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As filed with the Securities and Exchange Commission on 23 July 2007

Registration No. 333-144752



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 1
to
Form F-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



The Royal Bank of Scotland Group plc
(Exact name of registrant as specified in its charter)

Not Applicable
(Translation of registrant name into English)

United Kingdom
(State or other jurisdiction of
incorporation or organization)
  6029
(Primary Standard Industrial
Classification Code Number)
  Not Applicable
(I.R.S. Employer Identification Number)

RBS Gogarburn, PO Box 1000
Edinburgh EH12 1HQ
United Kingdom
011 44 131 556 8555
(Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices)

CT Corporation System
111 Eighth Avenue
New York, NY 10011
(212) 894 8940
(Name, address, including zip code, and telephone number, including area code, of agent of service)


Copies to:
Thomas B. Shropshire, Jr.
Lawrence Vranka, Jr.
Linklaters LLP
One Silk Street
London EC2Y 8HQ
United Kingdom
011 44 20 7456 2000
  Bonnie Greaves
George Karafotias
Shearman & Sterling LLP
Broadgate West
9 Appold Street
London EC2A 2AP
United Kingdom
011 44 20 7655 5000
  William P. Rogers, Jr.
Richard Hall
Cravath, Swaine & Moore LLP
CityPoint
One Ropemaker Street
London EC2Y 9HR
United Kingdom
011 44 20 7453 1000
  Gregory B. Astrachan Maurice M. Lefkort
Willkie Farr & Gallagher LLP
1 Angel Court
London EC2R 7HJ
United Kingdom
011 44 20 7696 5454


Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement becomes effective and all other conditions to the consummation of the transaction described in this document have been satisfied or waived.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

CALCULATION OF REGISTRATION FEE


Title of each class of
securities to be registered(1)

  Amount to
be registered(2)

  Proposed maximum
offering price
per unit

  Proposed maximum
aggregate offering price(3)

  Amount of
registration fee(4)


Ordinary shares, nominal value £0.25 per share   130,521,875   Not Applicable   $6,673,109,673   $204,864

Notes:


(1)
American depositary shares issuable on deposit of the RBS ordinary shares registered hereby are being registered pursuant to a separate Registration Statement on Form F-6.

(2)
Calculated as the product of (a) the sum of (i) 375,563,604 ABN AMRO ordinary shares, nominal value €0.56 per share, estimated to be held by U.S. holders as of the date hereof and (ii) 65,388,677 American depositary shares of ABN AMRO, each of which represents one ABN AMRO ordinary share, estimated to be outstanding as of the date hereof and (b) the exchange ratio of 0.296 RBS ordinary shares per ABN AMRO ordinary share or American depositary share. This number represents the maximum number of RBS ordinary shares issuable in exchange for all ABN AMRO ordinary shares held by U.S. persons and all ABN AMRO ordinary shares underlying ABN AMRO American depositary shares upon consummation of the U.S. offer. RBS ordinary shares to be issued in connection with the offers outside the United States are not registered under this Registration Statement.

(3)
Pursuant to Rule 457(c) and Rule 457(f), and solely for the purpose of calculating the registration fee, the market value of the securities to be offered was calculated as the sum of (a) the product of (i) 375,563,604 ABN AMRO ordinary shares, nominal value €0.56 per share, estimated to be held by U.S. holders and (ii) the average of the high and low sales prices of ABN AMRO ordinary shares reported on Euronext Amsterdam on July 16, 2007 (converted into U.S. Dollars on the basis of an exchange rate of €1.00 = $1.3785, which was the Federal Reserve Bank of New York noon buying rate on that date) and (b) the product of (i) 65,388,677 ABN AMRO American depositary shares estimated to be outstanding and (ii) the average of the high and low sales prices of ABN AMRO American depositary shares reported on the New York Stock Exchange on July 16, 2007.

(4)
Calculated in accordance with Rule 457(f) under the Securities Act as the product of the maximum aggregate offering price and $30.70 per $1,000,000 of securities registered. This fee was previously paid.



The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.




PRELIMINARY PROSPECTUS U.S. OFFER TO EXCHANGE

The information in this prospectus may change. We may not complete the exchange offer and issue these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer is not permitted.

GRAPHIC   GRAPHIC   GRAPHIC

Offer to Exchange
ordinary shares, nominal value of €0.56 per share,
and American depositary shares, each of which represents one ordinary share,
of ABN AMRO Holding N.V.

RFS Holdings B.V. ("RFS Holdings"), a company formed by an affiliate of Fortis N.V. and Fortis SA/NV, The Royal Bank of Scotland Group plc ("RBS") and an affiliate of Banco Santander Central Hispano, S.A., is offering to acquire all of the issued and outstanding ordinary shares, nominal value €0.56 per share (the "ABN AMRO ordinary shares"), of ABN AMRO Holding N.V. ("ABN AMRO") and all of the issued and outstanding American depositary shares of ABN AMRO, each of which represents one ABN AMRO ordinary share (the "ABN AMRO ADSs").

RFS Holdings is conducting this offer which comprises an offer made pursuant to this document to all holders of ABN AMRO ordinary shares who are U.S. holders (within the meaning of Rule 14d-1(d) under the U.S. Securities Exchange Act of 1934, as amended), and to all holders of ABN AMRO ADSs, wherever located (the "U.S. offer"); and an offer made pursuant to the Dutch offer document to all holders of ABN AMRO ordinary shares who are located in the Netherlands and to all holders of ABN AMRO ordinary shares who are located outside of the Netherlands and the United States (the "Dutch offer" and, together with the U.S. offer, the "offers"), in each case if, pursuant to the local laws and regulations applicable to such holders, they are permitted to participate in the relevant offer. The offers are being conducted simultaneously and have the same terms and are subject to the same conditions.

In this U.S. offer, RFS Holdings is offering to exchange for each ABN AMRO ordinary share and each ABN AMRO ADS validly tendered and not properly withdrawn:

€35.60 in cash; and

0.296 newly issued ordinary shares, nominal value £0.25 per share, of RBS ("RBS ordinary shares").

As at 13 July 2007, the last trading day prior to the announcement made on 16 July 2007, the total value of the consideration being offered by RFS Holdings was €38.40 per ABN AMRO ordinary share, based on the closing price of 640p for the RBS ordinary shares on the London Stock Exchange (the "LSE") on that date and an exchange rate of €1.00 per £0.6777, published in The Financial Times on 14 July 2007.

The consideration set out above assumes the payment by ABN AMRO of an interim (cash or share) dividend in respect of 2007 in an amount not to exceed €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes). If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes) or any other (cash or share) dividend, distribution, share split or analogous transaction in respect of the ABN AMRO ordinary shares, including the ABN AMRO ordinary shares represented by ABN AMRO ADSs, and the record date for such (cash or share) dividend, distribution, share split or analogous transaction precedes the settlement of the offers, the consideration set out above may be reduced by an amount, in the case of an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share, equal to such excess (before deduction of any applicable withholding taxes), or otherwise by the full amount of any other such dividend, distribution, share split or analogous transaction (before deduction of any applicable withholding taxes). If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 of €0.55 or less per ABN AMRO ordinary share (before deduction of any applicable withholding taxes), and the record date for such dividend precedes the settlement of the offers, the consideration set out above will not be adjusted.

The cash consideration paid to tendering holders of ABN AMRO ADSs will be in U.S. dollars, based on the conversion of the euro consideration to which holders of ABN AMRO ADSs are entitled, net of fees and expenses, into U.S. dollars at the exchange rate obtainable by The Bank of New York, the U.S. exchange agent, on the spot market in London on the date the cash consideration is received by The Bank of New York for delivery in respect of such ABN AMRO ADSs.

THE U.S. OFFER WILL COMMENCE ON 23 JULY 2007. THE U.S. OFFER WILL EXPIRE AT 9:00 A.M., NEW YORK CITY TIME (3:00 P.M. AMSTERDAM TIME) ON 5 OCTOBER 2007, UNLESS IT IS EXTENDED.

The completion of this U.S. offer is subject to certain conditions, including an 80% minimum acceptance condition. A detailed description of the terms and conditions of this U.S. offer appears under "The U.S. Offer—Terms of the U.S. Offer" and "The U.S. Offer—Conditions to the U.S. Offer" in this document.

ABN AMRO ordinary shares are listed on the Eurolist market of Euronext Amsterdam ("Euronext Amsterdam") and ABN AMRO ADSs are listed on the New York Stock Exchange (the "NYSE"). RBS ordinary shares are listed on the LSE. Prior to the U.S. offer being declared unconditional, RBS intends to list the RBS ordinary shares on Euronext Amsterdam. Prior to completion of the U.S. offer, RBS also intends to establish an American depositary receipt program in the United States. U.S. holders of ABN AMRO ordinary shares and holders of ABN AMRO ADSs who receive RBS ordinary shares in this U.S. offer will be able to deposit such RBS ordinary shares in exchange for RBS American depositary shares ("RBS ADSs") upon completing the necessary formalities and paying the associated U.K. stamp duty reserve tax (at the rate of 1.5% of the value of the RBS ordinary shares) and any other taxes, governmental charges and fees (including the fees of The Bank of New York, as the RBS ADS depositary) payable in connection therewith. RBS intends to apply to list the RBS ADSs on the NYSE.

FOR A DISCUSSION OF RISK FACTORS THAT YOU SHOULD CONSIDER IN EVALUATING THE U.S. OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 43.

THIS DOCUMENT CONTAINS DETAILED INFORMATION CONCERNING THE U.S. OFFER FOR ABN AMRO ORDINARY SHARES AND ABN AMRO ADSs AND THE PROPOSED TRANSACTIONS RELATING TO FORTIS, RBS, SANTANDER, RFS HOLDINGS AND ABN AMRO. THE BANKS RECOMMEND THAT YOU READ THIS DOCUMENT CAREFULLY.

THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS NOT A SOLICITATION OF AN OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY SALE OR PURCHASE OF SECURITIES PURSUANT HERETO, IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE IS NOT PERMITTED OR WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE LAWS OF ANY SUCH JURISDICTION.

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN CONNECTION WITH THE U.S. OFFER OR HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE UNITED STATES.

THIS PROSPECTUS HAS NOT BEEN APPROVED BY THE DUTCH AUTORITEIT FINANCIËLE MARKTEN (THE "AFM"). ACCORDINGLY, THIS PROSPECTUS MAY NOT BE USED TO MAKE OFFERS OR SALES IN THE NETHERLANDS IN CONNECTION WITH THE OFFERS.



The date of this document is 23 July 2007



REGULATORY STATEMENT

This prospectus is not an offer to sell securities and it is not a solicitation of an offer to buy securities, nor shall there be any sale or purchase of securities pursuant hereto, in any jurisdiction in which such offer, solicitation or sale is not permitted or would be unlawful prior to registration or qualification under the laws of any such jurisdiction. If you are in any doubt as to your eligibility to participate in the offers, you should contact your professional adviser immediately.

In accordance with, and subject to the restrictions under Dutch law and pursuant to exemptive relief granted by the SEC from Rule 14e-5 under the Exchange Act, Fortis, RBS, Santander and any of their respective subsidiaries or subsidiary undertakings and any advisor, broker or financial institution acting as an agent or for the account or benefit of any of Fortis, RBS or Santander may make certain purchases of, or arrangements to purchase, ABN AMRO ordinary shares outside the United States during the period in which the U.S. offer remains open for acceptance. In accordance with the requirements of Rule 14e-5 under the Exchange Act and with exemptive relief granted by the SEC, such purchases, or arrangements to purchase, must comply with applicable Dutch regulations, including the provisions of the 1995 Act on the supervision of the securities trade (Wet toezicht effectenverkeer 1995/Wte 1995) (Netherlands) and the 1995 Decree on the supervision of the securities trade (Besluit toezicht effectenverkeer 1995/Bte 1995) (Netherlands) and the rules of Euronext Amsterdam. Fortis, RBS and Santander will disclose promptly in the United States and the Netherlands by means of a press release, to the extent that such information is made public in the Netherlands pursuant to applicable Dutch regulations, information regarding such purchases of ABN AMRO ordinary shares outside the U.S. offer and will provide such information to holders of or beneficial owners of ABN AMRO ordinary shares upon their request without charge to such persons and will disclose information regarding such purchases to the AFM as required by applicable Dutch regulations.

Since the announcement of the offers, each of Fortis, RBS and Santander, through certain identifiable business units and certain of their respective affiliates, have engaged, and intend to continue to engage, in various dealing and brokerage activities involving RBS ordinary shares. Certain mutual fund management companies, pension fund management companies, asset management companies and insurance companies that are affiliates of Fortis, RBS or Santander, respectively, have purchased and sold, and intend to continue to purchase and sell, RBS ordinary shares as part of their ordinary investing activities and/or as part of the investment selections made by their clients. Each of Fortis, RBS and Santander, through certain identifiable business units and their respective affiliates, have also engaged, and intend to continue to engage, in dealings in derivatives relating to RBS ordinary shares (such as swaps, options, warrants and other instruments) for their accounts or for the accounts of their respective customers, and in dealings in RBS ordinary shares for their accounts and the accounts of their respective customers for the purpose of hedging their respective positions established in connection with their derivatives activities relating to RBS ordinary shares entered into by the respective Bank and its affiliates and their respective customers, as well as to effect unsolicited brokerage transactions in RBS ordinary shares with their respective customers. These activities occurred and are expected to continue to occur in the United Kingdom, elsewhere in Europe and elsewhere outside the United States. Citizens Financial Group, a wholly-owned subsidiary of RBS ("Citizens"), and certain affiliates of Santander have also engaged and may continue to engage in unsolicited brokerage transactions in RBS ordinary shares in the United States. All of these activities could have the effect of preventing or retarding a decline in the market price of the RBS ordinary shares. Each of Fortis, RBS and Santander has sought and received from the SEC certain exemptive relief from Regulation M under the Exchange Act in order to permit each of Fortis, RBS and Santander through their identifiable business units and affiliates, to engage in the foregoing activities during the period in which the U.S. offer remains open for acceptance.

i



The RBS ordinary shares have not been and will not be registered under the Securities and Exchange Law of Japan. Accordingly, the U.S. offer (which involves an offer of RBS ordinary shares) is not and will not, directly or indirectly, be made and the RBS ordinary shares will not, directly or indirectly, be offered or sold in Japan. Therefore, this document must not be distributed in whole or in part into Japan. This document and other documents related to the U.S. offer may not be electronically provided to, nor accessed by, persons in Japan. Copies of this document and any other documents related to the U.S. offer are not being, and must not be, mailed or otherwise distributed or sent to, or for the benefit of persons in Japan. Persons receiving this document (including custodians, nominees and trustees) or other documents related to the U.S. offer must not distribute or send them to any person or company in or from Japan. The U.S. offer is not being made, directly or indirectly, in or into or by the use of the mails or any other means or instrumentality (including, without limitation, facsimile transmission, telex, telephone or internet) of interstate or foreign commerce of, or any such facilities of a national securities exchange of, Japan, and is not capable of acceptance by any such use, means, instrumentality or facilities from or within Japan. The U.S. offer is not being made in Japan.

The U.S. offer and any solicitation in respect thereof are presently not being made, directly or indirectly, in or into the Republic of Italy and have not received clearance from the Commissione Nazionale per le Società e la Borsa pursuant to Italian securities laws and implementing regulations. Application for authorisation by the relevant Italian authorities for the launching of an offer for ABN AMRO ADSs in the Republic of Italy while being contemplated has not yet been, and may not be, made. Accordingly, Italian holders of ABN AMRO ADSs are hereby notified that, to the extent such holders of ABN AMRO ADSs are persons or entities resident and/or located in the Republic of Italy and until and to the extent that the relevant authorisation has not been obtained from the Italian authorities, the U.S. offer is not available to them and they may not accept the U.S. offer and, as such, any tenders of ABN AMRO ADSs received from such persons or entities shall be ineffective and void. Neither this offer document nor any other offering materials relating to the U.S. offer or ABN AMRO ADSs may be distributed or made available in the Republic of Italy.

ii



TABLE OF CONTENTS

REGULATORY STATEMENT   i

QUESTIONS AND ANSWERS ABOUT THE U.S. OFFER

 

1

INDICATIVE TIMETABLE

 

10

SUMMARY

 

11

SELECTED HISTORICAL CONDENSED CONSOLIDATED FINANCIAL DATA OF RBS

 

23

SELECTED HISTORICAL CONDENSED CONSOLIDATED FINANCIAL DATA OF ABN AMRO

 

30

SELECTED UNAUDITED PRO FORMA SUMMARY FINANCIAL INFORMATION

 

36

SUMMARY COMPARATIVE PER SHARE MARKET INFORMATION

 

40

EXCHANGE RATE INFORMATION

 

41

RISK FACTORS

 

43

INFORMATION INCORPORATED BY REFERENCE

 

52

PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

 

53

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

 

55

BACKGROUND TO AND REASONS FOR THE OFFERS

 

57

PLANS AND PROPOSALS FOR ABN AMRO

 

76

THE U.S. OFFER

 

94

SUMMARY OF THE CONSORTIUM AND SHAREHOLDERS' AGREEMENT

 

118

MATERIAL U.S. FEDERAL INCOME TAX, DUTCH TAX AND U.K. TAX CONSEQUENCES

 

122

EFFECTS OF THE OFFERS AND POST-CLOSING RESTRUCTURING

 

131

SOURCE AND AMOUNT OF FUNDS

 

139

TREATMENT OF ABN AMRO OPTIONS, CONVERTIBLE PREFERENCE SHARES AND FORMERLY CONVERTIBLE PREFERENCE SHARES

 

142

INFORMATION ABOUT RFS HOLDINGS

 

143

INFORMATION ABOUT FORTIS

 

145

INFORMATION ABOUT RBS

 

148

INFORMATION ABOUT SANTANDER

 

151

RECENT DEVELOPMENTS OF RBS AND ABN AMRO

 

154

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

157

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

 

171

DESCRIPTION OF RBS ORDINARY SHARES

 

173

DESCRIPTION OF RBS AMERICAN DEPOSITARY SHARES

 

180

COMPARISON OF SHAREHOLDERS' RIGHTS

 

188
     

iii



INTERESTS OF RFS HOLDINGS, FORTIS, RBS AND SANTANDER AND THEIR DIRECTORS AND EXECUTIVE OFFICERS

 

207

MARKET PRICE AND DIVIDEND DATA

 

217

VALIDITY OF THE SECURITIES

 

220

EXPERTS

 

220

ADDITIONAL INFORMATION FOR SECURITYHOLDERS

 

221

SERVICE OF PROCESS AND ENFORCEABILITY OF CIVIL LIABILITIES UNDER U.S. SECURITIES LAWS

 

223

WHO CAN HELP ANSWER MY QUESTIONS?

 

224

CERTAIN DEFINED TERMS

 

225

ANNEX A: INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF RFS HOLDINGS, FORTIS, RBS AND SANTANDER

 

A-1

ANNEX B: ADDITIONAL INFORMATION REGARDING RBS DIRECTORS

 

B-1

ANNEX C: RBS CUSTODY ACCOUNT

 

C-1

iv



QUESTIONS AND ANSWERS ABOUT THE U.S. OFFER

The following are some of the questions that you, as a holder of ABN AMRO ordinary shares or ABN AMRO ADSs, may have, along with answers to those questions. These questions and answers, as well as the following summary, are not meant to be a substitute for the information contained in the remainder of this document and the related letter of transmittal or acceptance form, and this information is qualified in its entirety by the more detailed descriptions and explanations contained in this document, including its annexes, the related letter of transmittal or acceptance form and the documents incorporated by reference into this document. We urge you to read such documents in their entirety prior to making any decision as to your ABN AMRO ordinary shares or ABN AMRO ADSs.

Q.        What is RFS Holdings?

A.
RFS Holdings is a Dutch holding company formed by the Banks for the purpose of making the offers to purchase all of the issued and outstanding ABN AMRO ordinary shares and ABN AMRO ADSs and to otherwise effect the Transaction. Upon settlement of the offers, RFS Holdings will be owned by the Banks in proportion to their funding commitments under the Consortium and Shareholders' Agreement. RFS Holdings will be consolidated as a subsidiary by RBS.

Q.        Why is RFS Holdings seeking to acquire all of the outstanding ABN AMRO ordinary shares and ABN AMRO ADSs?

A.
RFS Holdings is seeking to acquire all of the issued and outstanding ABN AMRO ordinary shares and ABN AMRO ADSs in order to acquire 100% of the issued and outstanding share capital of ABN AMRO. The Banks believe that due to their comprehensive strategic fit with ABN AMRO across its activities, they will be able to create stronger businesses with enhanced market presence and growth prospects, leading to substantial value creation and benefits for shareholders, customers and employees.

Q.        How are the offers being made?

A.
RFS Holdings is offering to acquire all of the ABN AMRO ordinary shares and ABN AMRO ADSs through two separate offers:

a U.S. offer made pursuant to this document to all holders of ABN AMRO ordinary shares who are located in the United States and to all holders of ABN AMRO ADSs, wherever located; and

a Dutch offer made pursuant to the Dutch offer document to all holders of ABN AMRO ordinary shares who are located in the Netherlands and to all holders of ABN AMRO ordinary shares who are located outside of the Netherlands and the United States,

      in each case, if, pursuant to the local laws and regulations applicable to such holders, they are permitted to participate in the relevant offer. The offers are being conducted simultaneously and have the same terms and are subject to the same conditions.

Q.        What will I receive if I accept the U.S. offer?

A.
Subject to the terms and conditions of the U.S. offer, for each ABN AMRO ordinary share or ABN AMRO ADS validly tendered and not properly withdrawn, you will receive €35.60 in cash and 0.296 RBS ordinary shares. Under no circumstances will interest be paid on the cash to be received.

1


Q.        May I choose the currency in which I receive my cash consideration?

A.
No. The cash consideration paid to tendering holders of ABN AMRO ordinary shares will be in euros.

      The cash consideration paid to tendering holders of ABN AMRO ADSs will be in U.S. dollars. The cash consideration payable in euros to which such tendering holders of ABN AMRO ADSs would otherwise be entitled pursuant to the terms of the U.S. offer will be converted by the U.S. exchange agent, net of fees and expenses, into U.S. dollars at the exchange rate obtainable on the spot market in London on the date the cash consideration is received by the U.S. exchange agent for delivery in respect of the tendered ABN AMRO ADSs.

      Holders of ABN AMRO ADSs should be aware that fluctuations in the euro to U.S. dollar exchange rate will cause the value of the cash consideration to be paid to them in respect of their ABN AMRO ADSs to change accordingly.

Q.        How does this offer compare with the Barclays proposed offer for ABN AMRO?

A.
The Banks believe that their offer is fundamentally different from the Barclays proposed offer and presents ABN AMRO shareholders and holders of ABN AMRO ADSs with an offer that delivers superior value. Whereas Barclays is seeking to merge the operations of ABN AMRO with its own operations, and is offering Barclays ordinary shares as the sole consideration, the Banks intend to divide the ABN AMRO Businesses between them and are offering approximately 93% of the total consideration in cash and 7% in RBS ordinary shares.

      Barclays is proposing to offer to exchange 3.225 Barclays ordinary shares for each ABN AMRO ordinary share, and 0.80625 Barclays ADSs for each ABN AMRO ADS.

      Based on the price of Barclays ordinary shares of 712.5p at the close of business on 24 April 2007 (the day before the Banks first announced details, including a price indication, of their proposals), the value of the Barclays proposed offer was €33.78 per ABN AMRO ordinary share (using an exchange rate of €1.00 per £0.6802, as published in The Financial Times on 25 April 2007).

      Based on the price of Barclays ordinary shares of 724.5p at the close of business on 13 July 2007, the last trading day prior to the Banks' announcement on 16 July 2007, the value of the Barclays proposed offer as at 13 July 2007 was €34.48 per ABN AMRO ordinary share (using an exchange rate of €1.00 per £0.6777, as published in The Financial Times on 14 July 2007). Based on the price of RBS ordinary shares of 640p at the close of business on 13 July 2007, and using the same exchange rate, the value of the consideration being offered by RFS Holdings as at 13 July 2007 was €38.40 per ABN AMRO ordinary share.

Q.        What percentage of RBS ordinary shares will be owned by the former holders of ABN AMRO ordinary shares and ABN AMRO ADSs after the offers are completed?

A.
If all of the issued and outstanding ABN AMRO ordinary shares and ABN AMRO ADSs on a fully-diluted basis are exchanged pursuant to the offers, immediately after the completion of the offers, the former holders of ABN AMRO ordinary shares and ABN AMRO ADSs (other than ABN AMRO) will own approximately 6% of the outstanding RBS ordinary shares, and the current holders of RBS ordinary shares (other than RBS) will own approximately 94% of the outstanding RBS ordinary shares.

2


Q.        Do I need to do anything if I want to retain my ABN AMRO ordinary shares or ABN AMRO ADSs?

A.
No. If you want to retain your ABN AMRO ordinary shares or ABN AMRO ADSs, you do not need to take any action.

Q.        If I decide not to tender, what will happen to my ABN AMRO ordinary shares or ABN AMRO ADSs?

A.
If you decide not to tender, you will continue to own your ABN AMRO ordinary shares or ABN AMRO ADSs in their current form. However, if the offers are completed, the number of ABN AMRO ordinary shares and ABN AMRO ADSs that are publicly held may be so small that there would no longer be an active trading market for ABN AMRO ordinary shares or ABN AMRO ADSs. In particular, ABN AMRO ordinary shares may no longer be eligible for trading on Euronext Amsterdam, and ABN AMRO ADSs may no longer be eligible for trading on the NYSE. The absence of an active trading market will reduce the liquidity and market value of your ABN AMRO ordinary shares or ABN AMRO ADSs.

