the offer and the Notes to be offered so as to enable an investor to decide topurchase or subscribe the Notes, as the same may be varied in that Member State by any measureimplementing the Prospectus Directive in that Member State and the expression Prospectus Directivemeans Directive 2003/71/EC of 4th November 2003 of the European Parliament and the Council of theEuropean Union and includes any relevant implementing measure in each Relevant Member State.

United KingdomEach Dealer has represented and agreed and each further Dealer appointed under the Programme will berequired to represent and agree that:

(i) it has only communicated or caused to be communicated and will only communicate or cause to becommunicated an invitation or inducement to engage in investment activity (within the meaning ofSection 21 of the FSMA) received by it in connection with the issue or sale of any Notes incircumstances in which Section 21(1) of the FSMA would not, if the Issuer was not an authorisedperson, apply to the Issuer; and

(ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anythingdone by it in relation to any Notes in, from or otherwise involving the United Kingdom.

JapanThe Notes have not been and will not be registered under the Financial Instruments and Exchange Act ofJapan (the Law No. 25 of 1948, as amended, the FIEA) and each Dealer has represented and agreed andeach further Dealer appointed under the Programme will be required to represent and agree that it will notoffer or sell any Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (asdefined under Item 5, Paragraph 1, Article 6 of the Foreign Exchange and Foreign Trade Control Law (LawNo. 228 of 1949, as amended)), or to others for re-offering or resale, directly or indirectly, in Japan or to,or for the benefit of, a resident of Japan pursuant to an exemption from the registration requirements ofand otherwise in compliance with, the FIEA and any other applicable laws, regulations and ministerialguidelines of Japan.

FranceEach of the Dealers and the Issuer has represented and agreed, and each further Dealer appointed underthe Programme will be required to represent and agree that:

(i) Offer to the public in France: it has only made and will only make an offer of Notes to the public inFrance in the period beginning (i) when a prospectus in relation to those Notes has been approvedby the Autorité des Marchés financiers (AMF), on the date of such publication or, (ii) when aprospectus has been approved by the competent authority of another Member State of the EuropeanEconomic Area which has implemented the EU Prospectus Directive No. 2003/71/EC, on the date of

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notification of such approval to the AMF, and ending at the latest on the date which is 12 monthsafter the date of approval of the Offering Circular, all in accordance with Articles L.412-1 and L.621-8of the French Code monétaire et financier and the Règlement général of the AMF; or

(ii) Private placement in France: it has not offered or sold and will not offer or sell, directly or indirectly,Notes to the public in France, and has not distributed or caused to be distributed and will notdistribute or cause to be distributed to the public in France, this Offering Circular the relevant finalterms or any other offering material relating to the Notes, and that such offers, sales and distributionshave been and will be made in France only to (a) providers of investment services relating to portfoliomanagement for the account of third parties, and/or (b) qualified investors (investisseurs qualifiés)other than individuals all as defined in, and in accordance with, Articles L.411-1, L.411-2 and D.411-1to D.411-3 and D.411-4 of the French Code monétaire et financier.

GeneralEach Dealer has agreed, and each further Dealer appointed under the Programme will be required to agree,that it will (to the best of its knowledge and belief) comply with all applicable securities laws andregulations in force in any jurisdiction in which it purchases, offers, sells or delivers Notes or possesses ordistributes this Offering Circular and will obtain any consent, approval or permission required by it for thepurchase, offer, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction towhich it is subject or in which it makes such purchases, offers, sales or deliveries and neither the Issuer norany other Dealer shall have any responsibility therefor.

Neither the Issuer nor any of the Dealers represents that Notes may at any time lawfully be sold incompliance with any applicable registration or other requirements in any jurisdiction, or pursuant to anyexemption available thereunder, or assumes any responsibility for facilitating such sale.