      In addition, in the event that RFS Holdings acquires control of ABN AMRO, RFS Holdings intends to request that ABN AMRO seek the delisting of the ABN AMRO ordinary shares from Euronext Amsterdam and the ABN AMRO ADSs from the NYSE. Following delisting of the ABN AMRO ADSs from the NYSE, RFS Holdings intends to cause ABN AMRO to make a filing with the SEC requesting that ABN AMRO's reporting obligations under the Exchange Act be terminated. RFS Holdings also intends to cause ABN AMRO to terminate the deposit agreement relating to the ABN AMRO ADSs.

      RFS Holdings intends to change ABN AMRO's dividend policy if the offers are completed and to cause ABN AMRO to stop paying regular cash dividends after the completion of the offers for the foreseeable future, subject to any applicable legal requirements. The amount and form of any one-time distribution will be determined by RFS Holdings from time to time as appropriate.

Q.        Do I have appraisal rights under the U.S. offer with respect to the ABN AMRO ordinary shares and ABN AMRO ADSs?

A.
Neither holders of ABN AMRO ordinary shares nor holders of ABN AMRO ADSs are entitled under Dutch law or otherwise to appraisal rights with respect to the U.S. offer. However, if RFS Holdings, acting alone or with another Group company, acquires 95% or more of the outstanding issued capital of ABN AMRO or 95% or more of the issued capital and voting rights attached thereto of any class of shares of ABN AMRO after the act implementing the squeeze-out provisions of European Union Takeover Directive 2004/25/EC has come into force, it intends to acquire the remaining outstanding ABN AMRO ordinary shares in accordance with the squeeze-out proceedings prescribed by the Dutch Civil Code. In those proceedings, ABN AMRO ordinary shares held by minority ABN AMRO shareholders will be acquired only for cash, and a Dutch court will determine the price to be paid for the ABN AMRO ordinary shares, which may be lower than the cash equivalent of the consideration offered in the U.S. offer.

Q.        Will shares of ABN AMRO held by minority shareholders after the completion of the offers be acquired by RFS Holdings?

A.
As indicated above, if RFS Holdings acquires 95% or more of ABN AMRO's issued capital, it intends to acquire the remaining outstanding shares of ABN AMRO in accordance with the squeeze-out proceedings prescribed by the Dutch Civil Code. Furthermore, if RFS Holdings acquires 95% or more of the issued capital of, and the voting rights attached to, any class of

3


    shares of ABN AMRO after implementation of the squeeze-out provisions of the European Union Takeover Directive 2004/25/EC, RFS Holdings will have the right to initiate squeeze-out proceedings with respect to shares of that class not tendered and not otherwise held by RFS Holdings or ABN AMRO. In those proceedings, ABN AMRO ordinary shares held by minority ABN AMRO shareholders will be acquired only for cash, and the Enterprise Chamber of the Amsterdam Court of Appeal court will determine the price to be paid for the ABN AMRO ordinary shares, which may be lower than the cash equivalent of the consideration offered in the U.S. offer. Upon payment of the required amount into a prescribed bank account, the ABN AMRO ordinary shares held by the minority shareholders will be transferred to RFS Holdings by operation of Dutch law.

      If RFS Holdings acquires less than 95% of ABN AMRO's issued share capital (or, after implementation of European Union Takeover Directive 2004/25/EC, less than 95% of the issued capital of and the voting rights attached to any class of shares of ABN AMRO), RFS Holdings will not be able to effect squeeze-out proceedings under the Dutch Civil Code. However, RFS Holdings intends to take steps to acquire 100% of the shares of ABN AMRO by other legally permissible means, including engaging in one or more corporate restructuring transactions, such as a merger pursuant to article 2:309 of the Dutch Civil Code, liquidation, transfer of assets, conversion of ABN AMRO into a different corporate form, alteration of ABN AMRO's capital structure and/or privately-negotiated purchases of ABN AMRO ordinary shares from minority ABN AMRO shareholders. See "Effects of the Offers and Post-Closing Restructuring" for further details regarding the impact of RFS Holdings acquiring less than 95% of the issued capital and voting rights on holders of ABN AMRO ordinary shares and ABN AMRO ADSs.

Q.        If ABN AMRO pays any dividend in respect of the ABN AMRO ordinary shares, including ABN AMRO ordinary shares represented by ABN AMRO ADSs, will my consideration be reduced?

A.
If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes) or any other (cash or share) dividend, distribution, share split or analogous transaction in respect of the ABN AMRO ordinary shares, including ABN AMRO ordinary shares represented by ABN AMRO ADSs, and the record date for such (cash or share) dividend, distribution, share split or analogous transaction precedes the settlement of the offers, RFS Holdings may reduce the consideration offered in exchange for each ABN AMRO ordinary share and each ABN AMRO ADS by an amount, in the case of an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share, equal to such excess (before deduction of any applicable withholding taxes), or otherwise by the full amount of any other such dividend, distribution, share split or analogous transaction (before deduction of any applicable withholding taxes), as explained in "The U.S. Offer—Adjustment of Consideration Offered Upon Payment of Certain ABN AMRO Dividends".

      If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 of €0.55 or less per ABN AMRO ordinary share (before deduction of any applicable withholding taxes), and the record date for such dividend precedes the settlement of the offers, the consideration set out above will not be adjusted.

Q.        When does the U.S. offer expire, and under what circumstances will the U.S. offer be extended?

A.
The U.S. offer will expire at 9:00 a.m. New York City time (3:00 p.m. Amsterdam time) on 5 October 2007, unless RFS Holdings decides to extend the U.S. offer.

4


      If one or more of the conditions described in this document under "The U.S. Offer—Conditions to the U.S. Offer" is not satisfied or, to the extent legally permitted, waived, RFS Holdings may, from time to time, extend the period of time for which the U.S. offer is open until all the conditions set forth in "The U.S. Offer—Conditions to the U.S. Offer" have been satisfied or, to the extent legally permitted, waived.

      RFS Holdings intends for the U.S. offer and the Dutch offer to expire on the same date and, if either offer is extended, to similarly extend the other offer.

      During any extension, any ABN AMRO ordinary shares and ABN AMRO ADSs validly tendered and not properly withdrawn will remain subject to the U.S. offer, subject to the right of each holder to withdraw, prior to the end of the offer period, as extended, the ABN AMRO ordinary shares or ABN AMRO ADSs that such holder has previously tendered.

Q.        How will I know if the U.S. offer is extended?

A.
RFS Holdings will announce any extension of the U.S. offer by issuing a press release on, among others, the Dow Jones News Service and by publication in the Daily Official List of Euronext Amsterdam, no later than the third Euronext Amsterdam trading day after the previously scheduled expiration date.

      In the event that RFS Holdings intends to waive the minimum acceptance condition to less than a majority of the issued and outstanding ABN AMRO ordinary shares on a fully-diluted basis, RFS Holdings will announce such waiver by issuing a press release on, among others, the Dow Jones News Service and by publication in the Daily Official List of Euronext Amsterdam, no later than 9:00 a.m., New York City time (3:00 p.m. Amsterdam time) on the next U.S. business day after the previously scheduled expiration date, and will extend the U.S. offer (and similarly extend the Dutch offer) to the extent required by the U.S. tender offer rules.

Q.        I hold ABN AMRO ordinary shares through an Admitted Institution. How do I accept the U.S. offer?

A.
If you hold your ABN AMRO ordinary shares through a financial intermediary that is an Admitted Institution, you should make your acceptance of the U.S. offer known to the Dutch exchange agent, Fortis Bank (Nederland) N.V., through your financial intermediary before the expiration of the U.S. offer. The financial intermediary may set an earlier deadline for receipt of acceptances in order to permit the financial intermediary to communicate acceptances to the Dutch exchange agent in a timely manner. You should contact the financial intermediary through which you hold your ABN AMRO ordinary shares to obtain information about the deadline by which you must make your acceptance of the U.S. offer known to your financial intermediary.

Q.        I hold ABN AMRO ordinary shares in registered form. How do I accept the U.S. offer?

A.
If you hold your ABN AMRO ordinary shares in registered form, you may tender your ABN AMRO ordinary shares to the Dutch exchange agent by delivering to the Dutch exchange agent a properly completed and duly executed acceptance form. You should complete, sign and return the acceptance form so as to reach the Dutch exchange agent before the expiration of the U.S. offer.

5


Q.        I hold American depositary receipts, or ADRs, representing ABN AMRO ADSs. How do I accept the U.S. offer?

A.
If you hold ABN AMRO ADRs, you may tender your ABN AMRO ADSs to the U.S. exchange agent by delivering to the U.S. exchange agent a properly completed and duly executed letter of transmittal, with any applicable signature guarantees from an eligible guarantor institution, together with the ABN AMRO ADR representing your ABN AMRO ADSs specified on the face of the letter of transmittal, before the expiration of the U.S. offer. If your ABN AMRO ADRs are not available, you may also follow the guaranteed delivery procedures described in this document. Do not send your ADRs to RFS Holdings, any of the Banks or the global information agent.

Q.        I hold ABN AMRO ADSs through a financial intermediary. How do I accept the U.S. offer?

A.
If you hold your ABN AMRO ADSs through a financial intermediary, you should instruct your financial intermediary through which you hold your ABN AMRO ADSs to tender your ABN AMRO ADSs in the U.S. offer to the U.S. exchange agent by means of delivery through the book-entry confirmation facilities of DTC before the expiration of the U.S. offer. If the procedure for book-entry transfer cannot be completed on a timely basis, you may also follow the guaranteed delivery procedures described in this document.

Q.        Will I have to pay any transaction fees or brokerage commissions?

A.
You will not have to pay any transaction fees or brokerage commissions if:

you instruct your financial intermediary that is an Admitted Institution to tender your ABN AMRO ordinary shares, subject to the policies of such Admitted Institution;

your ABN AMRO ordinary shares are registered in your name and you tender them to the Dutch exchange agent; or

you hold ABN AMRO ADSs directly and you tender them to the U.S. exchange agent.

      If you hold your ABN AMRO ordinary shares through a financial intermediary that does not directly tender and deliver your ABN AMRO ordinary shares to the Dutch exchange agent, you are advised to consult with your financial intermediary through which you hold your ABN AMRO ordinary shares regarding any applicable transaction fee or service charge.

      If you hold your ABN AMRO ADSs through a financial intermediary and such financial intermediary tenders your ABN AMRO ADSs on your behalf, your financial intermediary may charge you a fee for doing so. You should consult your financial intermediary to determine whether any charges will apply.

Q.        After I tender my ABN AMRO ordinary shares or ABN AMRO ADSs, may I change my mind and withdraw them?

A.
Yes. You may withdraw your ABN AMRO ordinary shares or ABN AMRO ADSs at any time before the expiration of the U.S. offer.

Q.        How do I withdraw previously tendered ABN AMRO ordinary shares or ABN AMRO ADSs?

A.
If you tendered ABN AMRO ordinary shares through a financial intermediary that is an Admitted Institution, you may withdraw your ABN AMRO ordinary shares by making a withdrawal request through your financial intermediary to the Dutch exchange agent before the expiration of the U.S. offer.

6


      If you tendered registered form ABN AMRO ordinary shares by sending an acceptance form to the Dutch exchange agent, you may withdraw your registered form ABN AMRO ordinary shares by delivering to the Dutch exchange agent a properly completed and duly executed notice of withdrawal before the expiration of the U.S. offer.

      If you tendered ABN AMRO ADSs directly to the U.S. exchange agent by delivering a letter of transmittal together with the ABN AMRO ADR evidencing your ABN AMRO ADSs, you may withdraw your ABN AMRO ADSs by delivering to the U.S. exchange agent a properly completed and duly executed notice of withdrawal, guaranteed by an eligible guarantor institution (if the letter of transmittal required a signature guarantee) before the expiration of the U.S. offer.

      If you tendered ABN AMRO ADSs by means of the book-entry confirmation procedures of DTC, you may withdraw your ABN AMRO ADSs by instructing your financial intermediary through which you hold your ABN AMRO ADSs to cause the DTC participant through which your ABN AMRO ADSs were tendered to deliver a notice of withdrawal to the U.S. exchange agent through the book-entry confirmation facilities of DTC before the expiration of the U.S. offer.

      See "The U.S. Offer—Withdrawal Rights" for more information about the procedures for withdrawing your previously tendered ABN AMRO ordinary shares or ABN AMRO ADSs.

Q.        When will I be notified of the results of the offers?

A.
Unless the initial offer period is extended, RFS Holdings will determine within five Euronext Amsterdam trading days following the expiration of the initial offer period on 5 October, 2007, whether the conditions to the offers have been satisfied or are to be waived and will announce whether (i) the conditions to the U.S. offer have been satisfied or waived, and the Dutch offer has been declared unconditional or (ii) the offers are terminated, as a result of the conditions to the offers not having been satisfied or waived.

      In accordance with Dutch law, any extension of the initial offer period will be announced no later than the third Euronext Amsterdam trading day after expiration of the initial, or extended, offer period (as the case may be). Announcement of the results of the offers where the initial offer period has been extended will be made on the same basis as described above.

Q.        Under what circumstances will there be a subsequent offering period?

A.
RFS Holdings reserves the right to provide a "subsequent offering period" of up to 15 Euronext Amsterdam trading days, but in no event more than 20 U.S. business days, following the close of the initial, or extended, offer period. If RFS Holdings determines to provide a subsequent offering period, it will publicly disclose its intentions and such subsequent offering period will commence immediately after the offer has been declared unconditional. However, there is no assurance that there will be a subsequent offering period. During the subsequent offering period, if any, holders of ABN AMRO ordinary shares and ABN AMRO ADSs may tender, but not withdraw, their ABN AMRO ordinary shares and ABN AMRO ADSs. RFS Holdings will accept for exchange and will pay for such ABN AMRO ordinary shares or ABN AMRO ADSs tendered during any subsequent offering period promptly and, in any event, within five Euronext Amsterdam trading days of the ABN AMRO ordinary shares and ABN AMRO ADSs being tendered. In the event the minimum acceptance condition is waived, following the expiration of the U.S. offer, to no less than a majority of the issued and outstanding ABN AMRO ordinary shares on a fully-diluted basis, RFS Holdings will provide a subsequent offering period of at least five U.S. business days following any such waiver.

7


Q.        Will I receive the same consideration if I tender in the subsequent offering period, if any, that I would have received in the initial offer period?

A.
Yes. The consideration paid for any ABN AMRO ordinary shares or ABN AMRO ADSs tendered during any subsequent offering period, as determined by RFS Holdings, will be the same as the consideration offered in the initial offer period. Because the exchange ratio is fixed, however, the market value of the RBS ordinary shares paid as a portion of the consideration in any subsequent offering period may differ from the market value of the RBS ordinary shares at the time they are paid in the initial offer period. In addition, the U.S. dollar value of the cash consideration received by tendering holders of ABN AMRO ADSs may change due to fluctuations in the euro to U.S. dollar exchange rate.

Q.        What happens if the U.S. offer is not completed?

A.
If the U.S. offer is not completed:

if you tendered ABN AMRO ordinary shares through a financial intermediary that is an Admitted Institution, your tendered ABN AMRO ordinary shares will be returned to the Admitted Institution;

if you tendered ABN AMRO ordinary shares in registered form, your acceptance communicated to the Dutch exchange agent will be considered withdrawn;

if you tendered your ABN AMRO ADSs by delivering a letter of transmittal together with the ABN AMRO ADRs, your ABN AMRO ADSs will be returned to you promptly following the announcement that the U.S. offer has not been completed; and

if you tendered your ABN AMRO ADSs by book-entry transfer, such ABN AMRO ADSs will be credited to an account maintained at the original book-entry transfer facility to which the ABN AMRO ADSs were tendered.

      Under no circumstances will RFS Holdings or any of the Banks pay, or otherwise agree to be responsible for the payment of, interest or other fees, expenses or other costs of holders of ABN AMRO ordinary shares or ABN AMRO ADSs, in the foregoing circumstances.

Q.        What if I am a holder of ABN AMRO ADSs and I want to hold the RBS ordinary shares that I receive in the U.S. offer in the form of RBS ADSs?

A.
Under the U.S. offer, you will receive RBS ordinary shares as part of the consideration in exchange for your ABN AMRO ordinary shares or ABN AMRO ADSs. RBS ADSs are not being issued or offered in the U.S. offer. However, prior to the completion of the U.S. offer, RBS intends to establish an ADS facility in the United States and register the RBS ADSs issued thereunder with the SEC, and if such a facility is established and registration occurs, ABN AMRO ADS holders will be able to elect to deposit their RBS ordinary shares with The Bank of New York, the depositary for the RBS ADSs. The RBS ADS depositary will then issue to you RBS ADSs based on the ratio of one RBS ADS for every one RBS ordinary share. Upon any such deposit, you will be required to pay a 1.5% U.K. stamp duty reserve tax on the value of the RBS ordinary shares so deposited as well as any other taxes, governmental charges and fees payable in connection with such deposit, including fees of the RBS ADS depositary for the execution and delivery of such RBS ADSs. The rights of holders of RBS ADSs will be governed by the terms of a deposit agreement among the RBS ADS depositary, RBS and the owners and beneficial owners of RBS ADSs. See "Description of RBS American Depositary Shares".

      You may direct any questions related to the RBS ADS facility to The Bank of New York, as ADS depositary, at 1-212-815-2030.

8


Q.        Do the statements on the cover of this document about this document being subject to change and the registration statement filed with the SEC not yet being effective mean that the U.S. offer has not commenced?

A.
No. The SEC's rules permit offers to begin before the related registration statement has become effective, and RFS Holdings commenced the U.S. offer with the goal of completing the acquisition of ABN AMRO as quickly as possible. However, the U.S. offer cannot be completed until such time as the SEC has declared the registration statement relating to the RBS ordinary shares effective.

Q.        Who can answer my questions?

A.
You can contact the global information agent, D.F. King & Co., Inc., at 48 Wall Street, New York, NY 10005 or 1-800-848-2998.

9



INDICATIVE TIMETABLE

You should take note of the dates and times set forth in the schedule below in connection with the U.S. offer. These dates and times may be changed by RFS Holdings in accordance with the terms and conditions of the U.S. offer, as described in this document. Unless otherwise noted, all times indicated are New York City time.

Event

  Calendar Date(1)
 
Publication of advertisement announcing the availability of the Dutch offer document   21 July 2007  
Commencement of the U.S. offer and the Dutch offer; Publication of summary advertisement of U.S. offer   23 July 2007  
Extraordinary General Meetings of Fortis shareholders (first call)   26 July 2007 (2)
Extraordinary General Meeting of Santander shareholders (first call)   26 July 2007 (3)
Extraordinary General Meeting of Santander shareholders (second call)   27 July 2007 (3)
Expected date of publication of interim results for the six months ending 30 June 2007 by ABN AMRO   30 July 2007  
Expected date of publication of interim results for the six months ending 30 June 2007 by RBS   3 August 2007  
Extraordinary General Meetings of Fortis shareholders (second call)   6 August 2007 (2)
Extraordinary General Meeting of RBS shareholders   10 August 2007  
End of initial U.S. offer period (deadline for tendering ABN AMRO ordinary shares and ABN AMRO ADSs into the U.S. offer)   5 October 2007 (4)
Announcement by RFS Holdings of whether or not the conditions to the U.S. offer have been satisfied or, to the extent legally permitted, waived   Within five Euronext Amsterdam trading days after the expiration of the U.S. offer period  
Settlement of the offers; Admission to trading of the RBS ordinary shares on the LSE and Euronext Amsterdam(5); Commencement of trading of RBS ADSs on the NYSE(5)   Within five Euronext Amsterdam trading days after the U.S. offer is declared unconditional  

Notes:

(1)
If you hold ABN AMRO ordinary shares or ABN AMRO ADSs through a financial intermediary, please be aware the financial intermediary may require you to make decisions and take actions in advance of the times and dates noted. You should contact your financial intermediary with respect to questions regarding the dates and times that may be applicable to you.

(2)
The Extraordinary General Meetings of Fortis shareholders are likely to occur at the second call, for which there will be no quorum requirement.

(3)
The Extraordinary General Meeting of Santander shareholders is likely to occur at the second call, for which there will be a lower quorum requirement.

(4)
This date will change if RFS Holdings extends the initial U.S. offer period in accordance with applicable law.

(5)
Subject to approval by the relevant listing authorities.

10



SUMMARY

Summary of the U.S. Offer

To understand the U.S. offer and the businesses of Fortis, RBS, Santander and ABN AMRO more fully, you should carefully read this entire document and any documents incorporated by reference into this document, including the sections under the headings "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors", as well as RBS's historical consolidated financial statements and notes thereto incorporated by reference into this document and ABN AMRO's historical consolidated financial statements and notes thereto incorporated by reference into this document.

The Banks

RFS Holdings (See page 143)

Strawinskylaan 3105
1077 ZX Amsterdam
The Netherlands

RFS Holdings was incorporated in the Netherlands on 4 May 2007 as a private company with limited liability, solely to make the offers and to effect the Transaction. If the offers are declared unconditional, RFS Holdings will be funded by Fortis, RBS and Santander in the following proportions:

Fortis: 33.8%

RBS: 38.3%

Santander: 27.9%

Following the offers having been declared unconditional, Fortis, RBS and Santander will have shareholdings in RFS Holdings that are equal to their proportionate funding commitments. The capital and income rights of each class of shares that will be issued to Fortis, RBS and Santander will be linked to the net assets and income of the ABN AMRO Businesses that each of the Banks or their respective affiliates will acquire following implementation of the restructuring of the ABN AMRO Group. Upon settlement of the offers, RFS Holdings will be a subsidiary of RBS, owned by the Banks. RFS Holdings will then also be consolidated by RBS. RBS will assume the lead responsibility for ensuring that ABN AMRO is managed in compliance with all applicable regulatory requirements from settlement of the offers.

Fortis (See page 145)

Fortis SA/NV   Fortis N.V.

Rue Royale 20/Koningsstraat 20
1000 Brussels
Belgium

 

Archimedeslaan 6
3584 BA Utrecht
The Netherlands

Telephone: 011 32 2 565 1141

 

Telephone: 011 31 30 226 62 22

Fortis is an international provider of banking and insurance products and services to personal, business and institutional customers. Fortis delivers a comprehensive package of financial products and services through its own distribution channels and via intermediaries and other partners.

Fortis ranks among the 20 largest financial institutions in Europe based on market capitalisation of €43.3 billion as at 31 December 2006, with total assets of €775 billion and shareholders' equity of €

11



20.6 billion. As at that date, Fortis had a total capital ratio of 11.1% and a Tier 1 capital ratio of 7.1%. With its sound solvency position, broad risk spread, experience in over 50 countries and the extensive expertise of its approximately 57,000 employees (full time equivalents) as of the end of 2006, Fortis combines an international presence with local flexibility to provide strong support to its customers.

Fortis SA/NV is a public company with limited liability (société anonyme/naamloze vennootschap) incorporated under Belgian law and Fortis N.V. is incorporated as a public limited liability company (naamloze vennootschap) under Dutch law.

RBS (See page 148)

RBS Gogarburn, PO Box 1000
Edinburgh EH12 1HQ
United Kingdom

Telephone: 011 44 131 556 8555

We are the holding company of one of the world's largest banking and financial services groups, with a market capitalisation of £62.8 billion at the end of 2006. Listed on the London Stock Exchange and headquartered in Edinburgh, we operate in the United Kingdom, the United States and internationally through our two principal subsidiaries, the Royal Bank and NatWest. Both the Royal Bank and NatWest are major U.K. clearing banks whose origins go back over 275 years. In the United States, our subsidiary Citizens Financial Group, Inc. was ranked the 10th largest (based on 31 December 2006 data) commercial banking organisation by deposits. We have a large and diversified customer base and provide a wide range of products and services to personal, commercial and large corporate and institutional customers.

We had total assets of £871.4 billion and shareholders' equity of £40.2 billion as at 31 December 2006. We are strongly capitalised with a total capital ratio of 11.7% and a Tier 1 capital ratio of 7.5% as at 31 December 2006.

Santander (See page 151)

Ciudad Grupo Santander
Avda. de Cantabria s/n
28660 Boadilla del Monte, Madrid
Spain

Telephone: 011 34 91 259 6520

Banco Santander, S.A. is the parent bank of the Santander Group, one of the world's largest banking groups by market value, with a market capitalisation of €88.4 billion at the end of 2006. Santander's current legal name is Banco Santander Central Hispano, S.A. On 23 June 2007, the general meeting of shareholders of Santander approved the change of Santander's legal name to Banco Santander, S.A., which will become effective when regulatory approval has been obtained. Headquartered in Madrid, Spain, the Santander Group operates in three geographic areas: (i) Continental Europe, where the main institutions are Santander, Banco Español de Crédito, Banco Banif, Santander Consumer Finance and Banco Santander Totta; (ii) the United Kingdom, where the main institution is Abbey National; and (iii) Latin America, mainly Brazil, Mexico, Chile, Argentina, Puerto Rico, Venezuela and Colombia. Santander is incorporated under, and governed by, the laws of the Kingdom of Spain.

The Santander Group's main business areas are retail banking, wholesale banking and asset management and insurance. As at 31 December 2006, Santander had, on a consolidated basis,

12



total assets of €833.9 billion and shareholders' equity of €40.1 billion. As at that date, Santander had, on a consolidated basis, a total capital ratio of 12.5% and a Tier 1 capital ratio of 7.4%.

ABN AMRO

Gustav Mahlerlaan 10
Amsterdam, 1082 PP
The Netherlands

Telephone: 011 31 20 383 68 21

ABN AMRO is a prominent international banking group offering a wide range of banking products and financial services on a global basis through a network of 4,532 offices and branches in 56 countries and territories as at 31 December 2006. ABN AMRO is one of the largest banking groups in the world. In addition to its leading position in the Netherlands, ABN AMRO also has regional business units in Europe (including Antonveneta in Italy), North America, Latin America and Asia. ABN AMRO also has diverse international advisory, capital markets and investment banking activities and its global asset management business manages approximately €193 billion in specialist mandates and mutual funds operating in 26 countries worldwide.

As at 31 December 2006, ABN AMRO had total assets of €987.1 billion and shareholders' equity of €23.6 billion. As at that date, ABN AMRO had a total capital ratio of 11.1% and a Tier 1 capital ratio of 8.5%.

Reasons for the Offers (See page 67)

ABN AMRO, the Banks believe, contains good businesses and customer franchises widely spread across a range of attractive markets. However, ABN AMRO has acknowledged the opportunity for it to deliver greater benefits for its customers and employees and generate growth and additional value for its shareholders by combining with a partner and selling parts of the ABN AMRO Group.

The Banks believe that they have a comprehensive strategic fit with ABN AMRO across its activities. The Banks expect that, following their acquisition of ABN AMRO, they will be able to create stronger businesses with enhanced market presence and growth prospects, leading to substantial value creation and benefits for shareholders, customers and employees. The Banks have the financial and management resources to invest in and grow the ABN AMRO Businesses and have proven records of growing their own businesses. Implementation of the Banks' respective measures to realise projected synergies is expected to enhance profitability and allow the Banks to invest further in customer-facing areas, as they have done in their own businesses.

The Banks believe that the inclusion within their groups of the ABN AMRO Businesses will create substantial value for shareholders through cost savings and revenue benefits.

The Banks also believe that the stronger businesses resulting from the Transaction will create sustainable platforms for increased job creation and enhanced opportunities for employees. The Banks' track records in this regard are excellent, demonstrating organic growth in employment built on strong business foundations.

Risk Factors (See page 43)

In deciding whether to tender your ABN AMRO ordinary shares or ABN AMRO ADSs, you should carefully consider the risks described under "Risk Factors".

13



The U.S. Offer (See page 94)

The U.S. Offer and the Dutch Offer (See page 94)

RFS Holdings, which was formed by the Banks, is offering to acquire all of the outstanding ABN AMRO ordinary shares and ABN AMRO ADSs through the U.S. offer and the Dutch offer. The U.S. offer and the Dutch offer have the same terms and completion of each offer is subject to the same conditions.

The U.S. offer is made pursuant to this document to all holders of ABN AMRO ordinary shares who are located in the United States and to all holders of ABN AMRO ADSs, wherever located.

The Dutch offer is made pursuant to the Dutch offer document to all holders of ABN AMRO ordinary shares who are located in the Netherlands and to all holders of ABN AMRO ordinary shares who are located outside of the Netherlands and the United States.

Holders of ABN AMRO ordinary shares who are located in the United States and holders of ABN AMRO ADSs, wherever located, are to participate in the U.S. offer, and holders of ABN AMRO ordinary shares who are not located in the United States are to participate in the Dutch offer. The offers are only being extended where the offers will comply with local laws and regulations which permit participation by holders of ABN AMRO ordinary shares and ABN AMRO ADSs.

Terms of the U.S. Offer (See page 95)

Upon the terms and subject to the conditions set forth in this document, RFS Holdings is offering to exchange for each ABN AMRO ordinary share and each ABN AMRO ADS validly tendered and not properly withdrawn:

€35.60 in cash; and

0.296 newly issued RBS ordinary shares.

The consideration set out above assumes the payment by ABN AMRO of an interim (cash or share) dividend in respect of 2007 in an amount not to exceed €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes). If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes) or any other (cash or share) dividend, distribution, share split or analogous transaction in respect of the ABN AMRO ordinary shares, including the ABN AMRO ordinary shares represented by ABN AMRO ADSs, and the record date for such (cash or share) dividend, distribution, share split or analogous transaction precedes the settlement of the offers, the consideration set out above may be reduced by an amount, in the case of an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share, equal to such excess (before deduction of any applicable withholding taxes), or otherwise by the full amount of any other such dividend, distribution, share split or analogous transaction (before deduction of any applicable withholding taxes). If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 of €0.55 or less per ABN AMRO ordinary share (before deduction of any applicable withholding taxes), and the record date for such dividend precedes the settlement of the offers, the consideration set out above will not be adjusted.

The cash consideration paid to tendering holders of ABN AMRO ADSs will be in U.S. dollars. The cash consideration payable in euros to which such tendering holders of ABN AMRO ADSs would otherwise be entitled pursuant to the terms of the U.S. offer will be converted by the U.S. exchange agent, net of fees and expenses, into U.S. dollars at the exchange rate obtainable on the spot market in London on the date the cash consideration is received by the U.S. exchange agent for delivery in respect of the tendered ABN AMRO ADSs.

14



Under no circumstances will interest be paid on the cash to be received, regardless of any delay in making the payment.

Conditions to the U.S. Offer (See page 97)

RFS Holdings will not be obliged to declare the U.S. offer unconditional and purchase any ABN AMRO ordinary shares or ABN AMRO ADSs validly tendered in the U.S. offer and not properly withdrawn:

(a)
if the ABN AMRO ordinary shares, including ABN AMRO ordinary shares represented by ABN AMRO ADSs, which have been validly tendered and not properly withdrawn in the offers on a combined basis, or which are otherwise held by RFS Holdings, do not represent at least 80% of the issued and outstanding ABN AMRO ordinary shares, calculated on a fully-diluted basis. This condition is referred to as the "minimum acceptance condition". Please see "The U.S. Offer—Conditions to the U.S. offer—(a) Minimum Acceptance Condition" for the method by which satisfaction of the minimum acceptance condition will be calculated;

(b)
if the Purchase and Sale Agreement, dated as of 22 April 2007, between Bank of America and ABN AMRO Bank in respect of ABN AMRO North America Holding Company, the holding company for LaSalle Bank Corporation, including the subsidiaries LaSalle N.A. and LaSalle Midwest N.A. (exclusive of any restatements of, or amendments to, such agreement), has not completed in accordance with its terms or if the proceeds of sale received on such completion are not held within the ABN AMRO Group;

(c)
if any material adverse change (as defined in "The U.S. Offer—Conditions to the U.S. Offer—(c) No Material Adverse Change") in respect of ABN AMRO, RFS Holdings, Fortis, RBS or Santander has occurred;

(d)
if any litigation or other legal, governmental or regulatory proceedings or investigations by a third party (including any regulatory body or governmental authority) has or have been instituted or threatened or are continuing or if any judgment, settlement, decree or other agreement relating to litigation or other legal, governmental or regulatory proceedings or investigations instituted by a third party (including any regulatory body or governmental authority) is in effect, which might, individually or in the aggregate, reasonably be expected to materially and adversely affect ABN AMRO, RFS Holdings, Fortis, RBS, Santander or any of their respective affiliates;

(e)
if an order, stay, judgment or decree is issued by any court, arbitral tribunal, government, governmental authority or other regulatory or administrative authority and is in effect, or any statute, rule, regulation, governmental order or injunction shall have been proposed, enacted, enforced or deemed applicable to the offers, any of which restrains, prohibits or delays or is reasonably likely to restrain, prohibit or delay consummation of the offers in any material respect, or if prior to the expiration of the U.S. offer period: (i) a notification has been received from the AFM that the Dutch offer has been made in conflict with any of the stipulations of Chapter IIa of the 1995 Securities Act, within the meaning of Article 32(a) 1995 Securities Decree (or any of its successor provisions) in which case the securities institutions would not be allowed to co-operate with the settlement of the Dutch offer; (ii) trading in the ABN AMRO ordinary shares on Euronext Amsterdam has been permanently suspended as a result of a listing measure taken by Euronext Amsterdam in accordance with Article 2706/1 of Euronext Rulebook II; or (iii) any of RFS Holdings, Fortis, RBS or Santander receives notification from its home country regulator that there is likely to be a material and adverse change in the supervisory, reporting or regulatory capital arrangements that will apply to ABN AMRO, Fortis, RBS, Santander or, to the extent applicable, RFS Holdings, as the case may be;

15


(f)
if all authorisations and consents in connection with the offers have not been obtained or relevant waiting periods have not expired or all mandatory or appropriate regulatory approvals from domestic and international regulatory authorities, insofar as reasonably required in connection with the offers have not been obtained;

(g)
if the European Commission has not declared the concentration or concentrations resulting from the Transaction, including the concentrations following from the ultimate acquisition by each of the Banks of their respective parts of ABN AMRO's assets, compatible with the common market or has not otherwise granted its approval for the Transaction or if the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in relation to the Transaction has not expired or been terminated or if other competent antitrust or competition authorities have not granted approvals reasonably deemed necessary;

(h)
if the registration statement containing the U.S. prospectus filed with the SEC is not declared effective by the SEC or if any stop order has been issued or proceedings for suspension of the effectiveness of the registration statement containing the U.S. prospectus have been initiated by the SEC;

(i)
if confirmation has not been obtained that the RBS ordinary shares to be issued in the offers will be admitted to:

(i)
the Official List maintained by the FSA;

(ii)
trading on the LSE's main market for listed securities; and

(iii)
trading and listing on Euronext Amsterdam,

      no later than the date of settlement of the offers;

(j)
if, to the extent required, the general meetings of shareholders of each of Fortis and RBS have not passed the resolutions to approve the Transaction or if the general meetings of shareholders of each of Fortis, RBS and Santander have not passed resolutions to approve the capital increase or, as the case may be, the issuances of securities described in "Source and Amount of Funds";

(k)
if, other than the Bank of America Agreement, ABN AMRO or any of its subsidiaries or subsidiary undertakings has entered into any agreement, or completed any transaction, involving the sale, repurchase, redemption or issue by ABN AMRO or its affiliates to third parties of any shares in ABN AMRO's own share capital (or securities convertible or exchangeable into shares or options to subscribe for any of the foregoing (other than pursuant to equity incentive plans operated in the normal course of business)), or involving the acquisition of material assets or the sale or transfer of a material part of its business or assets, including but not limited to any or all of the assets or businesses set out under "Background to and Reasons for the Offers—Reasons for the Offers—Businesses to be Acquired" whether by way of any legal merger, legal demerger, liquidation or any other transaction with similar effect, or entered into, varied or terminated any material contract outside the ordinary course of business or given any undertaking to do any of the foregoing, or if ABN AMRO has approved, declared or paid a dividend outside of the normal course of its business or inconsistent with past practice; or

(l)
if any public announcement has been made indicating that a third party is preparing or is to make an offer (or any amendment to, or revision of, an existing or proposed offer) for the ABN AMRO ordinary shares or ABN AMRO ADSs, or if Barclays has announced or is to make (i) any offer under terms and conditions different from the terms and conditions announced by it on 23 April 2007 or (ii) any amendment to the terms and conditions of an

16


    existing offer such that the terms and conditions of that offer are different from the terms and conditions announced on 23 April 2007.

The conditions to the U.S. offer are for the benefit of RFS Holdings and the Banks and, to the extent legally permitted, may be waived by RFS Holdings at any time. The conditions to the Dutch offer are the same as the conditions to the U.S. Offer. RFS Holdings will not waive a condition in one offer unless it waives the same condition in the other offer.

Condition (e)(i) above may not be waived by RFS Holdings except where the notification referred to in that condition has been or will be revoked by the AFM or if such notification is overruled by a court decision or after consultation with the AFM. Notice of any such waiver will be given in the manner prescribed by applicable law.

Subject to the U.S. tender offer rules (including U.S. tender offer rules that require that material changes of a condition be promptly disseminated to shareholders in a manner reasonably designed to inform them of such changes) and the Dutch tender offer regulations, RFS Holdings reserves the right, at any time, and, to the extent legally permitted, to waive any of the conditions to the U.S. offer in any respect (including the minimum acceptance condition), by giving oral or written notice of the waiver to the U.S. exchange agent and the Dutch exchange agent and by making a public announcement in accordance with the procedures outlined in "The U.S. Offer—Expiration Date; Extension of the U.S. Offer". For details of the impact that waiving the minimum acceptance condition may have on holders of ABN AMRO ordinary shares and ADSs, see "Effects of the Offers and Post-Closing Restructuring".

Settlement of the U.S. Offer (See page 109)

If the conditions referred to under "The U.S. Offer—Conditions to the U.S. Offer" have been satisfied or, to the extent legally permitted, waived, RBS ordinary shares and cash will be issued and paid to holders of ABN AMRO ordinary shares and ABN AMRO ADSs whose ABN AMRO ordinary shares or ABN AMRO ADSs are accepted for exchange within five Euronext Amsterdam trading days thereafter. In the event of a subsequent offering period, if any, RBS ordinary shares and cash will be issued and paid to holders of ABN AMRO ordinary shares and ABN AMRO ADSs whose ABN AMRO ordinary shares or ABN AMRO ADSs are accepted for exchange during that subsequent offering period promptly and, in any event, within five Euronext Amsterdam trading days after the ABN AMRO ordinary shares and ABN AMRO ADSs have been tendered.

The cash consideration payable in euros to which tendering holders of ABN AMRO ADSs would otherwise be entitled pursuant to the terms of the U.S. offer will be converted by the U.S. exchange agent, net of fees and expenses, into U.S. dollars at the exchange rate obtainable on the spot market in London on the date the cash consideration is received by the U.S. exchange agent for delivery in respect of such ABN AMRO ADSs.

Any 1.5% SDRT charge which arises in connection with the delivery of RBS ordinary shares to an ABN AMRO shareholder or holder of ABN AMRO ADSs whether in certificated or uncertificated form, will be required to be borne by the ABN AMRO shareholder or ADS holder; however, no such SDRT should generally arise in respect of the delivery of RBS ordinary shares into a CREST account designated by such ABN AMRO shareholder or ADS holder, except in the case of a CREST account of, or of a nominee for, certain providers of clearance services and depository receipt facilities (which would include the CREST account of Euroclear Nederland and the CREST account of The Bank of New York, as RBS ADS depositary or their nominees).

For tax consequences, including SDRT payable under certain circumstances see "Material U.S. Federal Income Tax, Dutch Tax and U.K. Tax Consequences—Certain U.K. Tax Consequences".

17



Source and Amount of Funds (See page 139)

Assuming all issued and outstanding ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) are tendered into the offers, RBS would be obliged to issue 556,143,700 RBS ordinary shares (assuming the number of issued and outstanding ABN AMRO ordinary shares is as set out in ABN AMRO's Form 6-K dated 23 April 2007 and exercise of all ABN AMRO options based on information as set out in the ABN AMRO 2006 Annual Report on Form 20-F) to ABN AMRO shareholders in satisfaction of the obligations of RFS Holdings with regard to the share element of the offer consideration, and, in addition, RFS Holdings would be obliged to pay aggregate cash consideration of €66 billion. The Banks propose to finance the cash portion of the consideration payable by RFS Holdings through a combination of rights issues, issues of debt and preferred securities and internal resources. Merrill Lynch and certain other financial institutions have agreed to underwrite any such rights issues and certain issues of debt or preferred securities.

Fortis intends to finance its portion of the consideration, of approximately €24 billion, primarily from net proceeds of an equity offering in an amount of up to €13 billion and the proceeds of the placement of conditional capital exchangeable notes ("CCENs") of €2 billion. The remaining part of the consideration to be funded by Fortis will be financed from the proceeds of a combination of (i) the issuance of various securities; (ii) the sale of specific non-core assets of Fortis that may complete prior to the completion of the offers; and (iii) other internal financial resources including but not limited to cash on Fortis's balance sheet.

RBS, whose portion of the cash consideration payable on settlement of the offers is €22 billion (assuming the number of issued and outstanding ABN AMRO Ordinary Shares is as set out in ABN AMRO's Form 6-K dated 23 April 2007 and exercise of all ABN AMRO options based on information as set out in the ABN AMRO 2006 Annual Report on Form 20-F) plans to issue preferred securities and debt securities, and to utilise internal resources to finance the remainder of its portion of the cash consideration not covered by the proceeds of the securities it issues.

Santander intends to finance its portion of the consideration to be paid in the offers, which is approximately €19.9 billion, by raising approximately €9.0 billion via a rights issue and the issuance of mandatorily convertible securities and funding the remaining amount of approximately €10.9 billion through internal financial resources, including asset disposals.

Regulatory Matters (See page 101)

As described above, RFS Holdings will not be obliged to purchase any tendered ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the U.S. offer if all authorisations and consents in connection with the offers have not been obtained or relevant waiting periods have not expired or all mandatory or appropriate regulatory approvals of domestic and international regulatory authorities, insofar as reasonably required in connection with the offers have been obtained.

RFS Holdings and the Banks have made all necessary filings for the approval of the change of control of ABN AMRO with their home regulators, in so far as these are required, and have made substantially all other applications for regulatory change of control approval. Approval has been requested from, amongst others, the FSA, the Dutch Central Bank (De Nederlandsche Bank), the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores), and the Belgian Banking, Finance and Insurance Commission (Commission Bancaire, Financière et des Assurances).

In addition, in order for the conditions to the U.S. offer to have been satisfied, RFS Holdings and/or the Banks must make certain competition and antitrust filings with, and obtain approvals from, certain regulatory authorities. In particular, competition consents or confirmations are being sought from, among others, the European Commission under the European Union Merger Regulation, the

18


Federal Trade Commission, the antitrust division of the U.S. Department of Justice and CADE, the Brazilian antitrust authority.

While RFS Holdings and the Banks have made, and will continue to make, significant efforts to obtain requisite regulatory approvals, there can be no assurances regarding the timing of the approvals, their ability to obtain the approvals on satisfactory terms or the absence of litigation challenging these approvals. There can likewise be no assurance that U.S. federal or state and non-U.S. regulatory authorities will not attempt to challenge the combination on antitrust grounds or for other reasons, or, if a challenge is made, as to the results of the challenge.

In certain jurisdictions where ABN AMRO has operations, the local regulatory regime imposes a statutory timeframe within which the relevant regulator must communicate its decision on the application for regulatory change of control consent. In many instances, the timeframe imposed on the regulator is shorter than the initial offer period. In others, there is no such timeframe and RFS Holdings cannot, therefore, be certain as to when consent might be granted (if at all). Whilst certain regulators have indicated their willingness to provide as much assistance as possible in reviewing the relevant application for regulatory change of control consent, there can be no guarantee that such consents will be granted within the initial offer period or at all.

Listing of RBS Ordinary Shares (See page 217)

The RBS ADS Facility (See page 180)

Application will be made to the FSA for the RBS ordinary shares issued in connection with the offers to be admitted to the Official List maintained by the FSA pursuant to the rules contained in Part VI of the U.K. Financial Services and Markets Act 2000 and to the LSE for the newly issued RBS ordinary shares to be admitted to trading on the LSE's main market for listed securities. It is expected that listing will become effective and dealings, for normal settlement, on the LSE will begin shortly following the date on which RFS Holdings announces that all conditions to the offers have been satisfied or, to the extent legally permitted, waived. The RBS ordinary shares issued pursuant to the offers will, when issued and fully paid, rank pari passu in all respects with the existing RBS ordinary shares, including the right to receive all dividends and other cash payments (if any) declared or paid by RBS by reference to a record date on or after the date of issue of the RBS ordinary shares issued pursuant to the offers.

In addition, prior to completion of the U.S. offer, we intend to list the RBS ordinary shares on Euronext Amsterdam.

Prior to completion of the U.S. offer, we also intend to establish an ADS facility in the United States and apply to list the RBS ADSs on the NYSE. Holders of ABN AMRO ADSs who receive RBS ordinary shares pursuant to the U.S. offer will be able to elect to deposit such RBS ordinary shares with The Bank of New York, as RBS ADS depositary, following completion of the U.S. offer. The RBS ADS depositary will then issue RBS ADSs to such holders based on the ratio of one RBS ADS for every one RBS ordinary share.

Following completion of the U.S. offer, holders of ABN AMRO ordinary shares may deposit the RBS ordinary shares they receive in the U.S. offer in the RBS ADS facility by contacting the RBS ADS depositary and furnishing such documentation and paying such fees and expenses as required under the RBS ADS deposit agreement.

However, upon any such deposit, the depositor will be required to pay the 1.5% U.K. stamp duty reserve tax on the value of the RBS ordinary shares so deposited, as well as any other taxes, governmental charges and fees payable in connection with such deposit, including the fees of the depositary for the execution and delivery of such RBS ADSs. The rights of holders of RBS ADSs will

19



be governed by the terms of the RBS ADS deposit agreement among the RBS ADS depositary, RBS and the owners and holders of RBS ADSs.

Effects of the Offers and Post-Closing Restructuring (See page 131)

If RFS Holdings, acting alone or with one or more group companies, acquires 95% or more of the outstanding issued capital of ABN AMRO, it intends to acquire the remaining issued capital of ABN AMRO in accordance with the squeeze-out proceedings prescribed by the Dutch Civil Code or other legal means. Furthermore, if RFS Holdings, acting alone or with one or more group companies, acquires 95% or more of the issued capital of and the voting rights attached to any class of shares of ABN AMRO after the act implementating the squeeze-out provisions of European Union Takeover Directive 2004/25/EC comes into effect, RFS Holdings will have the right to initiate squeeze-out proceedings with respect to shares of that class not tendered and not otherwise held by RFS Holdings, acting alone or with one or more group companies, or ABN AMRO. In case of a squeeze-out, ABN AMRO ordinary shares held by minority ABN AMRO shareholders will be acquired only for cash, and a Dutch court will determine the price to be paid for the ABN AMRO ordinary shares, which may be lower than the cash equivalent of the consideration offered in the U.S. offer. Upon payment of the amount required into a prescribed bank account, the ABN AMRO ordinary shares held by the minority shareholders will be transferred to RFS Holdings by operation of Dutch law.

If RFS Holdings acquires less than 95% of ABN AMRO's outstanding issued share capital (or, after implementation of European Union Takeover Directive 2004/25/EC, less than 95% of the issued capital of and the voting rights attached to any class of shares of ABN AMRO), RFS Holdings will not be able to squeeze out minority shareholders in accordance with the Dutch Civil Code. However, it may use other legal means to obtain 100% of ABN AMRO ordinary shares, including engaging in one or more corporate restructuring transactions, such as a merger pursuant to article 2:309 of the Dutch Civil Code, liquidation, transfer of assets, conversion of ABN AMRO into a different corporate form, alteration of ABN AMRO's capital structure and/or purchases of ABN AMRO ordinary shares from minority ABN AMRO shareholders.

RFS Holdings intends to change ABN AMRO's dividend policy if the offers are completed and to cause ABN AMRO to stop paying regular cash dividends after the completion of the offers for the foreseeable future, subject to any applicable legal requirements. The amount and form of any one-time distribution will be determined by RFS Holdings from time to time as appropriate.

In the event that RFS Holdings acquires control of ABN AMRO, RFS Holdings also intends to request that ABN AMRO seek the delisting of the ABN AMRO ordinary shares from Euronext Amsterdam and the ABN AMRO ADSs from the NYSE. Following delisting of the ABN AMRO ADSs from the NYSE, RFS Holdings intends to cause ABN AMRO to file with the SEC to request that ABN AMRO's reporting obligations under the Exchange Act be terminated. In addition, RFS Holdings intends to cause ABN AMRO to terminate the deposit agreement relating to the ABN AMRO ADSs.

Accounting Treatment (See page 115)

The acquisition of the ABN AMRO ordinary shares and ABN AMRO ADSs will be accounted for by RBS using the purchase method under both IFRS and U.S. GAAP.

Appraisal Rights (See page 116)

Neither holders of ABN AMRO ordinary shares nor holders of ABN AMRO ADSs are entitled under Dutch law or otherwise to appraisal rights with respect to the U.S. offer. However, if RFS Holdings acquires 95% or more of the outstanding issued capital of ABN AMRO or 95% or more of the

20



issued capital and voting rights attached thereto of any class of shares of ABN AMRO after the act implementing the squeeze-out provisions of European Union Takeover Directive 2004/25/EC has come into force, it intends to acquire the remaining outstanding ABN AMRO ordinary shares in accordance with the squeeze-out proceedings prescribed by the Dutch Civil Code. In those proceedings, ABN AMRO ordinary shares held by minority ABN AMRO shareholders will be acquired only for cash, and a Dutch court will determine the price to be paid for the ABN AMRO ordinary shares, which may be lower than the cash equivalent of the consideration offered in the U.S. offer.

Material U.S. Federal Income Tax, Dutch Tax, and U.K. Tax Consequences (See page 122)

The exchange of ABN AMRO ordinary shares or ABN AMRO ADSs representing ABN AMRO ordinary shares for a mixture of cash and RBS ordinary shares will be a taxable exchange for U.S. federal income tax purposes. U.S. holders of ABN AMRO ordinary shares and ABN AMRO ADSs whose ABN AMRO ordinary shares or ABN AMRO ADSs are exchanged in the U.S. offer will generally recognise gain or loss on the exchange of ABN AMRO ordinary shares or ABN AMRO ADSs for cash and RBS ordinary shares equal to the difference between (x) the sum of the fair market value of the RBS ordinary shares received pursuant to the U.S. offer (including cash received in lieu of fractional entitlements of RBS ordinary shares) and the U.S. dollar value of any cash consideration received, and (y) the U.S. holder's adjusted tax basis in the ABN AMRO ordinary shares or ABN AMRO ADSs. See "Material U.S. Federal Income Tax, Dutch Tax and U.K. Tax Consequences—Material U.S. Federal Tax Considerations".