With regard to each Tranche, the relevant Dealer will be required to comply with such other or additionalrestrictions as the Issuer and the relevant Dealer shall agree to be appropriate and as shall be set out in theapplicable Final Terms.

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General Information

AuthorisationThe establishment of the Programme and the issue of Notes thereunder have been duly authorised byresolutions of the Board of Directors of the Issuer dated 30th July, 2010.

Listing of Notes on the Official ListThe admission of Notes to the Official List will be expressed as a percentage of their nominal amount(excluding accrued interest). It is expected that each Tranche of Notes which is to be admitted to the OfficialList and to trading on the London Stock Exchange’s regulated market will be admitted separately as andwhen issued, subject only to the issue of a temporary global Note initially representing the Notes of suchTranche. Application has been made to the UK Listing Authority for Notes issued under the Programmeduring the period of 12 months from the date of this Offering Circular to be admitted to the Official Listand to the London Stock Exchange for such Notes to be admitted to trading on the London StockExchange’s regulated market. Such application is expected to be granted on or around 9 August, 2010.

Clearing SystemsThe Notes have been accepted for clearance through Clearstream, Luxembourg and Euroclear (which arethe entities in charge of keeping the records). The appropriate Common Code and ISIN for each Trancheof Notes allocated by Clearstream, Luxembourg and Euroclear will be specified in the applicable FinalTerms. If the Notes are to be cleared through an additional or alternative clearing system the appropriateinformation will be specified in the applicable Final Terms.

The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and theaddress of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855 Luxembourg.

Conditions for Determining PriceThe price and amount of Notes to be issued under the Programme will be determined by the Issuer andeach relevant Dealer at the time of issue in accordance with prevailing market conditions.

Material ContractsThe following contract was not entered into in the ordinary course of the Issuer’s business and could resultin the Issuer being under an obligation or entitlement that is material to the Issuer’s ability to meet itsobligations to holders of the Notes.

On 28th July 2008 the Issuer entered into a banking commercial services agreement (CSA) with The RoyalBank of Scotland plc (RBS) and Tesco PLC. The CSA became effective on 19th December 2008. Under theCSA, RBS will provide banking operations services to the Issuer for a period of three years from the date itbecame effective. The CSA is described further in “Tesco Personal Finance plc, Business Overview, PersonalBanking” above.

Significant or Material ChangeThere has been no significant change in the financial or trading position of the Issuer or the Issuer and itsSubsidiaries and there has been no material adverse change in the financial position or prospects of theIssuer or the Issuer and its Subsidiaries since 28th February 2010.

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Governmental, Legal and Arbitration ProceedingsThere are no governmental, legal or arbitration proceedings, (including any such proceedings which arepending or threatened, of which the Issuer is aware), which may have, or have had during the 12 monthsprior to the date of this Offering Circular, a significant effect on the financial position or profitability of theIssuer and its Subsidiaries.

Third Party InformationInformation included in this Offering Circular and attributed to GfK NOP has been accurately reproducedfrom relevant reports provided by GfK NOP and as far as the Issuer is aware and is able to ascertain frominformation published by GfK NOP, no facts have been omitted which would render the reproducedinformation inaccurate or misleading.

AuditorsThe financial statements of the Issuer have been audited without qualification for the financial periodsended 28th February 2010 and 28th February 2009 by PricewaterhouseCoopers LLP, chartered accountantsand registered auditors (a member of the Institute of Chartered Accountants in England and Wales), of POBox 90, Erskine House, 68-73 Queen Street, Edinburgh EH2 4NH.

PricewaterhouseCoopers LLP have no material interest in the Issuer.

Trust DeedThe Trust Deed provides that the Trustee may rely on certificates or reports from the Auditors (as definedin the Trust Deed) and/or any other expert in accordance with the provisions of the Trust Deed whether ornot any such certificate or report or any engagement letter or other document entered into by the Trusteeand the Auditors or such other expert in connection therewith contains any limit on the liability (monetaryor otherwise) of the Auditors or such other expert.

Documents AvailableFor the period of 12 months following the date of this Offering Circular, copies of the following documentswill, when published (if applicable), be available from the registered office of the Issuer and from thespecified office of the Paying Agents:

(i) the Memorandum and Articles of Association of the Issuer;

(ii) the auditors reports and the audited consolidated and non-consolidated financial statements of theIssuer for the financial periods ended 28th February 2010 and 28th February 2009;

(iii) the most recently published audited consolidated and non-consolidated annual financial statementsof the Issuer and the most recently published consolidated and non-consolidated interim financialreports (if any) of the Issuer, in each case together with any audit or review reports prepared inconnection therewith;

(iv) the Dealer Agreement, and the Schedule of Forms (containing the forms of the Temporary GlobalNotes, the Permanent Global Notes, the Definitive Notes, the Receipts, the Coupons and the Talons);

(v) this Offering Circular;

(vi) any future offering circulars, prospectuses or information memoranda in respect of the Notes and anysupplements thereto including any Final Terms (save that Final Terms relating to a Note which isneither admitted to trading on a regulated market in an EEA State nor offered to the public in an EEAState in circumstances where a prospectus is required to be published under the Prospectus Directivewill only be available for inspection by a holder of such Note and such holder must produce evidencesatisfactory to the Paying Agent as to its holding and identity) and any other documents incorporatedherein or therein by reference; and

(vii) in the case of each issue of listed Notes subscribed pursuant to a subscription agreement, thesubscription agreement (or equivalent document).

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In addition, this Offering Circular and the documents incorporated by reference herein are available, andeach Final Terms relating to Notes which are admitted to trading on the London Stock Exchange’s regulatedmarket and/or offered in the United Kingdom in circumstances where a prospectus is required to bepublished under the Prospectus Directive will be available, on the website of the Regulatory News Serviceoperated by the London Stock Exchange at www.londonstockexchange.com/rns.

Post-issuance InformationUnless otherwise specified in the applicable Final Terms, the Issuer does not intend to provide any post-issuance information in relation to any issues of Notes.

Dealers Transacting with the IssuerCertain of the Dealers and their affiliates have engaged, and may in the future engage, in investmentbanking and/or commercial banking transactions with, and may perform services for, the Issuer and itsaffiliates in the ordinary course of business.

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REGISTERED HEAD OFFICE OF THE ISSUER

TESCO PERSONAL FINANCE PLCInterpoint Building

22 Haymarket YardsEdinburgh EH12 5BH

THE TRUSTEE

Capita Trust Company LimitedPhoenix House

18 King William StreetLondon EC4N 7HE

AGENT AND PAYING AGENT

HSBC Bank plc8 Canada SquareLondon E14 5HQ

LEGAL ADVISERS

To the Issuer as to English Law To the Issuer as to Scots Law

Freshfields Bruckhaus Deringer LLP Dundas & Wilson CS LLP65 Fleet Street Saltire Court

London EC4Y 1HS 20 Castle TerraceEdinburgh EH1 2EN

To the Dealers and the Trustee as to English Law

Allen & Overy LLPOne Bishops Square

London E1 6AD

AUDITORS TO THE ISSUER

PricewaterhouseCoopers LLPPO Box 90

Erskine House68-73 Queen StreetEdinburgh EH2 4NH

DEALERS

Barclays Bank PLC BNP Paribas5 The North Colonnade 10 Harewood Avenue

Canary Wharf London NW1 6AALondon E14 4BB

Citigroup Global Markets Limited Deutsche Bank AG, London BranchCitigroup Centre Winchester HouseCanada Square 1 Great Winchester StreetCanary Wharf London EC2N 2DB

London E14 5LB

HSBC Bank plc J.P. Morgan Securities Ltd.8 Canada Square 125 London WallLondon E14 5HQ London EC2Y 5AJ

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sterling 135121