U.S. holders of ABN AMRO ordinary shares or ABN AMRO ADSs who are neither resident nor ordinarily resident in the U.K. for U.K. tax purposes will not generally be subject to U.K. taxation in respect of the disposal of their ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the U.S. offer assuming they do not carry on a trade, profession or vocation in the U.K. through a branch or agency or permanent establishment in connection with which their ABN AMRO ordinary shares or ABN AMRO ADSs are or have been used, held or acquired. See "Material U.S. Federal Income Tax, Dutch tax and U.K. Tax Consequences—Certain U.K. Tax Considerations."

U.S. holders of ABN AMRO ordinary shares or ABN AMRO ADSs who realise capital gains pursuant to the U.S. offer will generally not be subject to Dutch taxation on such capital gains unless the capital gains are attributable to an enterprise or part thereof that is either effectively managed in the Netherlands or carried on through a permanent establishment or a permanent representative in the Netherlands. However, other exceptions may apply that may result in U.S. holders becoming subject to Dutch taxation on the capital gains concerned. See "Material U.S. Federal Income Tax, Dutch Tax and U.K. Tax Consequences—Certain Dutch Tax Considerations".

Businesses to be Acquired (See page 68)

Upon successful completion of the offers, the ABN AMRO Businesses are to be acquired by RFS Holdings, and an orderly reorganisation is expected to result in the following ownership:

Fortis: Business Unit Netherlands (excluding former Dutch wholesale clients, Interbank and DMC Consumer Finance), Business Unit Private Clients globally (excluding Latin America) and Business Unit Asset Management globally

RBS: Continuing businesses of Business Unit North America following the sale of LaSalle, Business Unit Global Clients and wholesale clients in the Netherlands (including former Dutch wholesale clients) and Latin America (excluding Brazil), Business Unit Asia (excluding Saudi Hollandi) and Business Unit Europe (excluding Antonveneta)

Santander: Business Unit Latin America (excluding wholesale clients outside Brazil), Antonveneta, Interbank and DMC Consumer Finance

21


Shared Assets: Head Office and central functions, private equity portfolio, stakes in Capitalia and Saudi Hollandi, and Prime Bank

The split of businesses shown above is based on the Business Units as defined in ABN AMRO's Annual Report and Accounts for the year ended 31 December 2006.

Comparison of Shareholders' Rights (See page 188)

Former holders of ABN AMRO ordinary shares will have different rights once they become holders of RBS ordinary shares. The rights of RBS shareholders are governed by U.K. law and our articles of association, while the rights of ABN AMRO shareholders are governed by Book 2 of the Dutch Civil Code, ABN AMRO's articles of association, applicable listing rules, the Dutch Corporate Governance Code and certain other Dutch rules and legislation. The differences between the governing documents of RBS and ABN AMRO and U.K. and Dutch law are described in more detail under "Comparison of Shareholders' Rights". Holders of RBS ADSs will not be treated as holders of RBS ordinary shares and will not have the same rights as holders of RBS ordinary shares. The depositary for RBS ADSs will be the holder of the RBS ordinary shares underlying the RBS ADSs. Holders of RBS ADSs will have rights as holders of RBS ADSs, which will be set out in the RBS ADS deposit agreement, which will be governed by New York law. See "Description of RBS American Depositary Shares".

Interests of RFS Holdings, Fortis, RBS and Santander and their Directors and Executive Officers (See page 207)

The ownership of each of RFS Holdings, Fortis, RBS and Santander of ABN AMRO ordinary shares as at 16 July 2007, is set out in the section entitled "Interests of RFS Holdings, Fortis, RBS and Santander and their Directors and Executive Officers." The section also describes the shareholdings of each of our directors and officers in RBS ordinary shares as at 16 July 2007.

The U.S. Exchange Agent and the Dutch Exchange Agent (See page 224)

The Bank of New York has been appointed U.S. exchange agent in connection with the U.S. offer. Fortis Bank (Nederland) N.V. has been appointed Dutch exchange agent in connection with the offers.

Additional Information (See page 221)

If you have questions or want copies of additional documents, you may contact the global information agent:

D. F. King & Co., Inc.
48 Wall Street
New York, NY 10005
1-800-848-2998

22



SUMMARY SELECTED HISTORICAL CONDENSED CONSOLIDATED FINANCIAL DATA OF RBS

Presented below are RBS's summary selected historical condensed consolidated financial data as of and for each of the years in the five-year period ended 31 December 2006. The data are derived from, and should be read together with RBS's audited consolidated financial statements included in, its Annual Report on Form 20-F for the year ended 31 December 2006, which is incorporated by reference into this document.

The summary selected historical condensed consolidated financial data presented below as of and for the years ended 31 December 2006, 2005 and 2004 were prepared in accordance with IFRS. The financial data presented below as of and for the years ended 31 December 2003 and 2002 were prepared in accordance with U.K. GAAP. In addition, certain financial data prepared in accordance with U.S. GAAP are presented for each of the years in the five-year period ended 31 December 2006.

Unless otherwise noted, the per share data set out below is as published and has not been restated to reflect the two for one bonus share issue in May 2007.

23


 
  As of and for the
year ended 31 December

 
  2006
  2005
  2004
 
  (millions, except per share data,
percentages and ratios)

 
  ($)(1)

  (£)

  (£)

  (£)

Amounts in accordance with IFRS                

Summary condensed consolidated income statement

 

 

 

 

 

 

 

 
Net interest income   20,753   10,596   9,918   9,071
Non-interest income(2)   34,091   17,406   15,984   14,320
Total income   54,844   28,002   25,902   23,391
Operating expenses(3)(4)(5)   24,443   12,480   11,946   10,362
Profit before other operating charges and impairment losses   30,401   15,522   13,956   13,029
Insurance net claims   8,731   4,458   4,313   4,260
Impairment losses   3,678   1,878   1,707   1,485
Operating profit before tax   17,992   9,186   7,936   7,284
Tax   5,267   2,689   2,378   1,995
Profit for the year   12,725   6,497   5,558   5,289
Profit attributable to:                
  Minority interests   204   104   57   177
  Preference shareholders   374   191   109   256
  Ordinary shareholders   12,147   6,202   5,392   4,856

Summary condensed consolidated balance sheet

 

 

 

 

 

 

 

 
Loans and advances   1,076,249   549,499   487,813   408,324
Debt securities and equity shares   275,683   140,755   130,266   98,631
Derivatives and settlement balances   243,074   124,106   101,668   23,482
Other assets   111,781   57,072   57,080   57,685
Total assets   1,706,787   871,432   776,827   588,122
Shareholders' equity   78,789   40,227   35,435   33,905
Minority interests   10,308   5,263   2,109   3,492
Subordinated liabilities   54,163   27,654   28,274   20,366
Deposits   1,011,352   516,365   453,274   383,198
Derivatives, settlement balances and short positions   328,238   167,588   140,426   51,866
Other liabilities   223,937   114,335   117,309   95,295
Total liabilities and equity   1,706,787   871,432   776,827   588,122

24


 
  As of and for the
year ended 31 December

 
 
  2006
  2005
  2004
 
 
  (millions, except per share data,
percentages and ratios)

 
 
  (£)

  (£)

  (£)

 
Other financial data              
Earnings per ordinary share (pence)   194.7   169.4   157.4  
Earnings per ordinary share—adjusted (pence)(6)   64.9   56.5   52.5  
Diluted earnings per ordinary share (pence)(7)   193.2   168.3   155.9  
Diluted earnings per ordinary share—adjusted (pence)(6)(7)   64.4   56.1   52.0  
Dividends per ordinary share (pence)   77.3   60.6   52.5  
Dividends per ordinary share—adjusted (pence)(6)   25.8   20.2   17.5  
Dividend payout ratio(8)   46 % 43 % 38 %
Share price per ordinary share at year end   19.93   17.55   17.52  
Share price per ordinary share at year end—
adjusted (£)(6)
  6.64   5.85   5.84  
Market capitalisation at year end (£ billion)   62.8   56.1   55.6  
Net asset value per ordinary share (£)   11.59   10.14   9.26  
Net asset value per ordinary share—adjusted (£)(6)   3.86   3.38   3.09  
Return on average total assets(9)   0.74 % 0.73 % 0.94 %
Return on average ordinary shareholders' equity(10)   18.5 % 17.5 % 18.3 %
Average shareholders' equity as a percentage of average total assets   4.4 % 4.5 % 5.9 %
Tier 1 capital ratio   7.5 % 7.6 % 7.0 %
Total capital ratio   11.7 % 11.7 % 11.7 %
Ratio of earnings to combined fixed charges and preference share dividends(11)              
  —including interest on deposits   1.62   1.67   1.88  
  —excluding interest on deposits   6.12   6.05   7.43  
Ratio of earnings to fixed charges only(11)              
  —including interest on deposits   1.64   1.69   1.94  
  —excluding interest on deposits   6.87   6.50   9.70  

Notes:

(1)
The U.S. dollar financial information has been provided for convenience and has been translated from sterling at a rate of £1.00 to U.S.$1.9586, being the Noon Buying Rate on 29 December 2006 (the last business day in 2006).

(2)
Includes gain on sale of strategic investments of £333 million in 2005.

(3)
Includes loss on sale of subsidiaries of £93 million in 2005.

(4)
Includes integration expenditure of £134 million for the year ended 31 December 2006 (2005: £458 million; 2004: £520 million).

(5)
Includes purchased intangibles amortisation of £94 million for the year ended 31 December 2006 (2005: £97 million; 2004: £45 million).

(6)
Adjusted to reflect the two for one bonus share issue in May 2007.

(7)
All the convertible preference shares have a dilutive effect in 2006 and 2005 and as such have been included in the computation of diluted earnings per share. In 2004 their effect was anti-dilutive.

(8)
Dividend payout ratio represents the interim dividend paid and final dividend proposed as a percentage of profit attributable to ordinary shareholders.

(9)
Return on average total assets represents profit attributable to ordinary shareholders as a percentage of average total assets.

(10)
Return on average ordinary shareholders' equity represents profit attributable to ordinary shareholders expressed as a percentage of average ordinary shareholders' equity.

(11)
For this purpose, earnings consist of income before tax and minority interests, plus fixed charges less the unremitted income of associated undertakings (share of profits less dividends received). Fixed charges consist of total interest expense, including or excluding interest on deposits and debt securities in issue, as appropriate, and the proportion of rental expense deemed representative of the interest factor (one third of total rental expenses).

25


 
  As of and for the year ended 31 December
 
 
  2003
  2002
 
 
  (millions, except per share data, percentages and ratios)

 
 
  (£)

  (£)

 
Amounts in accordance with U.K. GAAP          

Summary condensed consolidated profit and loss account

 

 

 

 

 
Net interest income   8,301   7,849  
Non-interest income   10,980   9,167  
Total income   19,281   17,016  
Operating expenses excluding goodwill amortisation(1)   8,753   8,738  
Goodwill amortisation   763   731  
General insurance claims (net)   2,195   1,350  
Profit before provisions   7,570   6,197  
Provisions for bad and doubtful debts   1,461   1,286  
Amounts written off fixed asset investments   33   59  
Profit on ordinary activities before tax   6,076   4,852  
Tax on profit on ordinary activities   1,888   1,582  
Profit on ordinary activities after tax   4,188   3,270  
Minority interests (including non-equity)   210   133  
Preference dividends—non-equity   261   305  
Additional Value Shares dividend—non-equity   1,463   798  
Profit attributable to ordinary shareholders   2,254   2,034  

Summary condensed consolidated balance sheet

 

 

 

 

 
Loans and advances to banks (net of provisions)   51,891   44,296  
Loans and advances to customers (net of provisions)   252,531   223,324  
Debt securities and equity shares   82,249   68,928  
Intangible fixed assets   13,131   12,697  
Other assets   54,626   61,793  
Total assets   454,428   411,038  
Called up share capital   769   754  
Share premium account   8,175   7,608  
Other reserves   11,307   11,922  
Profit and loss account   5,847   4,787  
Shareholders' funds   26,098   25,071  
Minority interests   2,713   1,839  
Subordinated liabilities   16,998   13,965  
Deposits by banks   67,323   54,720  
Customer accounts   236,963   219,161  
Debt securities in issue   41,016   33,938  
Other liabilities   63,317   62,344  
Total liabilities   454,428   411,038  
           

26



Other financial data

 

 

 

 

 
Earnings per ordinary share (pence)   76.9   70.6  
Earnings per ordinary share—adjusted (pence)(6)   25.6   23.5  
Diluted earnings per ordinary share (pence)(2)   76.3   69.6  
Diluted earnings per ordinary share—adjusted (pence)(2)(6)   25.4   23.2  
Dividends per ordinary share (pence)   50.3   43.7  
Dividends per ordinary share—adjusted (pence)(6)   16.8   14.6  
Dividend payout ratio   66.1 % 62.3 %
Share price per ordinary share at period end (£)   16.46   14.88  
Share price per ordinary share at period end—adjusted (£)(6)   5.49   4.96  
Market capitalisation at period end (£ billion)   48.8   43.2  
Net asset value per ordinary share (£)   7.82   7.43  
Net asset value per ordinary share—adjusted (£)(6)   2.61   2.48  
Return on average total assets(3)   0.51 % 0.52 %
Return on average equity shareholders' funds(4)   9.8 % 8.8 %
Average shareholders' equity as a percentage of average total assets   5.9 % 6.8 %
Tier 1—capital ratio   7.4 % 7.3 %
Total—capital ratio   11.8 % 11.7 %
Ratio of earnings to combined fixed charges and preference share dividends(5)          
  —including interest on deposits   1.95   1.74  
  —excluding interest on deposits   7.08   5.20  
Ratio of earnings to fixed charges only(5)          
  —including interest on deposits   2.04   1.83  
  —excluding interest on deposits   9.73   7.24  

Notes:

(1)
Includes integration expenditure of £229 million for the year ended 31 December 2003 (2002: £957 million).

(2)
Convertible preference shares have not been included in the computation of diluted earnings per share as their effect was anti-dilutive.

(3)
Return on average total assets represents profit attributable to ordinary shareholders as a percentage of average total assets.

(4)
Return on average equity shareholders' funds represents profit attributable to ordinary shareholders expressed as a percentage of average equity shareholders' funds.

(5)
For this purpose, earnings consist of income before tax and minority interests, plus fixed charges less the unremitted income of associated undertakings (share of profits less dividends received). Fixed charges consist of total interest expense, including or excluding interest on deposits and debt securities in issue, as appropriate, and the proportion of rental expense deemed representative of the interest factor (one third of total rental expenses).

(6)
Adjusted to reflect the two for one bonus share issue in May 2007.

27


 
  As of and for the year ended 31 December
 
 
  2006
  2005
  2004
  2003
  2002
 
 
  (millions, except per share data, percentages and ratios)

 
 
  ($)(1)

  (£)

  (£)

  (£)

  (£)

  (£)

 
Amounts in accordance with U.S. GAAP                          

Net income available for ordinary shareholders

 

10,655

 

5,440

 

4,475

 

3,909

 

2,564

 

3,108

 
Shareholders' equity   78,495   40,077   40,229   36,191   31,665   28,177  
Total assets   1,509,718   770,815   700,386   631,100   488,046   430,573  

Other financial data

 

 

 

 

 

 

 

 

 

 

 

 

 
Earnings per ordinary share (pence)       170.8   140.6   126.7   87.5   107.9  
Earnings per ordinary share—adjusted (pence)(2)       56.9   46.9   42.2   29.2   36.0  
Diluted earnings per ordinary share (pence)(3)       169.7   140.0   125.9   86.8   106.3  
Diluted earnings per ordinary share—adjusted (pence)(2)(3)       56.6   46.7   42.0   28.9   35.4  
Dividends per ordinary share (pence)       77.3   60.6   52.5   45.6   39.7  
Dividends per ordinary share—adjusted (pence)(2)       25.8   20.2   17.5   15.2   13.2  
Dividend payout ratio       45.4 % 43.1 % 40.6 % 51.9 % 36.7 %
Return on average total assets(4)       0.73 % 0.64 % 0.70 % 0.55 % 0.75 %
Return on average ordinary shareholders' equity(5)       16.0 % 13.4 % 13.2 % 9.5 % 12.1 %
Average shareholders' equity as a percentage of average total assets       5.3 % 5.4 % 6.3 % 6.5 % 7.3 %
Ratio of earnings to combined fixed charges and preference share dividends(6)                          
  —including interest on deposits       1.53   1.55   1.73   1.98   1.97  
  —excluding interest on deposits       5.39   5.17   6.34   7.24   6.49  
Ratio of earnings to combined fixed charges only(6)                          
  —including interest on deposits       1.57   1.60   1.79   2.07   2.07  
  —excluding interest on deposits       6.55   6.56   8.28   9.96   9.03  

Notes:

(1)
The dollar information included above has been converted from sterling at a rate of U.S.$1.9586, the Noon Buying Rate on 29 December 2006.

(2)
Adjusted to reflect the two for one bonus share issue in May 2007.

(3)
All convertible preference shares have a dilutive effect in 2006 and 2005 and as such have been included in the computation of diluted earnings per share. In prior years their effect was anti-dilutive.

28


(4)
Return on average total assets represents profit attributable to ordinary shareholders as a percentage of average total assets.

(5)
Return on average ordinary shareholders' equity represents profit attributable to ordinary shareholders expressed as a percentage of average ordinary shareholders' equity.

(6)
For this purpose, earnings consist of income before tax and minority interests, plus fixed charges less the unremitted income of associated undertakings (share of profits less dividends received). Fixed charges consist of total interest expense, including or excluding interest on deposits and debt securities in issue, as appropriate, and the proportion of rental expense deemed representative of the interest factor (one-third of total rental expenses).

29



SELECTED HISTORICAL CONDENSED CONSOLIDATED
FINANCIAL DATA OF ABN AMRO

Presented below are selected historical condensed consolidated financial data of ABN AMRO as of and for each of the years in the five-year period ended 31 December 2006. These data are derived from, and should be read together with ABN AMRO's audited consolidated financial statements included in, its Annual Report on Form 20-F for the year ended 31 December 2006, which is incorporated by reference into this document, and its Annual Report on Form 20-F for the year ended 31 December 2004, which is not incorporated by reference into this document.

The financial data for the years ended 31 December 2006, 2005 and 2004 were prepared in accordance with IFRS. The financial data for the years ended 31 December 2003 and 2002 were prepared in accordance with Dutch GAAP. In addition, certain financial data prepared in accordance with U.S. GAAP are presented for each of the years in the five-year period ended 31 December 2006.

30


 
  As of and for the
year ended 31 December

 
  2006
  2005
  2004
 
  (millions, except per share data,
percentages and ratios)

 
  ($)(1)

  (€)

  (€)

  (€)

Amounts in accordance with IFRS                

Selected consolidated income statement data

 

 

 

 

 

 

 

 
Net interest income   13,371   10,575   8,785   8,525
Net fee and commission income   7,665   6,062   4,691   4,485
Net trading income   3,767   2,979   2,621   1,309
Results from financial transactions   1,374   1,087   1,281   905
Share of result in equity accounted investments   307   243   263   206
Other operating income   1,747   1,382   1,056   745
Income of consolidated private equity holdings   6,718   5,313   3,637   2,616
Operating income   34,948   27,641   22,334   18,791
Operating expenses   26,189   20,713   16,301   15,180
Loan impairment and other credit risk provisions   2,345   1,855   635   607
Total expenses   28,534   22,568   16,936   15,787
Operating profit before tax   6,414   5,073   5,398   3,004
Income tax expense   1,140   902   1,142   715
Profit from continuing operations   5,274   4,171   4,256   2,289
Profit from discontinued operations net of tax   770   609   187   1,651
Profit for the year   6,044   4,780   4,443   3,940
Attributable to shareholders of the parent company   5,961   4,715   4,382   3,865
Dividends on ordinary shares   2,722   2,153   2,050   1,665

Selected consolidated balance sheet data

 

 

 

 

 

 

 

 
Assets                
Financial assets held for trading   271,283   205,736   202,055   167,035
Financial investments   165,327   125,381   123,774   102,948
Loans and receivables—banks   177,772   134,819   108,635   83,858
Loans and receivables—customers   584,476   443,255   380,248   320,022
Total assets   1,301,543   987,064   880,804   727,454

Liabilities

 

 

 

 

 

 

 

 
Financial liabilities held for trading   191,677   145,364   148,588   129,506
Due to banks   247,882   187,989   167,821   133,529
Due to customers   477,838   362,383   317,083   281,379
Issued debt securities   266,418   202,046   170,619   121,232

Capitalisation

 

 

 

 

 

 

 

 
Equity attributable to shareholders of the parent company   31,115   23,597   22,221   14,815
Equity attributable to minority interests   3,030   2,298   1,931   1,737
Subordinated liabilities   25,334   19,213   19,072   16,687
Group capital   59,479   45,108   43,224   33,239

31


 
  As of and for the
year ended 31 December

 
 
  2006
  2005
  2004
 
 
  (millions, except per share data,
percentages and ratios)

 
 
  (€)

  (€)

  (€)

 
Other financial data              
Average number of ordinary shares outstanding (millions)   1,882.5   1,804.1   1,657.6  
Net profit per ordinary share   2.50   2.43   2.33  
Fully-diluted net profit per ordinary share   2.49   2.42   2.33  
Dividends per ordinary share   1.15   1.10   1.00  
Dividend payout ratio(2)   46.0 % 45.3 % 42.9 %
Return on average total assets(3)   0.50 % 0.55 % 0.57 %
Return on average ordinary shareholders' equity(4)   20.7 % 23.5 % 29.7 %
Average ordinary shareholders' equity as a percentage of average total assets   2.38 % 2.24 % 1.84 %
Tier 1 capital ratio(5)   8.45 % 10.62 % 8.46 %
Total capital ratio(5)   11.14 % 13.14 % 11.06 %
Ratio of earnings to combined fixed charges              
  —including interest on deposits(6)   1.19   1.25   1.22  
  —excluding interest on deposits(6)   1.54   1.78   1.76  

Notes:

(1)
According to ABN AMRO's Annual Report on Form 20-F for the year ended 31 December 2006, the U.S. dollar income statement financial information has been translated at an exchange rate of U.S. $1.00 to €0.7909, being the rate equal to the average of the month-end rates for 2006. According to ABN AMRO's Annual Report on Form 20-F for the year ended 31 December 2006, the U.S. dollar balance sheet financial information has been translated at an exchange rate of U.S. $1.00 to €0.75838, being the year-end rate for 2006. Amounts in this column are unaudited.

(2)
Dividend per ordinary share as a percentage of net profit per ordinary share.

(3)
Profit for the year as a percentage of average total assets.

(4)
Net profit attributable to ordinary shares as a percentage of average ordinary shareholders' equity excluding the reserves with respect to cash flow hedges and available for sale securities.

(5)
Tier 1 capital and total capital as a percentage of risk-weighted assets under Bank for International Settlements guidelines.

(6)
Deposits include bank and total customer accounts.

32


 
  As of and for
the year ended
31 December

 
 
  2003
  2002
 
 
  (millions, except per share data, percentages and ratios)

 
 
  (€)

  (€)

 
Amounts in accordance with Dutch GAAP          

Selected consolidated income statement data

 

 

 

 

 
Net interest revenue   9,723   9,845  
Net commissions   4,464   4,639  
Results from financial transactions   1,993   1,477  
Other revenue   2,613   2,319  
Total revenue   18,793   18,280  
Operating expenses   12,585   13,148  
Provision for loan losses   1,274   1,695  
Operating profit before taxes   4,918   3,388  
Net profit   3,161   2,207  
Net profit attributable to ordinary shares   3,116   2,161  
Dividends on ordinary shares   1,589   1,462  

Selected balance sheet data

 

 

 

 

 
Assets          
Banks   58,800   41,924  
Loans   296,843   310,903  
Interest-bearing securities   132,041   141,494  
Total assets   560,437   556,018  

Liabilities

 

 

 

 

 
Banks   110,887   95,884  
Total customer accounts   289,866   289,461  
Debt securities   71,688   71,209  

Capitalisation

 

 

 

 

 
Fund for general banking risks   1,143   1,255  
Shareholders' equity(1)   13,047   11,081  
Minority interests   3,713   3,810  
Subordinated debt   13,900   14,278  
Group capital(1)   31,803   30,424  
           

33



Other financial data

 

 

 

 

 
Average number of ordinary shares outstanding (millions)   1,610.2   1,559.3  
Net profit per ordinary share   1.94   1.39  
Fully-diluted net profit per ordinary share   1.93   1.38  
Dividend per ordinary share   0.95   0.90  
Dividend payout ratio(2)   49.0 % 64.7 %
Return on average total assets(3)   0.53 % 0.36 %
Return on average ordinary shareholders' equity(4)   27.7 % 20.1 %
Average ordinary shareholders' equity as a percentage of average total assets   1.88 % 1.74 %
Tier 1 capital ratio(5)   8.15 % 7.48 %
Total capital ratio(5)   11.73 % 11.54 %
Ratio of earnings to combined fixed charges          
  —including interest on deposits(6)   1.36   1.19  
  —excluding interest on deposits(6)   2.65   1.82  

Notes:

(1)
Pursuant to a directive of the Dutch "Raad voor de Jaarverslaggeving" (Council for Annual Reporting), from 1 January 2003, ABN AMRO calculated shareholders' equity before profit appropriation instead of after profit appropriation, which is how ABN AMRO used to present its financials. The consequence of this new directive is that the profit during the year will be added to shareholders' equity for the full amount until shareholders have approved the proposed profit appropriation. To be able to compare on a like for like basis, ABN AMRO has represented shareholders' equity, group capital and shareholders' equity per ABN AMRO ordinary share and per ABN AMRO ADS as at 31 December 2002 before profit appropriation.

(2)
Dividend per ordinary share as a percentage of net profit per ordinary share.

(3)
Net profit as a percentage of average total assets.

(4)
Net profit attributable to ordinary shares as a percentage of average ordinary shareholders' equity.

(5)
Tier 1 capital and total capital as a percentage of risk-weighted assets under Bank for International Settlements guidelines.

(6)
Deposits include bank and total customer accounts.

34


 
  As of and for the year ended 31 December
 
  2006
  2005
  2004
  2003
  2002
 
  (millions, except per share data, percentages and ratios)

 
  ($)(1)

  (€)

  (€)

  (€)

  (€)

  (€)

Amounts in accordance with U.S. GAAP                        
Income statement data                        
Net interest income   11,430   9,040   8,565   8,886   8,052   7,879
Non-interest income   15,224   12,041   8,247   5,995   9,472   10,057
Total revenue   26,654   21,081   16,812   14,881   17,524   17,936
Loan impairment and other credit risk provisions   2,419   1,913   536   (191 ) 1,274   1,695
Operating profit before tax   6,345   5,018   3,246   2,447   4,967   3,711
Net profit   5,640   4,461   2,870   2,824   3,119   2,110

Balance sheet data

 

 

 

 

 

 

 

 

 

 

 

 
Shareholders' equity   37,026   28,080   28,494   21,537   20,143   19,013
Minority interests   3,030   2,298   1,931   1,737   3,713   3,810
Total assets   1,289,731   978,106   876,366   725,172   565,039   562,478

Other financial data

 

 

 

 

 

 

 

 

 

 

 

 
Basic earnings per ordinary share       2.35   1.57   1.68   1.91   1.32
Diluted earnings per ordinary share       2.34   1.56   1.67   1.90   1.32
Basic earnings per American Depositary Share ($)(2)       2.97   1.94   2.09   2.17   1.25
Shareholders' equity per ordinary share       14.73   14.76   12.44   11.80   11.47
Shareholders' equity per American Depositary Share ($)(3)       19.43   17.47   16.97   14.87   12.03

Notes:

(1)
According to ABN AMRO's Annual Report on Form 20-F for the financial year ended 31 December 2006, the U.S. dollar income statement financial information has been translated at an exchange rate of U.S. $1.00 to €0.7909, being the rate equal to the average of the month-end rates for 2006. According to ABN AMRO's Annual Report on Form 20-F for the financial year ended 31 December 2006, the U.S. dollar balance sheet financial information has been translated at an exchange rate of U.S. $1.00 to €0.75838, being the year-end rate. Amounts in this column are unaudited.

(2)
According to ABN AMRO's Annual Report on Form 20-F for the financial year ended 31 December 2006, this item has been translated into U.S. dollars at the rate equal to the average of the month-end rates for the applicable year.

(3)
According to ABN AMRO's Annual Report on Form 20-F for the financial year ended 31 December 2006, this item has been translated into U.S. dollars at the applicable year-end rate.

35



SELECTED UNAUDITED PRO FORMA SUMMARY FINANCIAL INFORMATION

The following selected unaudited pro forma summary financial information is being provided to give you a better understanding of what the results of operations and financial position of RBS might have looked like had the offers by RFS Holdings for ABN AMRO ordinary shares and ADSs occurred, in respect of the unaudited pro forma condensed combined balance sheet (the "pro forma balance sheet") on 31 December 2006 and, in respect of the unaudited pro forma condensed combined income statement (the "pro forma income statement") on 1 January 2006. The unaudited pro forma condensed combined financial information (the "pro forma financial information") is preliminary and is being furnished solely for illustrative purposes and is not necessarily indicative of the combined results of operations or financial position of RBS and the ABN AMRO Businesses that might have been achieved, had the acquisition occurred on the dates indicated, nor is it necessarily indicative of the results of operations or financial position that may, or may be expected to, be achieved in the future. No account has been taken within the pro forma financial information of any synergy or efficiency benefits that may, or may be expected to, occur as a result of the proposed acquisition.

The pro forma financial information is based upon the published audited financial statements of RBS and ABN AMRO for the year ended 31 December 2006, prepared in accordance with IFRS, after giving effect to (i) the proposed sale of LaSalle by ABN AMRO to Bank of America, as disclosed in ABN AMRO's Form 6-K filed with the SEC on 23 April 2007, incorporated herein by reference, and in accordance with the Bank of America Agreement, and (ii) to the offers. The pro forma balance sheet and pro forma income statement have been prepared using the purchase method of accounting, after giving effect to the pro forma adjustments described in the notes to the unaudited pro forma financial information. The pro forma income statement also reflects the reorganisation of the businesses to be transferred to Fortis and Santander and the probable sale of the non-strategic businesses to third parties. Due to the limited information publicly available regarding the allocation of assets and liabilities to each of ABN AMRO's business segments that will be included in the reorganisation, a pro forma balance sheet cannot be prepared on a basis consistent with the pro forma income statement.

The RBS Annual Report on Form 20-F for the year ended 31 December 2006 and the ABN AMRO Annual Report on Form 20-F for the year ended 31 December 2006 are both incorporated by reference into this document and the information below should be read together with the financial statements of RBS and ABN AMRO contained therein.

See "Unaudited Pro Forma Condensed Combined Financial Information" on pages 157 to 170 for an explanation of the basis of preparation of these data, including the assumptions underlying them and the limitations thereof.

36



IFRS basis

 
  For the year ended
31 December 2006

 
  (millions, except
per share data)

 
  ($)(1)

  (£)

Unaudited Pro Forma Condensed Combined Income Statement        
Net interest income   21,905   11,184
Non-interest income   39,920   20,382
Total income   61,825   31,566
Profit from continuing operations, net of tax   17,951   9,165

Other financial data

 

 

 

 
Basic earnings per ordinary share—continuing operations(2)   1.169   0.597
Diluted earnings per ordinary share—continuing operations(2)   1.161   0.593
Weighted average ordinary shares(2)   10,111   10,111
Weighted average diluted ordinary shares(2)   10,285   10,285

The pro forma income statement information reflects businesses to be acquired by RBS including Business Unit North America (excluding LaSalle), Business Unit Global Clients, Business Unit Asia (excluding Saudi Hollandi), Business Unit Europe (excluding Antonveneta) and wholesale clients businesses in the Netherlands and Latin America (excluding Brazil). The results attributable to Saudi Hollandi, a non-strategic business to be disposed of, cannot be separately identified from the information disclosed in ABN AMRO's Annual Report on Form 20-F for the year ended 31 December 2006 and hence are included in the above results. The results of wholesale clients businesses in the Netherlands and Latin America (excluding Brazil) cannot be separately identified from the information disclosed in ABN AMRO's Annual Report on Form 20-F for the year ended 31 December 2006 and have been included in the results of Businesses transferred to Fortis and Santander. Hence they are not included in the above results. These presentations are solely for the purposes of the pro forma income statement. Business Unit nomenclature above is consistent with that used by ABN AMRO in its Annual Report on Form 20-F for the year ended 31 December 2006.

 
  As of
31 December 2006

 
  (millions)

 
  ($)(1)

  (£)

Unaudited Pro Forma Condensed Combined Balance Sheet        
Total assets   2,959,165   1,510,857
Total liabilities   2,794,288   1,426,676
Minority interests   72,180   36,853
Shareholders' equity   92,697   47,328

37


U.S. GAAP Basis

 
  As of and for
the year ended
31 December 2006

 
  (millions, except
per share data)

 
  ($)(1)

  (£)

Unaudited Pro Forma U.S. GAAP Information        
Net income available to ordinary shareholders   12,529   6,397
Shareholders' equity   92,403   47,178
Basic earnings per ordinary share(2)   1.239   0.633
Diluted earnings per ordinary share(2)   1.230   0.628

No adjustments have been made to the unaudited pro forma U.S. GAAP net income available to ordinary shareholders, shareholders' equity or earnings per share information above to reflect ABN AMRO's discontinued operations, the businesses to be transferred to Fortis and Santander or the disposal of non-strategic businesses, as ABN AMRO does not publish sufficiently detailed data in its Annual Report on Form 20-F for the year ended 31 December 2006 to enable IFRS—U.S. GAAP differences related to these businesses to be identified.


Notes:

(1)
The U.S. dollar financial information has been translated from sterling at a rate of £1.00 to U.S.$1.9586 being the Noon Buying Rate on 29 December 2006 (the last business day in 2006).

(2)
Earnings per share and weighted average number of RBS ordinary shares have been adjusted for the two-for-one bonus issue of ordinary shares effected by RBS on 8 May 2007.

38



SUMMARY COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

The following table summarises per share information for RBS and ABN AMRO on a historical basis, an unaudited pro forma basis for the combined RBS group and equivalent information per ABN AMRO ordinary share, based on the exchange ratio of 0.296 RBS ordinary shares for each ABN AMRO ordinary share. The information set out below should be read in conjunction with the audited consolidated financial statements of RBS and ABN AMRO incorporated by reference into this document and the Unaudited Pro Forma Condensed Combined Financial Information. See "Comparative Historical and Pro Forma Per Share Information" on pages 171 to 172.

 
  For the year ended 31 December 2006
 
  Published
  Adjusted(1)
RBS—Historical(1)        
Historical per ordinary share:        
Basic earnings per ordinary share   £1.947   £0.649
Dividend per ordinary share(2)   £0.906   £0.302
Book value per ordinary share   £11.59   £3.86

ABN AMRO—Historical

 

 

 

 
Historical per ordinary share:        
Basic earnings per ordinary share from continuing operations   €2.18    
Dividend per ordinary share(2)   €1.15    
Book value per ordinary share   €12.73    

Unaudited Pro Forma Condensed Combined

 

 

 

 
Unaudited pro forma condensed combined per ordinary share:        
Basic earnings per ordinary share from continuing operations       £0.597
Dividend per ordinary share(2)       £0.302
Book value per ordinary share       £4.00

Unaudited Pro Forma ABN AMRO Ordinary Share Equivalents

 

 

 

 
Unaudited pro forma per share of ABN ordinary shares:        
Basic earnings per ordinary share from continuing operations       €0.26
Dividend per ordinary share(2)       €0.13
Book value per ordinary share       €1.76

(1)
Historical per ordinary share data for RBS have been adjusted to reflect the two-for-one bonus issue of ordinary shares effected on 8 May 2007.

(2)
Dividend per ordinary share data reflect dividends declared in respect of the year ended 31 December 2006.

39



SUMMARY COMPARATIVE PER SHARE MARKET INFORMATION

RBS ordinary shares are listed on the LSE under the symbol "RBS". ABN AMRO ordinary shares are listed on Euronext Amsterdam under the symbol "AABA" and ABN AMRO ADSs are listed on the NYSE under the symbol "ABN". The following table presents the closing market prices per security for RBS ordinary shares and ABN AMRO ordinary shares and ABN AMRO ADSs in pounds sterling, euros, or U.S. dollars, as the case may be:

as reported on the LSE for RBS ordinary shares;

as reported on Euronext Amsterdam for ABN AMRO ordinary shares; and

as reported on the NYSE for ABN AMRO ADSs.

 
  RBS
  ABN AMRO
 
  Ordinary
Shares

  Ordinary
Shares

  ADSs
 
  (£)

  (€)

  (U.S.$)

16 March 2007   6.5467   27.29   36.24
13 July 2007   6.4000   35.85   50.50

In each case the prices are given:

as of 16 March 2007, which was the last full trading day on the LSE, Euronext Amsterdam and the NYSE before rumours and press articles significantly affected the share prices and trading volumes of RBS ordinary shares and ABN AMRO ordinary shares and ABN AMRO ADSs; and

as of 13 July 2007, which was the most recent practicable trading day prior to the date of this document.

See "Market Price and Dividend Data" for further information about historical market prices of these securities.

The following table also presents the implied equivalent value per security for ABN AMRO ordinary shares in euros and ABN AMRO ADSs in U.S. dollars. The implied equivalent value of an ABN AMRO ordinary share was calculated by multiplying the closing market price per RBS ordinary share by 0.296, the exchange ratio for each ABN AMRO ordinary share and ABN AMRO ADS in the U.S. offer, and then adding to that amount the cash portion of the exchange consideration of €35.60 for each ABN AMRO ordinary share and ABN AMRO ADS.

Implied equivalent value per share

 
   
  ABN AMRO
 
   
  Ordinary
Shares

  ADSs
 
   
  (€)

  (U.S.$)

16 March 2007       38.43   51.14
13 July 2007       38.40   52.89

In calculating the implied equivalent value per ABN AMRO ADS, amounts in euros have been translated into U.S. dollars at a rate of €1.00=$1.3307, the 16 March 2007 exchange rate as published in The Financial Times on 17 March 2007, and at a rate of €1.00=$1.3775, the 13 July 2007 exchange rate as published in The Financial Times on 14 July 2007, as applicable.

The market prices of RBS ordinary shares and ABN AMRO ordinary shares and ABN AMRO ADSs are likely to fluctuate prior to the expiration date of the U.S. offer and cannot be predicted. We urge you to obtain current market information regarding RBS ordinary shares and ABN AMRO ordinary shares and ABN AMRO ADSs.

40



EXCHANGE RATE INFORMATION

For your convenience, this document contains translations of sterling and euro amounts into U.S. dollars at specified exchange rates. These translations have been made at the indicated noon buying rate in New York City for cable transfers in sterling and euros as certified for customs purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"). These translations are not representations that the sterling or euro amounts actually represent these U.S. dollar amounts or could be converted to U.S. dollars at the rates indicated.

Pounds Sterling

The Noon Buying Rate for sterling on 13 July 2007, the latest practicable date prior to the date of this document, was $2.0344 per pound sterling.

The following tables set forth, for the periods indicated, information concerning the Noon Buying Rate, expressed in dollars per pound sterling. Such rates are provided solely for your convenience. They are not necessarily the rates used by RBS in the preparation of its financial statements. No representation is made that the pound sterling could have been, or could be, converted into U.S. dollars at the rates indicated below:

 
  2007
 
  June
  May
  April
  March
  February
  January
 
  (U.S. dollars per £1)

Noon Buying Rate                        
High   2.0063   1.9993   2.0061   1.9694   1.9699   1.9847
Low   1.9657   1.9695   1.9608   1.9235   1.9443   1.9305
 
  2006
  2005
  2004
  2003
  2002
Noon Buying Rate                    
Period end rate   1.9586   1.7188   1.9160   1.7842   1.6095
Average rate for the period(2)   1.8582   1.8147   1.8356   1.6450   1.5084

Consolidation rate(3)

 

 

 

 

 

 

 

 

 

 
Period end rate   1.9651   1.7214   1.9346   1.7857   1.6128
Average rate for the period   1.8436   1.8198   1.8325   1.6354   1.5032

Notes:

(1)
The period end rate is the Noon Buying Rate announced on the last day of the period.

(2)
The average of the Noon Buying Rates on the last business day of each month during the period.

(3)
The rates used by RBS for translating U.S. dollars into sterling in the preparation of its financial statements.

Euros

The Noon Buying Rate for euros on 13 July 2007, the latest practicable date prior to the date of this document, was $1.3788 per euro.

The following tables set forth, for the periods indicated, information concerning the Noon Buying Rate, expressed in dollars per euro. Such rates are provided solely for your convenience. They are not necessarily the rates used by ABN AMRO in the preparation of its financial statements. No

41



representation is made that the euro could have been, or could be, converted into U.S. dollars at the rates indicated below:

 
  2007
 
  June
  May
  April
  March
  February
  January
 
  (U.S. dollars per euro)

Noon Buying Rate                        
High   1.3526   1.3616   1.3660   1.3374   1.3246   1.3286
Low   1.3295   1.3419   1.3363   1.3094   1.2933   1.2904
 
  2006
  2005
  2004
  2003
  2002
Noon Buying Rate                    
Period end rate(1)   1.3197   1.1842   1.3538   1.2597   1.0485
Average rate for the period(2)   1.2661   1.2400   1.2478   1.1411   0.9495

Notes:

(1)
The period end rate is the Noon Buying Rate announced on the last day of the period.

(2)
The average of the Noon Buying Rates on the last business day of each month during the period.

42



RISK FACTORS

In deciding whether to accept this U.S. offer, you should carefully consider the following risks that relate to the U.S. offer and the transactions contemplated thereby as well as the risk factors incorporated by reference into this document from RBS's Annual Report on Form 20-F for the year ended 31 December 2006 and from ABN AMRO's Annual Report on Form 20-F for the year ended 31 December 2006, together with the other information contained in or incorporated by reference into this document.

The risks and uncertainties described below are not the only ones facing RBS or which may affect your decision whether to accept this U.S. offer. Additional risks and uncertainties not presently known or that RBS and the Banks currently deem immaterial may also have an adverse effect on RBS's business or on the U.S. offer.

RBS's business, financial condition or results of operations could be materially and adversely affected by any of the risks described below. In that event, the value of the RBS ordinary shares could decline, and you could lose all or part of your investment in the RBS ordinary shares.

Governmental policy and regulation may have an adverse effect on our results.

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

There is continuing political and regulatory scrutiny of the operation of the retail banking and consumer credit industries in the United Kingdom and elsewhere. The nature and impact of future changes in policies and regulatory action are not predictable and are beyond our control but could have an adverse impact on our businesses and earnings.

In the European Union, these regulatory actions included an inquiry into retail banking in all of the then 25 member states by the European Commission's Directorate General for Competition. The inquiry examined retail banking in Europe generally. On 31 January 2007, the European Commission announced that barriers to competition in certain areas of retail banking, payment cards and payment systems in the European Union had been identified. The European Commission indicated that it will use its powers to address these barriers and will encourage national competition authorities to enforce European and national competition laws where appropriate. Any action taken by the European Commission and national competition authorities could have an adverse impact on our payment cards and payment systems businesses and on our retail banking activities in the European Union countries in which we operate.

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

In April 2006, the OFT commenced a review of the undertakings given following the conclusion of the Competition Commission Inquiry in 2002 into the supply of banking services to small and medium enterprises, or SMEs.

The OFT has carried out investigations into Visa and MasterCard credit card interchange rates. The decision by the OFT in the MasterCard interchange case was set aside by the Competition Appeals

43



Tribunal in June 2006. The OFT's investigations in the Visa interchange case and a second MasterCard interchange case are ongoing. The outcome is not known, but these investigations may have an impact on the consumer credit industry in general and, therefore on RBS's business in this sector. On 9 February 2007, the OFT announced that it was expanding its investigation into interchange rates to include debit cards.

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

On 26 January 2007, the FSA issued a Statement of Good Practice relating to Mortgage Exit Administration Fees. On 1 March 2007, the Group adopted a policy of charging all customers the fee applicable at the time the customers took out the mortgage. In addition, any customers who had previously been charged a higher fee than was applicable at the time they took out the mortgage and who complained were refunded the difference in fees. This approach was one of the options recommended by the FSA.

On 26 April 2007 the Office of Rail Regulation referred the leasing of rolling stock for franchised passenger services and the supply of related maintenance services in Great Britain to the U.K. Competition Commission for an inquiry lasting up to two years. RBS owns the Angel Trains group, a rolling stock leasing business operating in this market.

On 15 May 2007 the Competition Commission published its final report into the supply of personal current account banking services in Northern Ireland. It is anticipated that a statutory instrument implementing the remedies set out in the report will be made in October 2007. RBS owns Ulster Bank, which is active in the Northern Ireland current account market.

Other areas where changes could have an adverse impact include:

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

general changes in government or regulatory policy or changes in regulatory regimes that may significantly influence investor decisions in particular markets in which we operate or may increase the costs of doing business in those markets;

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

changes in competition and pricing environments;

further developments in the financial reporting environment;

expropriation, nationalisation, confiscation of assets and changes in legislation relating to foreign ownership; and

other unfavourable political, military or diplomatic developments producing social instability or legal uncertainty which, in turn, may affect demand for our products and services.

44


Risks Relating to the Transaction

The value of the RBS ordinary shares and U.S. dollar cash consideration being offered will fluctuate.

There will be no adjustment to the consideration offered for changes in the market price of either ABN AMRO ordinary shares or ABN AMRO ADSs, on the one hand, or RBS ordinary shares, on the other, or for movements in exchange rates. Accordingly, the market value of the RBS ordinary shares that holders of ABN AMRO ordinary shares and ABN AMRO ADSs will receive upon completion of the U.S. offer and the exchange rate between the pound sterling and the U.S. dollar at the time could vary significantly from the market value of RBS ordinary shares and the pound sterling to U.S. dollar exchange rate on the date of this document or on the date the offers were first announced. The market value of the RBS ordinary shares to be issued in the U.S. offer and the pound sterling to U.S. dollar exchange rate will also continue to fluctuate after completion of the U.S. offer.

In addition, the cash portion of the consideration that you will receive for your ABN AMRO ordinary shares and ABN AMRO ADSs is determined in euros. As a result, the value of this consideration in U.S. dollars will vary depending on the exchange rate between the euro and the U.S. dollar, which is expected to fluctuate between the date of this document and the date on which you will receive your cash consideration.

For historical exchange rate information, please see "Exchange Rate Information". You should obtain current market quotations for RBS ordinary shares and for ABN AMRO ordinary shares and ABN AMRO ADSs.

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

Uncertainty about the effects of the offers and any competing offers on employees, partners, regulators and customers may materially and adversely affect the business and operations of ABN AMRO. These uncertainties could cause customers, business partners and other parties that have business relationships with ABN AMRO to defer the consummation of other transactions or other decisions concerning ABN AMRO's business, or to seek to change existing business relationships with ABN AMRO. In addition, employee retention at ABN AMRO may be challenging until the offers are completed.

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

The Transaction will require various approvals or consents from, among others, the Dutch Central Bank, the FSA, the Bank of Spain, the European Commission and various other antitrust authorities outside the European Union, other bank regulatory, securities, insurance and other regulatory authorities worldwide. The governmental entities from which these approvals are required, including the Dutch Central Bank, the FSA, the Bank of Spain, the European Commission and others, may refuse to grant such approval, or, may impose conditions on, or require divestitures or other changes in connection with, the completion of the Transaction. These conditions or changes could have the effect of delaying completion of the Transaction, reducing the anticipated benefits of the Transaction or imposing additional costs on us or limiting our revenues following completion of the Transaction, any of which might have a material adverse effect on us following the Transaction. In order to obtain these regulatory approvals, we may have to divest, or commit to divesting, certain of the businesses of ABN AMRO and/or the Banks to third parties. In addition, we may be required to make other commitments to regulatory authorities. These divestitures and other commitments, if

45



any, may have an adverse effect on our business, results of operations, financial condition or prospects after the completion of the Transaction.

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

The Banks have not verified the reliability of the ABN AMRO information included in, or incorporated by reference into, this document and, as a result, our estimates of the impact of the Transaction on the pro forma financial information in this document may be incorrect.

The information about ABN AMRO presented in, or incorporated by reference into, this document, including all ABN AMRO financial information, is derived from publicly available information, including periodic and other reports ABN AMRO has filed with or furnished to the SEC. Although the Banks have no knowledge that would indicate that any statements contained in this document based upon information contained in such reports filed with or furnished to the SEC are inaccurate, incomplete or untrue, the Banks were not involved in the preparation of such reports and, therefore, cannot verify the accuracy, completeness or truth of the information obtained from such reports or any failure by ABN AMRO to disclose events that may have occurred, but that are unknown to the Banks, that may affect the significance or accuracy of the information contained in such reports. In addition, given that ABN AMRO has provided the Banks only with limited access to ABN AMRO's accounting records, RBS did not have the information necessary independently to verify certain adjustments and assumptions, and therefore did not verify such adjustments and assumptions, with respect to ABN AMRO's financial information in preparing the pro forma financial information presented in this document. Any financial information regarding ABN AMRO that may be detrimental to the Banks (including, after the completion of the Transaction, the ABN AMRO Businesses) and that has not been publicly disclosed by ABN AMRO, or errors in the Banks' estimates due to the lack of cooperation from ABN AMRO, may have an adverse effect on the benefits each of the Banks expect to achieve in the Transaction.

Risks Relating to the RBS Ordinary Shares and RBS ADSs

We may fail to realise the business growth opportunities, revenue benefits, cost savings and other benefits anticipated from, or may incur unanticipated costs associated with, the Transaction and our results of operations, financial condition and the price of our ordinary shares may suffer.

There is no assurance that our acquisition of certain of ABN AMRO's businesses will achieve the business growth opportunities, revenue benefits, cost savings and other benefits we anticipate. We believe the offer consideration is justified in part by the business growth opportunities, revenue benefits, cost savings and other benefits we expect to achieve by combining our operations with certain ABN AMRO Businesses. However, these expected business growth opportunities, revenue benefits, cost savings and other benefits may not develop and other assumptions upon which the Banks determined the offer consideration may prove to be incorrect, as, among other things, such assumptions were based on publicly available information.

In particular, the reorganisation plan currently contemplated may have to be modified as a result of employee consultations and approvals, which may delay its implementation. We may also face challenges with the following: obtaining the required approvals of various regulatory agencies, any of which could refuse or impose conditions or restrictions on its approval; retaining key employees; redeploying resources in different areas of operations to improve efficiency; minimising the diversion of management attention from ongoing business concerns; and addressing possible

46



differences between our business culture, processes, controls, procedures and systems and those of the ABN AMRO Businesses that we will acquire. In addition, because the Banks have had access only to publicly available information regarding ABN AMRO's tax situation and structure, unanticipated substantial tax costs may be incurred in the implementation of the reorganisation plan.

Under any of these circumstances, the business growth opportunities, revenue benefits, cost savings and other benefits anticipated by RBS to result from the reorganisation may not be achieved as expected, or at all, or may be delayed. To the extent that RBS incurs higher integration costs or achieves lower revenue benefits or fewer cost savings than expected, RBS's results of operations, financial condition and the price of its ordinary shares may suffer.

The Banks have conducted only a limited due diligence review of ABN AMRO and, therefore, we may become subject to unknown liabilities of ABN AMRO, which may have an adverse effect on our financial condition and results of operations.

In making the offers and determining their terms and conditions, the Banks have relied on publicly available information relating to ABN AMRO, including periodic and other reports for ABN AMRO, filed with or furnished to the SEC on Form 20-F and Form 6-K. The Banks have also conducted a due diligence review of limited additional information about ABN AMRO. This information in relation to ABN AMRO has not been subject to comment or verification by ABN AMRO, the Banks or their respective directors. As a result, after the completion of the offers, we may be subject to unknown liabilities of ABN AMRO, which may have an adverse effect on our financial condition and results of operations.

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

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

Change of control provisions in ABN AMRO's agreements may be triggered upon the completion of the offers, upon RFS Holdings' acquisition of ABN AMRO or upon the completion of the reorganisation and may lead to adverse consequences for RBS, including the loss of significant contractual rights and benefits, the termination of joint venture and/or licensing agreements or the requirement to repay outstanding indebtedness.

ABN AMRO may be a party to joint ventures, licences and other agreements and instruments that contain change of control provisions that will be triggered upon the completion of the offers, upon RFS Holdings' acquisition of ABN AMRO or upon completion of the reorganisation. ABN AMRO has not provided the Banks with copies of any of the agreements to which it is party, and these agreements are not generally publicly available. Agreements with change of control provisions typically provide for or permit the termination of the agreement upon the occurrence of a change of

47



control of one of the parties or, in the case of debt instruments, require repayment of all outstanding indebtedness. If, upon review of these agreements after completion of the offers, the Banks determine that such provisions can be waived by the relevant counterparties, the Banks will consider whether to seek these waivers. In the absence of these waivers, the operation of the change of control provisions, if any, could result in the loss of material contractual rights and benefits, the termination of joint venture agreements and licensing agreements or the requirement to repay outstanding indebtedness.

In addition, employment agreements with members of ABN AMRO senior management and other ABN AMRO employees may contain change of control provisions providing for compensation to be paid in the event the employment of these employees is terminated, either by ABN AMRO or by those employees, following the completion of the offers, RFS Holdings' acquisition of ABN AMRO or completion of the reorganisation. Such employment agreements may also contain change of control provisions providing for compensation to be paid following the occurrence of such events even if the employment is not terminated. RBS has taken into account potential payments arising on the operation of change of control provisions, including compensation arising on change of control provisions in employment agreements but such payments may exceed RBS's expectations.

There has been no prior public market for the RBS ADSs, and an active market for such securities may not develop or be sustained and trading prices may vary.

Prior to completion of the U.S. offer, we intend to establish an ADR facility in the United States pursuant to which holders of ABN AMRO ordinary shares or ABN AMRO ADSs who receive RBS ordinary shares in the U.S. offer will be able to exchange such newly issued RBS ordinary shares (upon payment of the taxes (including a 1.5% SDRT charge), governmental charges and fees described in this document) for RBS ADSs by electing to deposit or by otherwise depositing the newly issued RBS ordinary shares with The Bank of New York, the depositary for the RBS ADSs. We intend to apply to list the RBS ADSs on the NYSE. Although the RBS ordinary shares are listed and traded on the London Stock Exchange, neither RBS ordinary shares nor RBS ADSs are currently listed or traded in the United States and, before completion of the U.S. offer, there will be no public market for RBS ADSs. Even if the RBS ADSs are listed on the NYSE, an active market for the RBS ADSs may not develop or may not be sustained if it does develop.

RBS is a company governed by the laws of the United Kingdom, and being a shareholder of a company governed by the laws of the United Kingdom involves different rights and privileges from those of a shareholder of a Dutch company.

The rights of RBS's shareholders are governed by the laws of the United Kingdom and by its memorandum of association and articles of association. The laws of the United Kingdom extend to shareholders certain rights and privileges that may not exist under Dutch law and, conversely, do not extend certain rights and privileges that shareholders of a company governed by Dutch law may have. See "Comparison of Shareholders' Rights".

Following completion of the offers, if you elect to deposit or otherwise deposit your RBS ordinary shares in exchange for RBS ADSs, asserting your distribution, voting and pre-emptive rights will be more difficult than for holders of RBS ordinary shares.

It may not be possible, at certain times and for certain reasons outlined in "Description of RBS American Depositary Shares", for the RBS ADS depositary to make cash, share or other distributions to holders of RBS ADSs. In addition, holders of RBS ADSs will not be entitled to attend our shareholders' meetings and will be able to vote only by giving timely instructions to the RBS ADS depositary in advance of a meeting. Under some circumstances, including our failure to provide the RBS ADS depositary with voting materials on a timely basis, holders of RBS ADSs may not be able to vote by giving instructions to the RBS ADS depositary on how to vote. If no

48



instructions are received by the RBS ADS depositary, the RBS ADS depositary shall deem that such holder of RBS ADSs to have instructed the RBS ADS depositary to give a discretionary proxy to a person designated by RBS; provided that no such instruction shall be deemed given with respect to matters where RBS informs the RBS ADS depositary that RBS does not wish to give such proxy, or where substantial opposition exists, or where such matter materially and adversely affects the rights of RBS ordinary shareholders.

In addition, we may not be able to offer our ordinary shares to U.S. holders of RBS ADSs pursuant to pre-emptive rights granted to holders of RBS ordinary shares in connection with any future issuance of RBS ordinary shares unless a registration statement under the Securities Act is effective with respect to such ordinary shares and pre-emptive rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement relating to pre-emptive rights with respect to RBS ordinary shares, and we cannot assure you that we will file any such registration statement. If such a registration statement is not filed and an exemption from registration does not exist, The Bank of New York, as RBS ADS depositary, may attempt to sell the pre-emptive rights, if a market for such rights exists, and holders of RBS ADSs will be entitled to receive the proceeds of such sale. However, these pre-emptive rights will expire and U.S. holders of RBS ADSs will not realise any value from the granting of such pre-emptive rights if the RBS ADS depositary does not sell them.

After completion of the offers, holders of ABN AMRO ordinary shares or ABN AMRO ADSs and holders of RBS ordinary shares will own a smaller percentage of RBS than they currently own of ABN AMRO and RBS, respectively, and will exercise less influence over management.

After the completion of the offers, holders of ABN AMRO ordinary shares or ABN AMRO ADSs and holders of RBS ordinary shares will own a smaller percentage of RBS than they currently own of ABN AMRO and RBS, respectively. Assuming that all of the outstanding ABN AMRO ordinary shares and ABN AMRO ADSs are exchanged in the offers, existing holders of RBS ordinary shares (other than RBS) and former holders of ABN AMRO ordinary shares or ABN AMRO ADSs (other than ABN AMRO) will own approximately 94% and 6%, respectively, of the RBS ordinary shares immediately after the completion of the offers, assuming the number of issued and outstanding ABN AMRO ordinary shares is as set out in ABN AMRO's Form 6-K dated 23 April 2007 and exercise of all ABN AMRO options based on information as set out in the ABN AMRO 2006 Annual Report on Form 20-F. Consequently, former holders of ABN AMRO ordinary shares or ABN AMRO ADSs, as a group, will have reduced ownership and voting power in RBS compared to their ownership and voting power in ABN AMRO, and existing holders of RBS ordinary shares will have reduced ownership and voting power in RBS compared to their current ownership and voting power in RBS. Following the completion of the offers, RFS Holdings will own the majority of the ABN AMRO ordinary shares (including ABN AMRO ordinary shares formerly represented by ABN AMRO ADSs) and thus control the nomination of all of the members of the ABN AMRO managing board and the ABN AMRO supervisory board, subject to compliance with applicable legal and regulatory requirements.

There may be difficulties in enforcing civil liabilities against RBS and its directors and senior management.

RBS is organised under the laws of the United Kingdom with its registered office and corporate headquarters in Edinburgh, Scotland. The majority of our directors and senior management and the experts named in this document are residents of jurisdictions outside the United States. The majority of RBS's assets and the assets of those persons are located outside the United States. As a result, U.S. investors may find it difficult to effect service of process within the United States upon us or these persons or to enforce outside the United States judgments obtained against RBS or these persons in U.S. courts, including actions predicated upon the civil liability provisions of the

49



U.S. federal securities laws. Likewise, it may also be difficult for an investor to enforce in U.S. courts judgments obtained against RBS or these persons in courts in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws.

Risks Relating to Non-Tendering Security Holders

If the offers are successful, but some ABN AMRO ordinary shares or ABN AMRO ADSs remain outstanding, the liquidity and market value of the remaining ABN AMRO ordinary shares and ABN AMRO ADSs held by the public could be adversely affected by the fact that they will be held by a smaller number of holders.

Depending upon the number of ABN AMRO ordinary shares and ABN AMRO ADSs acquired pursuant to the offers, following the completion of the offers, the ABN AMRO ADSs may no longer meet the requirements of the NYSE for continued listing. Moreover, to the extent permitted under applicable law and stock exchange regulations, if RFS Holdings acquires control of ABN AMRO, RFS Holdings intends to seek to cause the delisting of the ABN AMRO's ordinary shares from Euronext Amsterdam and the ABN AMRO ADSs from the NYSE.

If the NYSE delists the ABN AMRO ADSs, or if Euronext Amsterdam delists the ABN AMRO ordinary shares, the market for the ABN AMRO ADSs and ABN AMRO ordinary shares will be adversely affected. Although it is possible that the ABN AMRO ADSs and/or the ABN AMRO ordinary shares could be traded in over-the-counter markets, such alternative trading markets may not occur. In addition, the extent of the public market for the ABN AMRO ADSs and ABN AMRO ordinary shares and the availability of market quotations would depend upon the number of holders and/or the aggregate market value of the ABN AMRO ADSs and ABN AMRO ordinary shares remaining at such time, the interest in maintaining a market in the ABN AMRO ADSs and ABN AMRO ordinary shares on the part of securities firms and the possible termination of registration of ABN AMRO ADSs under the Exchange Act. If such registration is terminated, ABN AMRO could cease filing periodic reports with the SEC, which could further impact the value of the ABN AMRO ADSs. To the extent the availability of such continued listings or quotations depends on steps taken by RFS Holdings, the Banks or ABN AMRO, RFS Holdings, the Banks or ABN AMRO may or may not take such steps. Therefore, if the offers are successful, you should not rely on any such listing or quotation being available.

In addition, RFS Holdings intends to change ABN AMRO's dividend policy if the offers are completed and to cause ABN AMRO to stop paying regular cash dividends after the completion of the offers for the foreseeable future, subject to any applicable legal requirements.

If RFS Holdings acquires 95% or more of the outstanding issued capital of ABN AMRO, RFS Holdings intends to utilise Dutch squeeze-out proceedings to acquire the ABN AMRO ordinary shares of non-tendering ABN AMRO shareholders at a price that may be less than that which might have been received upon a sale of such ordinary shares prior to the squeeze-out.

If RFS Holdings acquires 95% or more of the outstanding issued capital of ABN AMRO, it intends to acquire the remaining issued capital of ABN AMRO in accordance with the squeeze-out proceedings prescribed by the Dutch Civil Code or other legal means. Furthermore, if RFS Holdings acquires 95% or more of the issued capital of and the voting rights attached to any class of shares of ABN AMRO after the act implementing the squeeze-out provisions of European Union Takeover Directive 2004/25/EC comes into effect, RFS Holdings will have the right to initiate squeeze-out proceedings with respect to shares of that class not tendered and not otherwise held by RFS Holdings or ABN AMRO. In case of a squeeze-out, ABN AMRO ordinary shares held by minority ABN AMRO shareholders will be acquired only for cash, and a Dutch court will determine

50



the price to be paid for the ABN AMRO ordinary shares, which may be lower than the cash equivalent of the consideration offered in the U.S. offer. Also, upon payment of the amount required to purchase the ABN AMRO ordinary shares into a prescribed bank account, the ABN AMRO ordinary shares held by the minority shareholders will be transferred to RFS Holdings by operation of Dutch law. The only remaining right of the minority holders of ABN AMRO ordinary shares would be to receive payment for their ABN AMRO ordinary shares. If you do not tender your ABN AMRO ordinary shares in the U.S. offer and RFS Holdings is able to effectuate a squeeze-out, the price determined by the Dutch court for the purchase of ABN AMRO ordinary shares may be less than the amount which might have been received upon a sale of your ABN AMRO ordinary shares prior to the squeeze-out.

In the event that RFS Holdings acquires less than 95% of ABN AMRO's issued capital, RFS Holdings intends to take such legally permissible steps available to it under Dutch law to acquire the remaining outstanding ABN AMRO ordinary shares.

In the event that the squeeze-out procedures described above are not capable of being used because RFS Holdings has acquired less than 95% of the outstanding issued capital, RFS Holdings will have the right following the completion of the offers to use any other legally permitted method to obtain 100% of the ABN AMRO ordinary shares, including engaging in one or more corporate restructuring transactions, such as a legal merger, liquidation, transfer of assets or conversion of ABN AMRO into another form or corporate entity, or changing the ABN AMRO articles of association to alter the corporate or capital structure in a manner beneficial to RFS Holdings, or engaging in one or more transactions with minority holders of ABN AMRO ordinary shares including public or private exchanges or tender offers or purchases for consideration which may consist of RBS ordinary shares, other securities or cash. If you do not tender your ABN AMRO ordinary shares or ABN AMRO ADSs in the U.S. offer and RFS Holdings is able to effectuate such a transaction, the price paid for the ABN AMRO ordinary shares purchased may be less than what might have been received upon a sale of such shares prior to such a transaction and payments may attract Dutch withholding tax for certain categories of shareholder depending on the form they take. For further details of the impact this may have on holders of ABN AMRO ordinary shares and ABN AMRO ADSs, see "Effects of the Offers and Post-Closing Restructuring".

ABN AMRO ADSs may cease to be "margin securities".

ABN AMRO ADSs currently are "margin securities" under the regulations of the Board of Governors of the U.S. Federal Reserve System, which status has the effect, among other things, of allowing U.S. brokers to extend credit on the collateral of ABN AMRO ADSs for purposes of buying, carrying and trading in securities. Upon the delisting of ABN AMRO ADSs from the NYSE, ABN AMRO ADSs would not be "margin securities" and, therefore, would no longer be able to be used as collateral for the purpose of loans made by U.S. brokers.

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INFORMATION INCORPORATED BY REFERENCE

This document incorporates important business and financial information about RBS and ABN AMRO by reference and, as a result, this information is not included in or delivered with this document. For a list of those documents that are incorporated by reference into this document, see "Additional Information for Securityholders—Incorporation of Certain Documents by Reference".

Documents incorporated by reference are available from us upon request without charge. You may also obtain documents incorporated by reference into this document from the internet site of the SEC, at http://www.sec.gov or by requesting such documents in writing or by telephone from the global information agent:

D.F. King & Co., Inc.

48 Wall Street
New York, NY 10005

1-800-848-2998

To obtain timely delivery of these documents, you must request them no later than 26 September 2007.

In deciding whether to tender your ABN AMRO ordinary shares or ABN AMRO ADSs in the U.S. offer, you should rely only on the information contained in or incorporated by reference into this document or in the related U.S. offer documents. None of Fortis, RBS, Santander or RFS Holdings has authorised any person to provide you with any information that is different from, or in addition to, the information that is contained in this document or in other documents related to the U.S. offer.

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PRESENTATION OF CERTAIN FINANCIAL AND OTHER INFORMATION

ABN AMRO Information

In commencing the offers and determining their terms and conditions, and in presenting financial and other information about ABN AMRO in this document, the Banks and RFS Holdings have relied upon publicly available information relating to ABN AMRO, including periodic and other reports for ABN AMRO as filed with or furnished to the SEC on Form 20-F and Form 6-K, and in its annual reports and accounts made available in the Netherlands. As a result of the limited information the Banks have about ABN AMRO, after the completion of the offers, the Banks may be subject to unknown liabilities of ABN AMRO, which may have an adverse effect on the Banks' respective profitability, results of operations and financial position.

Accounting Principles

RBS

As required by the U.K. Companies Act 1985 and Article 4 of the European Union IAS Regulation, our consolidated financial statements are prepared in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, or IASB, and interpretations issued by the International Financial Reporting Interpretations Committee of the IASB, or collectively IFRS, as adopted by the European Union. The EU has not adopted the complete text of IAS 39 "Financial Instruments: Recognition and Measurement". It has relaxed some of the standard's hedging requirements. We have not taken advantage of this relaxation and have adopted IAS 39 as issued by the IASB. On implementation of IFRS on 1 January 2005, we took advantage of the option in IFRS 1 "First-time Adoption of International Financial Reporting Standards" to implement IAS 39 "Financial Instruments: Recognition and Measurement", IAS 32 "Financial Instruments: Disclosure and Presentation" and IFRS 4 "Insurance Contracts" from 1 January 2005 without restating our 2004 income statement and balance sheet. The date of our transition to IFRS and the date of our opening IFRS balance sheet was 1 January 2004. Our published 2004 financial statements were prepared in accordance with then-current U.K. GAAP, comprising standards issued by the U.K. Accounting Standards Board, pronouncements of the Urgent Issues Task Force, relevant Statements of Recommended Accounting Practice and provisions of the U.K. Companies Act 1985.

IFRS differs in certain important respects from U.S. GAAP. For a discussion of the principal differences between IFRS and U.S. GAAP relevant to us, together with a reconciliation of certain IFRS amounts to U.S. GAAP, see note 47 to our audited consolidated financial statements included in our Annual Report on Form 20-F for the year ended 31 December 2006, which is incorporated by reference into this document.

ABN AMRO

For all periods up to and including the year ended 31 December 2004, ABN AMRO prepared its consolidated financial statements in accordance with Dutch GAAP. From 1 January 2005, it was required under EU regulations to prepare its consolidated financial statements in accordance with IFRS. ABN AMRO's financial statements for 2005 are its first financial statements prepared in accordance with IFRS. For a discussion of the principal differences between IFRS and U.S. GAAP relevant to ABN AMRO, together with a reconciliation of certain IFRS amounts to U.S. GAAP, see Note 50 to ABN AMRO's audited consolidated financial statements included in its Annual Report on Form 20-F for the year ended 31 December 2006, which is incorporated by reference into this document.

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Market Information

This document includes industry data and projections about the Banks' and ABN AMRO's respective markets obtained from industry surveys, industry publications, market research and other publicly available third-party information. Industry surveys and industry publications generally state that the information they contain has been obtained from sources believed to be reliable but that the accuracy and completeness of such information is not guaranteed and that the projections they contain are based on a number of significant assumptions. We have not independently verified this data or determined the reasonableness of such assumptions.

In addition, in many cases statements in this document regarding the banking and financial services industry and the Banks' and ABN AMRO's positions in that industry have been made based on internal surveys, industry forecasts, market research, as well as the Banks' own experiences. While these statements are believed by the Banks to be reliable, they have not been independently verified.

Financial Information

The financial information and certain other information presented in a number of tables in this document has been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column. In addition, certain percentages presented in the tables in this document reflect calculations based upon the underlying information prior to rounding, and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers.

No Internet Site is Part of This Document

Each of Fortis, RBS, Santander and ABN AMRO maintains an internet site. The Fortis internet site is at http://www.fortis.com. The RBS internet site is at http://www.rbs.com. The Santander internet site is at http://www.santander.com. The ABN AMRO internet site is at http://www.abnamro.com. In addition, the Banks have established an internet site for the offers which is accessible through each of the Banks' websites. Information contained in or otherwise accessible through these internet sites is not a part of this document. All references in this document to these internet sites are inactive textual references to these internet addresses and are for your information only.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This document contains or incorporates by reference "forward-looking statements" regarding the intent, belief or current expectations of RFS Holdings, Fortis, RBS, Santander, ABN AMRO and their respective directors and officers about RFS Holdings, Fortis, RBS, Santander or ABN AMRO, their respective businesses and the transactions described herein. Generally, words such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "plan", "seek", "continue" or similar expressions identify forward-looking statements.

These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of RFS Holdings, Fortis, RBS, Santander or ABN AMRO and are difficult to predict, that may cause actual results or developments to differ materially from any future results or developments expressed or implied from the forward-looking statements. Factors that could cause actual results to differ materially from those contemplated by the forward-looking statements include, among other factors:

costs (including taxes) or difficulties related to the integration of acquisitions, including the proposed acquisition of ABN AMRO, may be greater than expected;

the risk of unexpected consequences resulting from acquisitions, including the proposed acquisition of ABN AMRO;

the Banks' respective abilities to achieve revenue benefits and cost savings from the integration of certain of ABN AMRO's businesses and assets;

Fortis's, RBS's, Santander's and RFS Holdings' ability to obtain regulatory approvals for the proposed acquisition of ABN AMRO without materially onerous conditions;

any change-of-control provisions in ABN AMRO's agreements that might be triggered by the transactions described in this document;

the potential exposure of the Banks and ABN AMRO to various types of market risks, such as interest rate risk, foreign exchange rate risk and commodity and equity price risk. For example, certain of the market risk disclosures are dependent on choices about key model characteristics and assumptions and are subject to various limitations. By their nature, certain of the market risk disclosures are only estimates and, as a result, actual future gains and losses could differ materially from those that have been estimated;

general economic conditions in the European Union, in particular in the United Kingdom, the Netherlands, Belgium, Spain and in other countries in which the Banks or ABN AMRO have business activities or investments, including the United States;

the monetary and interest rate policies of central banks, in particular the Bank of England, the Dutch Central Bank, the Central Bank of Belgium, the Bank of Spain, the European Central Bank, the Board of Governors of the Federal Reserve System and other G-7 central banks;

changes or volatility in interest rates, foreign exchange rates (including the exchange rates between sterling, U.S. dollars and euros), asset prices, equity markets, commodity prices, inflation or deflation;

the effects of competition and consolidation in the markets in which the Banks or ABN AMRO operate, which may be influenced by regulation, deregulation or enforcement policies;

tax consequences of restructuring;

55


changes in consumer spending and savings habits, including changes in government policies which may influence investment decisions;

changes in applicable laws, regulations and taxes in jurisdictions in which the Banks and ABN AMRO operate, including the laws and regulations governing the structure of the transactions described in this document, as well as actions or decisions by courts and regulators;

natural and other disasters;

the inability of RBS or ABN AMRO to hedge certain risks economically;

the adequacy of our or ABN AMRO's impairment provisions and loss reserves;

technological changes; and

the success of the Banks or ABN AMRO in managing the risks involved in the foregoing.

The Banks caution that these statements are further qualified by the risk factors disclosed in or incorporated by reference in this document that could cause actual results to differ materially from those in the forward-looking statements. See "Risk Factors". Subject to compliance with applicable laws and the rules and regulations of relevant stock exchanges, none of the Banks or RFS Holdings undertakes any obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Banks do not as a matter of course make public projections as to future net revenues, costs, or other results. However, the Banks have prepared prospective financial information for inclusion in this document mainly related to estimated cost savings, estimated revenue benefits, adjusted earnings per share and return on investment, among others, to present the estimated impacts of the acquisition of ABN AMRO. This prospective financial information was not prepared in accordance with the guidelines established by the American Institute of Certified Public Accounts (the "AICPA") with respect to prospective financial information.

Statements relating to the revenue benefits, cost savings, adjusted earnings per share, returns on investment, internal rates of return, capital ratios and business growth opportunities the Banks expect to achieve following the transactions described in this document are based on assumptions which in the view of each Bank's respective management, were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of such management's knowledge and belief, the expected course of action and the expected future financial impact on performance of the relevant bank due to the acquisition of ABN AMRO. However, the assumptions about these expected revenue benefits, cost savings, adjusted earnings per share, returns on investment, internal rates of return, capital ratios and business growth opportunities are inherently uncertain and, though considered reasonable by management as of the date of its preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the prospective financial information. There can be no assurance that the Banks will be able to successfully implement the strategic or operational initiatives that are intended.

Neither RBS's independent auditors, nor any other independent accountants, have complied with, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, or disclaim any association with, the prospective financial information.

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BACKGROUND TO AND REASONS FOR THE OFFERS

Background to the Offers

In the ordinary course of managing their respective businesses, each Bank has regularly reviewed and evaluated its business strategy and strategic alternatives, potential acquisitions and business combinations.

During the two-year period covered in this section, as part of its review of non-organic growth opportunities for RBS, the RBS Board discussed a range of strategic opportunities, including the potential benefits of an acquisition of ABN AMRO, at its annual strategy offsite meetings and at a number of other RBS Board meetings.

In February 2005, Sir Fred Goodwin (Group Chief Executive of RBS) met with Mr Rijkman Groenink (Chairman of the Managing Board of ABN AMRO) to exchange views about various issues affecting banking in Europe. They also discussed whether there were any opportunities for a potential combination between the two companies, but nothing further came from this initial discussion.

In the summer of 2005, Sir Fred Goodwin and Mr. Groenink corresponded in connection with ABN AMRO's proposed acquisition of Banca Antonveneta. On 5 July 2005, in reaction to market speculation regarding Italian bank transactions, Sir Fred Goodwin wrote to Mr. Groenink confirming RBS's statement in its 2004 full year results that it had no interest in European cross-border bank acquisitions at that time.

On 31 October 2006, Sir Fred Goodwin wrote to Mr. Groenink regarding market speculation of a potential acquisition of ABN AMRO and to arrange a time to meet with Mr. Groenink to catch up generally. Mr. Groenink responded the next day, and a meeting was scheduled for 9 January 2007.

Between January and March 2007, Santander engaged in preliminary discussions and negotiations with ABN AMRO regarding the possible purchase by Santander of certain discrete businesses in different geographic locations being offered for sale by ABN AMRO. These preliminary discussions and negotiations between Santander and ABN AMRO did not result in the acquisition by Santander of any ABN AMRO Businesses.

On 9 January 2007, Sir Fred Goodwin met Mr. Groenink in Amsterdam, and, during a wide-ranging conversation, discussed whether a combination of parts of the ABN AMRO Group and certain RBS businesses could be attractive. The discussion related to the merits of combining RBS's U.S. operations with ABN AMRO's U.S. retail and commercial banking activities and their respective global corporate banking businesses. Mr. Groenink said that ABN AMRO would approach RBS if it decided to take any action in the United States and indicated that an internal review was underway at ABN AMRO with respect to the issue. It was left with Mr. Groenink to consider the discussion further and he agreed to revert to Sir Fred Goodwin. During these conversations, Mr. Groenink disclosed to Sir Fred Goodwin that ABN AMRO shareholder Tosca Holdings ("Tosca") had met with him to recommend that ABN AMRO merge with RBS. Sir Fred Goodwin confirmed that RBS was not working with Tosca, or, in this regard, with any other ABN AMRO shareholder.

The next day, Sir Fred Goodwin wrote to Mr. Groenink thanking him for the meeting and welcoming Mr. Groenink's thoughts in due course.

On 20 February 2007, a letter from The Children's Investment Fund ("TCI") to ABN AMRO was publicly disclosed, which urged ABN AMRO to actively pursue the potential break up, spin off, sale or merger of ABN AMRO or of its various businesses.

On 8 March 2007, Sir Fred Goodwin telephoned Mr. Groenink to discuss press and market speculation regarding a potential acquisition of ABN AMRO. During that conversation, Sir Fred Goodwin confirmed to Mr. Groenink that RBS was not the source of such speculation and offered to put this in writing to Mr. Groenink. However, he also reiterated a continued interest in working with

57



ABN AMRO to explore the opportunities that might be available by combining RBS's U.S. operations with ABN AMRO's U.S. retail and commercial banking activities and RBS's and ABN AMRO's global corporate banking businesses. The call was concluded with both parties confirming they would give further consideration to the matter.

By letter dated 12 March 2007 to Mr. Groenink, Sir Fred Goodwin further reiterated that RBS was interested in exploring with ABN AMRO any opportunities which might exist in relation to the U.S. or more widely to work together to create value. He also re-confirmed that RBS had no involvement with Tosca.

In the course of regular dialogue, representatives of RBS and Santander held two meetings, in January and March 2007, in which the potential for a joint RBS-Santander acquisition of ABN AMRO was discussed.

On 19 March 2007, Barclays announced that it was in exclusive preliminary discussions with ABN AMRO concerning a potential combination of the two organisations and, on 20 March 2007, announced the principles of any potential combination between ABN AMRO and Barclays.

On 30 March 2007, Merrill Lynch arranged a meeting where Sir Fred Goodwin met with Count Maurice Lippens (Chairman of Fortis) and Mr. Jean-Paul Votron (Chief Executive of Fortis) to discuss a potential joint offer by RBS, Santander and Fortis for ABN AMRO.

During April 2007, representatives of the Banks and their financial adviser Merrill Lynch had a series of meetings during which the Banks agreed to work together on the potential acquisition of ABN AMRO and together formulated the Banks' proposed offer for ABN AMRO. These meetings culminated in the Banks sending a joint letter dated 12 April 2007, to Mr. Arthur Martinez (Chairman of the Supervisory Board of ABN AMRO) and Mr. Groenink, to express their strong interest in putting forward a joint offer for ABN AMRO which the Banks believed would provide ABN AMRO shareholders with immediate and superior value at a materially higher level than Barclays. The letter requested the opportunity to discuss the proposals with ABN AMRO. After the close of the market on 13 April 2007, in response to market and press speculation and a request by the AFM for the Banks to make a public announcement of their proposal to ABN AMRO, the Banks issued a joint announcement confirming the proposal they had made to ABN AMRO. The announcement was published on Regulatory News Service on 16 April 2007.

By letter dated 17 April 2007, ABN AMRO invited the Banks to a meeting on 23 April 2007 to discuss the Banks' proposals, and issued an announcement disclosing this invitation. By letter dated 19 April 2007, the Banks accepted the invitation of Mr. Groenink and Mr. Martinez to meet to clarify the Banks' intentions and interest with respect to ABN AMRO and, on the same day, the Banks issued an announcement confirming that they had agreed to attend the meeting.

On 20 April 2007, Sir Fred Goodwin telephoned Mr. Groenink to discuss the Banks' interest in acquiring ABN AMRO.

On 22 April 2007, there was a call between Count Maurice Lippens and Mr. Groenink concerning the relationship between Fortis and ABN AMRO.

On 23 April 2007, ABN AMRO announced that it had entered into a merger protocol (the "Merger Protocol") with Barclays in respect of a proposed €67 billion offer by Barclays for ABN AMRO that would be recommended by the ABN AMRO Managing and Supervisory Boards (the "ABN AMRO Boards") and that ABN AMRO Bank, an ABN AMRO subsidiary, had also entered into an agreement with Bank of America for the sale of LaSalle to Bank of America for $21 billion in cash. The proposed offer by Barclays was conditional on the completion of the sale of LaSalle either to Bank of America pursuant to the terms of the Bank of America Agreement or pursuant to a purchase and sale agreement with another party. The Bank of America Agreement included a "go shop" provision that permitted ABN AMRO Bank, for a period of 14 days ending on 6 May 2007, to enter into an

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alternative acquisition agreement for LaSalle with another bidder, provided that, among other things, such bidder's acquisition proposal was a "superior proposal" in that it was superior from a financial point of view to the Bank of America Agreement, for cash and not subject to a financing condition. The "go shop" provision also required that any alternative acquisition agreement would automatically terminate upon the exercise by Bank of America of its right to match any such superior proposal. The Bank of America Agreement also granted ABN AMRO Bank the right to terminate the Bank of America Agreement if Bank of America failed to exercise its matching right, provided that ABN AMRO Bank simultaneously paid a $200 million termination fee to Bank of America.

On the same day, ABN AMRO postponed the pre-arranged early afternoon meeting scheduled between the Banks and ABN AMRO, first to later in the afternoon and then to early evening. In reaction to ABN AMRO's announcement, the Banks sent a letter to Mr. Martinez and Mr. Groenink and issued a press release cancelling their meeting that had been arranged for that day. In the letter, the Banks stated that their proposals required the retention of LaSalle by ABN AMRO and requested details of the circumstances under which the sale of LaSalle to Bank of America could be terminated. The Banks also requested access to the same due diligence information provided to Barclays.

On 23 April 2007, Citizens, a wholly owned subsidiary of RBS, received a letter from UBS, on behalf of ABN AMRO, regarding a potential acquisition by Citizens of LaSalle. UBS asked Citizens to confirm that it would be able to propose a cash purchase price in excess of $21 billion not subject to financing and that Citizens was prepared to enter into an agreement on terms at least as favourable as the Bank of America Agreement. UBS also sent Citizens a proposed draft of a confidentiality agreement to be executed prior to the commencement of a due diligence review of LaSalle (the "LaSalle Confidentiality Agreement").

On 24 April 2007, the Banks received a letter from ABN AMRO seeking further details of their proposal for the acquisition of ABN AMRO and suggesting a meeting to discuss them.

On 25 April 2007, Sir Fred Goodwin responded by letter on behalf of the Banks to Mr. Groenink outlining the key terms of the Banks' proposed offer, including a price indication, and proposing a time to meet in Edinburgh that day. The Banks' proposals were subject to certain pre-conditions, including LaSalle remaining within the ABN AMRO Group as well as satisfactory completion of a limited due diligence review.

On 25 April 2007, the Banks issued a press release and held a press conference outlining the contents of this proposal. Following the issue of the press release, Sir Fred Goodwin, Mr. Guy Whittaker (Group Finance Director of RBS) and Mr. Votron had various discussions on the proposed offer with Mr. Groenink, Mr. Martinez and Mr. Wilco Jiskoot (a director on the ABN AMRO Managing Board) and other representatives of ABN AMRO.

On the same day, ABN AMRO announced that it would provide the Banks with the same information it had previously provided to Barclays.

On 26 April 2007, ABN AMRO held its annual general meeting at which ABN AMRO shareholders approved (amongst other resolutions) a resolution by TCI that ABN AMRO should "actively pursue any possibilities to sell, spin-off or merge some or all of the major businesses of the [C]ompany to maximize shareholders' value". On the same day, the shareholder group VEB filed a suit in the Dutch Enterprise Chamber seeking, among other things, a provisional injunction restraining ABN AMRO and ABN AMRO Bank from proceeding to completion of the sale of LaSalle to Bank of America without the approval of the shareholders of ABN AMRO.

During the same day, Sir Fred Goodwin corresponded with Mr. Martinez to discuss access to be afforded to the Banks to conduct a limited due diligence review of ABN AMRO, consistent with that provided to Barclays. On the same day, ABN AMRO sent the Banks a proposed draft of a

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confidentiality agreement with respect to such information (the "ABN AMRO Confidentiality Agreement") to be entered into by ABN AMRO and each Bank. The draft ABN AMRO Confidentiality Agreement contained a standstill provision that would have prevented the Banks from making an offer for ABN AMRO for 12 months without ABN AMRO's prior written consent. The Banks requested that ABN AMRO remove the standstill provision from the ABN AMRO Confidentiality Agreement and issued a press release that day disclosing the request. Sir Fred Goodwin met with Mr. Martinez after the ABN AMRO annual general meeting to discuss due diligence access and to inform Mr. Martinez that the letter (referred to below) that was being sent by the Banks was of a technical nature in order to satisfy requirements of the Dutch takeover regulations and that the Banks' preference was to hold direct, constructive discussions with ABN AMRO.

Given that any offer for ABN AMRO made prior to the expiration of the "go shop" period could, under Dutch takeover regulations, be made only on seven days' notice to ABN AMRO, the Banks provided such notification by letter dated 26 April 2007. On 27 April 2007, the Banks issued a press release announcing the delivery of the notification to ABN AMRO. The same day, ABN AMRO agreed to remove the standstill provision, and the ABN AMRO Confidentiality Agreement was executed. On 28 April 2007, the Banks and ABN AMRO Bank also entered into a definitive LaSalle Confidentiality Agreement regarding a possible acquisition proposal by the Banks.

On 30 April 2007, the Banks delivered a letter to UBS confirming that the Banks were confident that they would be able to make an acquisition proposal for LaSalle that would constitute a superior proposal under the terms of the Bank of America Agreement. Shortly thereafter, the Banks and their advisers were granted access to begin their due diligence review of LaSalle, and the Banks' legal counsel made preliminary contact with ABN AMRO's legal counsel.

During the period between 30 April 2007 and 5 May 2007, the Banks met with ABN AMRO to conduct a limited due diligence review of ABN AMRO. Representatives from various ABN AMRO departments, including finance, human resources, legal, risk and compliance, group audit, group risk management, asset and liability management, general counsel and Business Units Latin America, Europe, Netherlands, Asia and Global Markets, met with their counterparts from Fortis, RBS and Santander to discuss due diligence materials. Representatives from Citizens also met with LaSalle executives to discuss LaSalle's due diligence materials.

By letter dated 1 May 2007, Mr. Groenink asked the Banks to provide additional information regarding, among other things, the financing arrangements in place for the €50 billion cash element of the Banks' indicative offer; how the risks to capital, clients and employees would be managed in a break up of ABN AMRO; how the revenues, capital and group debt of ABN AMRO would be divided by the Banks; and how the capital gains tax, stranded costs and restructuring charges would be borne by the Banks.

In a telephone call on 2 May 2007, ABN AMRO counsel advised RBS counsel that ABN AMRO would be concerned about any cross-conditionality between an acquisition proposal for LaSalle and completion of a public offer for ABN AMRO. ABN AMRO counsel also indicated a willingness to discuss issues relating to the structure of the Banks' proposal before its submission. Later that day, the Banks received a letter from UBS, on behalf of ABN AMRO Bank, inviting them to submit a final binding offer for the acquisition of LaSalle between 2 May 2007 and 4 May 2007 and providing details of the procedures under which the offer should be made. The letter included a draft of a purchase and sale agreement between the Banks and ABN AMRO Bank with respect to LaSalle and the related disclosure schedules. Thereafter, the Banks' respective counsel had a preliminary discussion with ABN AMRO's counsel regarding the terms and structure of the Banks' acquisition proposal for LaSalle, including the fact that the acquisition proposal would be conditional upon the Banks completing an offer to acquire ABN AMRO and the Banks' belief that this was not precluded by the Bank of America Agreement.

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On 2 May 2007, representatives of the Banks and Merrill Lynch met with Mr. Hugh Scott-Barrett (then Chief Financial Officer of ABN AMRO) and Mr. Jiskoot, together with representatives of Morgan Stanley and UBS, to discuss the proposed offer. Sir Fred Goodwin joined for part of the meeting.

On 3 May 2007, the Banks sent a letter to Mr. Groenink in response to his letter of 1 May 2007 in which he requested further information regarding the Banks' proposed offer. The Banks answered the questions in Mr. Groenink's letter, including explaining that any offer would not be subject to a financing condition, that Merrill Lynch had confirmed its intention to underwrite the Banks' securities issuances in respect of the €50 billion cash element of the proposed offer and that any changes to ABN AMRO's capitalisation and structure would be made only with regulatory approval following completion of the offer.

On the same day, the Dutch Enterprise Chamber granted VEB a provisional injunction restraining ABN AMRO and ABN AMRO Bank from proceeding to completion of the sale by ABN AMRO Bank of LaSalle to Bank of America without the approval of ABN AMRO shareholders.

Later on 3 May 2007, ABN AMRO counsel called RBS counsel to discuss whether any acquisition proposal by the Banks for LaSalle would be conditional on the completion of a public offer for ABN AMRO. ABN AMRO counsel encouraged the Banks to submit an unconditional acquisition proposal in light of the "various ramifications of a conditional bid". ABN AMRO counsel also indicated that ABN AMRO Bank would seek clarification from the Dutch Enterprise Chamber as to whether its order barred ABN AMRO from continuing the "go shop" process.

On 4 May 2007, Bank of America filed a lawsuit against ABN AMRO in the United States District Court of the Southern District of New York, seeking unspecified monetary damages for breach of representation, an injunction preventing ABN AMRO from negotiating the sale of or selling LaSalle, other than as provided for in the Bank of America Agreement, and an order of specific performance for the delivery of LaSalle to Bank of America. The same day, ABN AMRO asked the Dutch Enterprise Chamber for clarity on whether its preliminary injunction affected the "go shop" deadline provided for in the Bank of America Agreement.

On 4 May 2007, Sir Fred Goodwin, Count Maurice Lippens and Mr. Votron, as representatives of the Banks, met with Mr. Groenink and Mr. Martinez over dinner in Amsterdam to discuss the Banks' proposal for LaSalle and to explain how their proposal was superior to the Barclays proposed offer and the Bank of America agreement to acquire LaSalle.

In a 5 May 2007 letter, in accordance with the "go shop" provision of the Bank of America Agreement, the Banks submitted to both ABN AMRO's and ABN AMRO Bank's Boards their acquisition proposal to acquire LaSalle for $24.5 billion in cash, not subject to financing, but conditional on the completion of a proposed public offer to be made by the Banks for ABN AMRO. The letter enclosed a confidential memorandum describing the details of the proposed public offer that the Banks would make for ABN AMRO if the Banks' acquisition proposal for LaSalle were accepted, including the price of €38.40 per share. The memorandum also described the rationale for the proposed offer, the Banks' plans with respect to ABN AMRO, the expected benefits of the offer to customers and employees, the low execution risk of the offer and the financing of the offer consideration.

Included with the Banks' acquisition proposal was a purchase and sale agreement for LaSalle in the form that the Banks were prepared to execute. The agreement included a provision requiring the approval of ABN AMRO shareholders for the acquisition of LaSalle and a mutual termination right in the event that ABN AMRO recommended or pursued an alternative transaction involving the acquisition of ABN AMRO. In addition to the closing conditions included in the Bank of America Agreement, the agreement proposed by the Banks included conditions relating to the receipt of Fortis shareholder approval and the absence of any litigation arising out of or related to the Bank of

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America Agreement. The Banks also indicated that they were prepared to enter into a merger protocol with ABN AMRO that would outline the terms of their proposed public offer for ABN AMRO. By its terms, the Banks' acquisition proposal was to expire at 11:59 p.m. (New York City time) on 6 May 2007.

Throughout 5 and 6 May 2007, the Banks, Merrill Lynch and the Banks' respective legal advisers had discussions by telephone and correspondence with ABN AMRO and its financial and legal advisers regarding the acquisition proposal for LaSalle and the proposed offer for ABN AMRO. On 5 May 2007, ABN AMRO counsel asked RBS counsel to eliminate the conditions relating to the Bank of America litigation and the Fortis shareholder vote. ABN AMRO counsel and financial advisers also expressed dissatisfaction with the inter-conditionality between the Banks' acquisition proposal for LaSalle and the proposed offer to acquire ABN AMRO. The Banks' legal counsel and Merrill Lynch explained, however, that the inter-conditionality was not precluded by the Bank of America Agreement.

Later that day, RBS counsel sent a letter on behalf of the Banks to ABN AMRO stating that the Banks would eliminate the conditions relating to the Bank of America litigation and the Fortis shareholder vote. ABN AMRO counsel subsequently requested that the inter-conditionality also be eliminated and, on 6 May 2007, confirmed that request in writing.

During the afternoon (London time) of 6 May 2007, the Banks responded to a number of legal questions submitted by Morgan Stanley, on behalf of ABN AMRO. The Banks then received an email from Morgan Stanley and UBS, again on ABN AMRO's behalf, attaching a list of 31 detailed questions on the Banks' proposed offer for ABN AMRO. In response, a representative of Merrill Lynch sent Morgan Stanley and UBS an email to the effect that the Banks had provided sufficient information for ABN AMRO to be able to determine that the Banks' acquisition proposal was a superior proposal and that the Banks would provide confirmatory due diligence on the financing of the proposed offer if ABN AMRO accepted their offer in principle.

The parties' respective legal counsel continued to negotiate the terms of the purchase and sale agreement for LaSalle into the night of 6 May 2007, ahead of the expiry of the "go shop" provision at 11:59 p.m. (New York City time) and resolved substantially all the open issues in the purchase and sale agreement for LaSalle other than those that related to the inter-conditionality between the Banks' acquisition proposal for LaSalle and the Banks' proposed public offer to acquire ABN AMRO.

The Banks informed ABN AMRO through telephone calls and emails between Merrill Lynch, UBS and Morgan Stanley, and between Sir Fred Goodwin and Mr. Martinez and Mr. Groenink in the evening of 6 May 2007, that they were not prepared to remove the inter-conditionality between their acquisition proposal for LaSalle and their proposed public offer for ABN AMRO, that the interconditionality was not precluded by the Bank of America Agreement and that the Banks' offer for LaSalle was superior.

Later that night, UBS emailed Merrill Lynch to inform the Banks that the ABN AMRO Boards did not accept the inter-conditionality of the acquisition proposal and the proposed offer and therefore would not consider the Banks' acquisition proposal for LaSalle to be a superior proposal within the terms of the "go shop" provision.

On 7 May 2007, the Banks confirmed by press release that they had submitted an acquisition proposal for LaSalle to ABN AMRO on 5 May 2007, which had been rejected by ABN AMRO on 6 May 2007. In particular, the Banks noted that their proposed price for LaSalle was materially greater than the price that Bank of America had agreed to pay and would have led to a public offer from the Banks for ABN AMRO on terms consistent with the indicative proposals announced on 25 April 2007.

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From the week commencing 7 May 2007 until the week ending 8 June 2007, there was intermittent contact between representatives of RBS, Santander and their advisers and Bank of America and its legal advisers regarding the possibility of resolving the situation with respect to the sale of LaSalle, in particular regarding a possible split of the LaSalle business between RBS and Bank of America. As at the date of this document, discussions are not ongoing.

On 14 May 2007, at the request of the AFM and ABN AMRO, the Banks issued a press release to clarify certain aspects of the Banks' acquisition proposal for LaSalle submitted to ABN AMRO on 5 May 2007, including the proposed purchase price of $24.5 billion. At the request of the AFM, ABN AMRO and the Banks also disclosed on their websites a number of previously non-public documents, including letters between the Banks and ABN AMRO and the draft purchase and sale agreement. The Banks' press release also stated that the Banks' proposals for the acquisition of ABN AMRO were still under consideration by the Banks and remained conditional, among other things, on LaSalle remaining within the ABN AMRO Group. The Banks stated that under the timetable set by the Dutch public offer rules, the Banks would make a further statement regarding their position on or before 27 May 2007.

On 15 May 2007, ABN AMRO filed an appeal in the Supreme Court of the Netherlands requesting that the Supreme Court nullify the decision of the Dutch Enterprise Chamber issued on 3 May 2007. On the same date, both Bank of America and Barclays also filed an appeal seeking similar relief with the Supreme Court of the Netherlands.

On 19 May 2007, Sir Fred Goodwin spoke with Mr. Martinez regarding progressing the Banks' proposed offer for ABN AMRO.

On 24 May 2007, executives from the Banks held preliminary discussions on their proposals in relation to ABN AMRO with ABN AMRO's Works Council. These discussions were continued on 4 June 2007.

On 25 May 2007, the Banks issued a press release announcing that, in light of the forthcoming bank holiday on Monday, 28 May 2007 in the Netherlands, Belgium and the United Kingdom, the Banks would make an announcement on 29 May 2007, rather than 27 May 2007, as previously indicated, clarifying whether or not, and if so under what circumstances, the Banks would make an offer for ABN AMRO.

Sir Fred Goodwin having advised Mr. Groenink and Mr. Martinez in advance by telephone, the Banks sent a letter dated 28 May 2007, confirming to ABN AMRO their intention to announce an offer on 29 May 2007 and enclosing a draft of the announcement to be released on 29 May 2007. The letter explained that the Banks' proposed offer was substantially the same as in the confidential memorandum dated 5 May 2007, but also indicated that the Banks intended to defer €1.00 of cash per ABN AMRO share from the proposed consideration pending resolution of the situation with respect to the sale of LaSalle. The letter also outlined the benefits of the Banks' proposals to ABN AMRO shareholders, employees and other stakeholders.

On 29 May 2007, the Banks announced their proposed offer for ABN AMRO and held investor and press conferences about the proposed offer. Among other things, the Banks confirmed the following terms of the proposed offer:

€30.40 in cash plus 0.844 RBS ordinary shares for each ABN AMRO ordinary share (including €1.00 in cash to be retained by the Banks pending resolution of the situation with respect to the sale of LaSalle);

Valued at €38.40 per ABN AMRO ordinary share, a 13.7% premium to the value of Barclays' proposed offer (based on the price of Barclays ordinary shares of 712.5p at the close of business on 24 April 2007, the day before the Banks first announced details of their proposals including a price indication, and the price of RBS ordinary shares of 642.5p at the close of

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    business on 25 May 2007, the last full trading day prior to the announcement of the terms of the proposed offer);

Total value of €71.1 billion; €8.6 billion higher than Barclays' proposed offer (based on an undiluted number of shares, and on the price of Barclays ordinary shares of 712.5p at the close of business on 24 April 2007, the day before the Banks first announced details of their proposals including a price indication, and on the price of RBS ordinary shares of 642.5p at the close of business on 25 May 2007, the last full trading day prior to the announcement of the terms of the proposed offer);

Approximately 79% of the consideration in cash, providing greater certainty of value than Barclays' proposed offer;

Proposed offer not subject to any financing condition, with capital raisings fully underwritten; and

Proposed offer conditional, among other things, on the Dutch Supreme Court upholding the provisional injunction granted by the Dutch Enterprise Chamber on 3 May 2007 restraining ABN AMRO and ABN AMRO Bank from selling LaSalle to Bank of America without the prior approval of ABN AMRO shareholders and the result of the ABN AMRO shareholder vote on the sale of LaSalle to Bank of America.

On 30 May 2007, in response to the Banks' offer announcement, ABN AMRO issued a press release stating that it had formed a Transaction Committee that would liaise with the Managing Board and key staff and advisers of ABN AMRO on an ongoing basis on all matters with respect to the proposed offers by Barclays and the Banks or other potential bidders.

Throughout June 2007, following the announcement of the terms of the proposed offer, UBS and Morgan Stanley (on behalf of ABN AMRO) and Merrill Lynch (on behalf of the Banks) had intermittent contact, none of which was substantive, to discuss the terms of the Banks' proposed offer.

By letter dated 4 June 2007, ABN AMRO advised the Banks that the ABN AMRO Boards were in the process of considering the Banks' proposed offer, requested clarification of various points and proposed a meeting between ABN AMRO's working team and the Banks for the week beginning 11 June 2007. Enclosed was a preliminary list of questions intended, according to the letter, to elicit information that would enable ABN AMRO to assess the likelihood that the Banks would obtain the necessary shareholder approvals to complete the proposed offer and to give ABN AMRO a better understanding of the Banks' plans for the split of the ABN AMRO business units in the Netherlands. The letter also noted that any interaction between the Banks and ABN AMRO must be predicated on preserving the rights and obligations under ABN AMRO's Merger Protocol with Barclays and the Bank of America Agreement.

By letter dated 5 June 2007, RBS (on behalf of the Banks) responded, stating that the Banks were willing to meet with ABN AMRO to discuss the proposed offer earlier than the week beginning 11 June 2007. The letter also requested further clarification from ABN AMRO regarding the Transaction Committee formed by ABN AMRO the previous week, as well as the implications of ABN AMRO's reference to "preserving the rights and obligations under [the] Merger Protocol". The Merger Protocol had not been made public at that stage.

On 7 June 2007, Mr. Votron spoke with Mr. Jiskoot regarding valuation issues with respect to the Banks' proposed offer and ABN AMRO's Transaction Committee.

By a letter dated 8 June 2007, Mr. Groenink responded to RBS's 5 June 2007 letter, stating that the Barclays Merger Protocol (which would be publicly filed early in the week commencing 11 June 2007) contained no provisions preventing ABN AMRO from seeking clarifications or prohibiting the ABN AMRO Boards from recommending to ABN AMRO's shareholders a superior competing offer

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to that of Barclays; however, the ABN AMRO Boards were not in a position to engage in a dialogue with the intent to recommend the Banks' proposed offer for ABN AMRO as it was conditional upon LaSalle not being sold. Mr. Groenink also suggested further meetings with him and Mr. Martinez if the Banks felt it necessary after review of the Merger Protocol and reiterated ABN AMRO's proposal for a meeting between ABN AMRO's working team and the Banks.

On 12 June 2007, Sir Fred Goodwin and Mr. Groenink met in Amsterdam to further discuss the terms of the Banks' proposal. The following day, Mr. Gilbert Mittler (Chief Financial Officer of Fortis), Mr. Whittaker, Mr. José A. Álvarez (Chief Financial Officer of Santander) and a representative of Merrill Lynch met with Mr. Jiskoot and representatives of Morgan Stanley and UBS to discuss the Banks' proposed offer in further detail, to answer the questions set out in Mr. Groenink's letter and to discuss the basis for cooperation between ABN AMRO and the Banks regarding their proposed offer.

Between 18 June and 20 June 2007, UBS contacted Merrill Lynch several times by email, on ABN AMRO's behalf, to request additional information and to clarify certain issues with respect to the Banks' proposed offer, in order to better understand the proposed offer so that the ABN AMRO Boards could determine whether to recommend the proposed offer. On 20 June 2007, UBS sent an email to Merrill Lynch confirming that other than the wording of the "material adverse change" clause in the Banks' proposed offer and ABN AMRO's request to have access to, for verification purposes, the Banks' funding and/or underwriting agreements, ABN AMRO and UBS had no further major outstanding questions about the Banks' proposed offer at that stage.

On 4 July 2007, Mr. Votron and Mr. Jiskoot met to discuss the merits of the Banks' proposed offer, valuation issues and the impact of the Transaction on clients and others.

On 10 July 2007, Mr. Groenink sent Sir Fred Goodwin a letter commenting on the Banks' plans for the Dutch businesses of ABN AMRO, suggesting a further meeting between the Banks and Mr. Jiskoot and offering to provide detailed management accounting information relating to ABN AMRO. Sir Fred Goodwin replied the next day, welcoming the opportunity to meet and obtain further information relating to ABN AMRO as a helpful step forward as part of a constructive dialogue between ABN AMRO and the Banks.

On 11 July 2007, Mr. Groenink called Sir Fred Goodwin regarding VEB's 10 July 2007 submission to the Dutch Enterprise Court requesting the appointment of independent directors to ABN AMRO's Supervisory Board. Sir Fred Goodwin confirmed that RBS did not support that strategy. Mr. Martinez called Sir Fred Goodwin later, when the same matters were discussed.

On 13 July 2007, the Dutch Supreme Court overruled the Dutch Enterprise Chamber's injunction restraining ABN AMRO and ABN AMRO Bank from proceeding to completion of the sale by ABN AMRO Bank of LaSalle to Bank of America without the approval of ABN AMRO's shareholders. The Dutch Supreme Court decision did not deal with VEB's request to the Enterprise Chamber for an investigation into the policy of ABN AMRO as from 1 January 2006; this request is still pending before the Enterprise Chamber. Soon after the announcement of the Dutch Supreme Court's decision, ABN AMRO announced its intention to complete the sale of LaSalle to Bank of America.

On the same day, Mr. Groenink called Sir Fred Goodwin to seek clarification of the Banks' position following the Dutch Supreme Court's ruling. Sir Fred Goodwin confirmed that the Banks would clarify their position shortly. During a subsequent telephone conversion, Sir Fred Goodwin advised Mr. Martinez that the Banks intended to make a revised offer which would be materially higher than Barclays' proposed offer and that it would be a condition of that revised offer that ABN AMRO did not make any further disposals of a material part of its business or assets. Mr. Martinez confirmed that ABN AMRO would treat any revised offer by the Banks for ABN AMRO, without LaSalle, on a level playing field with Barclays' proposed offer. There was a subsequent follow up call between Mr. Groenink and Sir Fred Goodwin.

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Later that day, the Banks wrote to Mr. Martinez and Mr. Groenink confirming that they still intended to bid for ABN AMRO, that their bid would be conditional, amongst other things, upon there being no further disposals by ABN AMRO of a material part of its business or assets, and that it remained the Banks' preference to work with the ABN AMRO Boards to secure their recommendation for the Banks' proposals. The Banks also issued a press release confirming their intention to proceed with a revised bid for ABN AMRO excluding LaSalle.

On 15 July 2007, during separate telephone conversations with each of Mr. Martinez and Mr. Groenink, Sir Fred Goodwin confirmed that the Banks would be making a revised proposed offer at €38.40 per ABN AMRO ordinary share. Mr. Martinez and Mr. Groenink each reconfirmed that this revised proposed offer would be treated on a level playing field with Barclays' proposed offer and that ABN AMRO had no intention of making any major assets disposals at the current time.

Sir Fred Goodwin indicated in the foregoing calls that the Banks would make reference in their announcement to the assurance regarding a level playing field.

On 16 July 2007, the Banks issued an announcement confirming their intention to proceed with their revised proposed offer for ABN AMRO on the following terms, amongst others:

€35.60 in cash plus 0.296 RBS ordinary shares for each ABN AMRO ordinary share;

Valued at €38.40 per ABN AMRO ordinary share, with a total value of €71.1 billion;

Approximately 93% of the consideration in cash, providing greater certainty of value than Barclays' proposed offer;

No pre-conditions or conditions relating directly to claims arising from the sale of LaSalle and no element of contingent consideration; and

Conditional upon ABN AMRO not having made or agreed to make any acquisitions or disposals of a material part of its business or assets, with the exception of the disposal of LaSalle.

Further to the letter received by the Banks on 10 July 2007 from ABN AMRO, on 16 July 2007, representatives of RBS and Fortis met with ABN AMRO representatives to discuss and share limited historical management accounting information for periods in 2005 and 2006 relating to ABN AMRO's business units.

On 18 July 2007, ABN AMRO issued a press release acknowledging receipt of the Banks' revised proposed offer. In the press release, ABN AMRO confirmed it would discuss the revised proposed offer with the Banks, and that, under the terms of the Merger Protocol, it would also discuss with Barclays its offer and the implications of the Banks' revised proposed offer. ABN AMRO also confirmed that it would assess the proposed offers in a fair and transparent manner and that it had no intention of making any major asset disposals at that time.

On the same day, during telephone conversations between Mr. Groenink and Sir Fred Goodwin, Mr. Groenink confirmed that the Banks' revised proposed offer would be assessed in a fair and transparent manner and that ABN AMRO had no intention of making any major asset disposals at that time. Mr. Groenink and Sir Fred Goodwin also discussed the VEB's 10 July 2007 submission to the Dutch Enterprise Court requesting the appointment of independent directors to ABN AMRO's Supervisory Board.

In addition, there has been other intermittent contact, none of which was substantive, between representatives of the Banks and ABN AMRO and their respective advisers.

Other than as set forth in this document, including in this section, since 20 July 2005, to the best knowledge of the Banks, there have been no negotiations, transactions or material contacts between Fortis, RBS, Santander, RFS Holdings or any of their affiliates or any of the persons named in Annex A, on the one hand, and ABN AMRO or any of its affiliates, on the other hand, relating to

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any merger, consolidation, acquisition, tender offer for any class of ABN AMRO's securities, election of the directors of ABN AMRO, or any sale or other transfer of a material amount of the assets of ABN AMRO.

Other than in the ordinary course of business, or as set forth in this document, including in the section entitled "Interests of RFS Holdings, Fortis, RBS, Santander and ABN AMRO and Their Directors and Executive Officers", since 20 July 2005, to the best knowledge of the Banks, there has been no transaction, or series of related transactions, between Fortis, RBS, Santander, RFS Holdings or any of the persons named in Annex A to this document, on the one hand, and any executive officer, director or affiliate of ABN AMRO that is a natural person, on the other hand, that exceeded U.S.$60,000 in the aggregate.

In the normal course of their businesses, ABN AMRO, on one hand, and Fortis, RBS and Santander, on the other hand, are parties to transactions and agreements with each other. None of Fortis, RBS or Santander or, to the best knowledge of the Banks, any of the persons named in Annex A to this document has since 20 July 2005 engaged in any transaction with ABN AMRO or its affiliates that is not a natural person that would require disclosure under the rules and regulations of the SEC applicable to these offers.

Reasons for the Offers

ABN AMRO, the Banks believe, contains good businesses and customer franchises widely spread across a range of attractive markets. However, ABN AMRO has acknowledged the opportunity for it to deliver greater benefits for its customers and employees and generate growth and additional value for its shareholders by combining with a partner and selling parts of the ABN AMRO Group.

The Banks believe that they have a comprehensive strategic fit with ABN AMRO across its activities. The Banks expect that, following their acquisition of ABN AMRO, they will be able to create stronger businesses with enhanced market presence and growth prospects, leading to substantial value creation and benefits for shareholders, customers and employees. The Banks have the financial and management resources to invest in and grow the ABN AMRO businesses and have proven records of growing their own businesses. Implementation of the Banks' respective measures to realise projected synergies is expected to enhance profitability and allow the Banks to invest further in customer-facing areas, as they have done in their own businesses.

The Banks believe the inclusion within their groups of the ABN AMRO Businesses will create substantial value for shareholders through cost savings and revenue benefits. In 2006, ABN AMRO's cost:income ratio was 69.6%, compared to 61.2% for Fortis Bank, 42.1% for RBS and 48.5% for Santander. The Banks believe that the combinations of complementary and overlapping businesses will enable substantial rationalisation of costs. In aggregate, it is expected that the Banks' cost savings, before tax, will reach approximately €3.46 billion per annum by the end of 2010.

While the expected cost saving opportunities underpin the potential value creation, the Banks also believe that there are considerable opportunities for them to create sustainable increases in profitable revenue growth. The Banks believe that relatively limited scale and resources, combined with a lack of focus, have made it difficult for ABN AMRO to take advantage of the many growth opportunities across its broad range of attractive but widely-spread franchises, products and geographies. The combination of complementary businesses and capabilities will create additional opportunities for growth which are not available to ABN AMRO alone, or to any single buyer. The Banks have the resources to capitalise on these opportunities for growth. The Banks estimate that the aggregate revenue benefits identified, net of associated costs and impairment losses, before tax, will be approximately €0.85 billion per annum by the end of 2010.

The Banks believe that, because of their collective presence in and understanding of the broad range of markets in which ABN AMRO operates, and because of their proven track records of

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successful acquisitions and delivery of promised results, their acquisition of ABN AMRO will have lower integration risk than its acquisition by a single buyer.

The Banks expect that the stronger businesses created by combining the ABN AMRO's Businesses with their own complementary operations will generate benefits for customers and employees. The enhanced presence, product strengths and distribution capabilities of these strengthened businesses are expected to deliver benefits to customers, who will also gain from the increased scale and efficiency of the businesses that serve them. The Banks also believe that the stronger businesses resulting from the Transaction will create sustainable platforms for increased job creation and enhanced opportunities for employees.

Businesses to be Acquired

Upon successful completion of the offers, the ABN AMRO Businesses are to be acquired by RFS Holdings, a company formed by the Banks and to be controlled by RBS. Following completion of the offers, an orderly reorganisation is expected to result in the following ownership:

Fortis: Business Unit Netherlands (excluding former Dutch wholesale clients, Interbank and DMC Consumer Finance), Business Unit Private Clients globally (excluding Latin America) and Business Unit Asset Management globally

RBS: Continuing businesses of Business Unit North America following the sale of LaSalle, Business Unit Global Clients and wholesale clients in the Netherlands (including former Dutch wholesale clients) and Latin America (excluding Brazil), Business Unit Asia (excluding Saudi Hollandi) and Business Unit Europe (excluding Antonveneta)

Santander: Business Unit Latin America (excluding wholesale clients outside Brazil), Antonveneta, Interbank and DMC Consumer Finance

Shared Assets: Head Office and central functions, private equity portfolio, stakes in Capitalia and Saudi Hollandi, and Prime Bank

The split of businesses shown above is based on the Business Units as defined in ABN AMRO's Annual Report and Accounts for the year ended 31 December 2006. For further information on the plans and proposals for each of the Banks with respect to ABN AMRO and the acquired businesses see "Plans and Proposals for ABN AMRO".

RBS

RBS believes that the acquisition of the ABN AMRO Businesses will enhance the RBS Group's prospects for growth, both by enabling it to accelerate existing strategies for growth and by providing attractive new opportunities.

Global Wholesale Businesses

The combination of RBS Global Banking & Markets, or GBM, and ABN AMRO's Global Wholesale Businesses will create a leading corporate and institutional business with both scale and global reach, and with significantly enhanced growth prospects. For the purposes of this document, ABN AMRO's Global Wholesale Businesses consist of Business Unit Global Clients and the wholesale clients in Business Unit Europe (excluding Antonveneta), Business Unit Asia and the continuing businesses of Business Unit North America, and wholesale clients in the Netherlands and Latin America, excluding Brazil.

GBM has over recent years established a strong platform for growth outside the United Kingdom in Continental Europe, the United States and the Asia-Pacific region, with scale in financing and risk management products and with deep customer relationships. GBM is now focused on leveraging this platform by adding new customers in existing geographic areas and by achieving greater

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geographic reach. ABN AMRO's Global Wholesale Businesses, while lacking scale in some important products, have extensive geographic reach and large but relatively under-developed customer franchises in Continental Europe, the United States and Asia. In the combined business, GBM expects to generate greater value from ABN AMRO customer relationships by applying its relationship-driven model, which has delivered significantly higher revenue per customer and revenue per employee metrics.

ABN AMRO is one of a small number of banks with a strong global capability in international cash management, payments and trade finance. These products often form the foundation of long-term relationships which should provide opportunities for GBM to sell other, higher value products. In addition, GBM expects to be able to enhance its customer relationships by offering ABN AMRO's stronger products and capabilities in cash management and trade finance.

In North America, GBM has been implementing a strategy with the objective of becoming a top five corporate bank. RBS believes that the combination with ABN AMRO's Global Wholesale Businesses will enable GBM to accelerate the implementation of this strategy. In addition to the significant opportunity to grow the large corporate and institutional franchise in the United States, the combined business is expected to be able to deliver a full range of financial and risk management solutions to mid-corporate customers.

A current objective for GBM is to increase its exposure to high growth markets in Asia and the Middle East. RBS believes that the acquisition of ABN AMRO's Global Wholesale Businesses will enable GBM to make substantial progress on this objective, and will give GBM opportunities to sell a broader range of products to ABN AMRO's large but relatively under-developed corporate customer base in these areas. At the same time, the acquisition of the ABN AMRO Global Wholesale Businesses should enable GBM to increase its exposure to high growth areas such as emerging markets and equity derivatives.

In Latin America, RBS will acquire ABN AMRO's global clients and, except in Brazil, corporate customers and the branches that support them. Although relatively small, this presence and capability in Latin America is expected to enable GBM to enhance relationships with corporate customers operating in this region.

Based on 2006 data, the combined business would have top five positions across a broad range of products and a presence in over 50 countries and it would be ranked the number one corporate and institutional bank in the United Kingdom and Continental Europe and the number five corporate and institutional bank in the United States and Asia (excluding Japan), by client relationships. RBS believes that this combination of product strengths and leading customer franchises globally will give GBM enhanced competitive advantage in a market that is consolidating, and will provide a strong platform for organic growth.

International Retail Businesses

RBS expects that the combination of ABN AMRO's retail businesses in Asia and the Middle East and RBS's credit card and wealth management operations will create a valuable opportunity to build retail businesses in selected countries with large populations and high growth rates. For the purposes of this document, ABN AMRO's International Retail Businesses consist of the retail activities in Business Unit Asia and Business Unit Europe, excluding Antonveneta.

In Asia, RBS's wealth management business is growing strongly from its locations in Hong Kong and Singapore, serving a rapidly growing number of affluent customers in the region. RBS has also established partnership businesses with Bank of China in credit cards and wealth management. Across ABN AMRO's branch network in Asia, the Middle East and Europe are retail activities, offering retail banking products including current accounts and credit cards, and an affluent banking proposition. While RBS is of the view that these retail activities are thinly spread, RBS

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believes that there will be opportunities to build businesses in selected countries with large populations and high growth rates, accelerating RBS's wealth management strategy and adding the capability to distribute credit cards, and potentially a broader product range.

Diversification by Geography

The acquisition of the ABN AMRO Businesses is expected to increase RBS's geographic diversity and will strengthen its platform for growth outside the United Kingdom. On the basis of 2006 results, and full transaction benefits, the proportion of RBS's operating profit coming from outside the United Kingdom will increase from 42% to approximately 47%.

Cost Savings and Revenue Benefits

RBS believes that the combination of its and the ABN AMRO Businesses creates the opportunity for significant cost savings and revenue benefits. RBS believes that it will deliver cost savings amounting to €1,237 million (or €1,319 million, including its share of central cost savings), or 23% of the 2006 costs associated with the relevant ABN AMRO Businesses and net revenue benefits amounting to €481 million, or 8% of the 2006 income associated with the relevant ABN AMRO Businesses, in the third year after completion of the offers. RBS expects the total integration costs to be €2.57 billion (€2.73 billion including RBS's share of central integration costs).

The following table sets out the pre-tax benefits that RBS expects to gain within three years of completion of the offers as a result of the integration of the relevant ABN AMRO Businesses. For further information about the plans and proposals of RBS for achieving these benefits, see "Plans and Proposals for ABN AMRO—RBS".

RBS

 
  Estimated Cost Savings per Annum by end of 2010
  Estimated Net Revenue Benefits per Annum by end of 2010
 
  (euro millions)

  (euro millions)

Global Wholesale Businesses   1,237   481
International Retail Businesses    
Shared Assets   82  
   
 
Total   1,319   481
   
 

Expected Financial Impact

Based on RBS's forecasts for business growth and transaction benefits, the acquisition of the ABN AMRO Businesses is expected to lead to 7.0% accretion in adjusted earnings(a) per RBS ordinary share and to produce a return on investment(b) of 13.2% in the third year after completion of the offers. The internal rate of return of the Transaction is expected to be 15.5% post tax.

Allowing for the acquisition of the relevant ABN AMRO Businesses, RBS's Tier 1 capital ratio is expected to be approximately 7.4%(c) at the end of 2007.


Notes:

(a)
Adjusted for purchased intangibles amortisation and integration costs.

(b)
Return on investment defined as profit after tax plus post-tax transaction benefits over consideration plus post-tax integration costs.

(c)
On a pro forma proportional consolidated basis Tier 1 ratio is expected to be 7.1%.

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Fortis

The successful combination of Fortis and ABN AMRO Businesses is expected to create a top European financial institution. Based on 2006 published data, on a pro forma basis, the combined Fortis and ABN AMRO business will have more than 80,000 employees worldwide, more than 10 million retail customers in the Benelux region alone, projected banking revenues of €16.4 billion, total Banking and Insurance net profit of more than €5.5 billion (which is among the top five in countries that use the euro), 2,500 retail branches and 145 business centers across Europe.

The combined businesses of Fortis and ABN AMRO will enjoy pre-eminent positions in all major market segments in the Benelux region.

Leading positions in the Netherlands. In 2006, Fortis was #3 in insurance (based on Gross Written Premiums), and the new combined group is expected to occupy a leading position in Retail Banking (#3 based on client assets), Small and Medium Enterprise, or SME, Banking (#2 based on revenues), Commercial Banking (#1 based on revenues) and Private Banking (#1 based on assets under management, or AuM).

A leading European Private Bank. Fortis's enlarged private bank is expected to become the third largest European private bank with more than €200 billion in AuM globally based on 2006 data. With one integrated network and a large European and Asian footprint, the combined private bank will be positioned to be the service provider of choice for high net worth clients and ultra high net worth clients, based on a dedicated, broad and differentiated service offering.

Top-tier Asset Management Company. The combined business will be a top-tier European asset manager, with more than €300 billion in AuM globally based on 2006 data. The combined asset management business is expected to benefit from a larger geographic footprint and enhanced offering to third-party distributors, leveraging on a wide, innovative and well-performing product range. The combined product range is anticipated to reach top quartile positions across many asset classes and achieve scale in core growth products.

Fortis believes that the combined activities will allow it to accelerate its strategy to become one of Europe's most dynamic and sustainable financial services providers, helping it to grow its businesses in "Enlarged Europe", and selectively in Asia and North America.

Fortis believes that its combination with ABN AMRO will benefit all stakeholders. Clients will benefit from an enhanced product offering and distribution network; employees will benefit from increased career opportunities; and both companies have a strong reputation for contributing to the local communities in which they operate.

Fortis values the strong brand of ABN AMRO in the Netherlands, and, as its owner, intends to capitalise on it, as well as on the Fortis brand. Both companies have best-in-class servicing models: while ABN AMRO has been named "Best Bank" on several occasions, including by Global Finance, and has an extremely well equipped retail branch network, Fortis has twice been awarded the title of Dutch "Commercial Bank of the Year" in the last three years and has a distinctive European network to service internationally active medium-sized enterprises.

Fortis believes that through combining their significant expertise in service quality, product development and distribution channels, the combined Fortis and ABN AMRO Businesses will provide enormous opportunities to innovate, to invest in the best talents in the market, and to take the lead in product and technological development.

The combined business intends to pursue a socially responsible approach to business, in active dialogue with all stakeholders, in all the countries where it is present, leveraging on both companies' experience in investing in the community (through sponsorship, funding and employee volunteering).

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Cost Savings and Revenue Benefits

Fortis anticipates that this integration process will create substantial synergies. The expected pre-tax synergies are estimated at €1.3 billion, 86% on the cost side and 14% on the revenue side. Fortis expects that these synergies will be realised in stages, approximately 30% in 2008, another 40% in 2009 and the remaining 30% in 2010.

Fortis intends to integrate the ABN AMRO Businesses over a 36-month period focusing on, amongst others, the identification and mitigation of all relevant integration risks. During integration, Fortis will focus on ensuring minimal disruption for clients. Fortis expects the total integration costs to be €1.54 billion.

The following table sets out the pre-tax benefits that Fortis expects to gain within three years of completion of the offers as a result of the integration of the ABN AMRO Businesses.

Fortis

  Estimated Cost Savings per Annum by end of 2010
  Estimated Revenue Benefits per Annum by end of 2010
 
  (pre-tax)
(euro millions)

  (euro millions)

Retail Banking Netherlands   307   56
Commercial Banking Netherlands   124   19
Private Banking   160   43
Asset Management   145   15
Information Technology and Operations   225  
Overhead   189   54
   
 
Total   1,150   187
   
 

Expected Financial Impact

Allowing for the acquisition of the relevant ABN AMRO Businesses, Fortis Bank's Tier 1 pro forma capital ratio is expected to be close to 6.7% immediately after completion of the offers including any Tier 1 or debt financing. Based on Fortis's forecasts for business growth and transaction benefits, the acquisition is expected to lead to 4.3% accretion in cash earnings per share in 2010(a) and to produce a return on investment on a cash basis of 11.2% in 2010(b).


Notes:

(a)
Adjusted for purchased intangibles amortization.

(b)
Defined as profit after tax, adjusted for purchase intangibles amortization, plus post-tax transaction benefits divided by the consideration paid plus post-tax integration costs.

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Santander

Santander believes the acquisition of the ABN AMRO Businesses it will acquire has a compelling strategic rationale for Santander, since it will increase Santander's exposure to attractive markets which it knows well through the acquisition of businesses which Santander believes have significant potential for growth. Santander believes that it has the necessary tools to execute a successful integration of back offices and operating functions, creating substantial value in the process.

Santander believes it can add significant value to the ABN AMRO Businesses it intends to acquire by implementing its retail and commercial business banking model, by introducing its proprietary technology platforms and by generating synergies. Santander believes that, in view of its strong integration track record both in Europe and in Latin America, the risk involved in integrating those businesses is relatively low.

Business Unit Latin America

Santander believes that the assets of ABN AMRO's Business Unit Latin America that it will acquire pursuant to the Transaction will be an excellent complement to its existing operations in Latin America. Following the Transaction and as a result of the acquisition of Real in Brazil, Santander expects that it will have a market share close to 15% in the two largest markets (Brazil and Mexico), a market share above 20% in Chile and a market share above 10% in other markets such as Argentina, Venezuela and Puerto Rico. Santander's market share in the Latin American region as a whole is expected to reach between 10% and 15% in all major products (e.g., lending deposits, mutual funds).

Real is an attractive franchise with an excellent customer franchise in Brazil, with a broad distribution network and, in 2006 it was the fourth largest bank in Brazil by total loans, deposits and revenues. Based on 2006 data, the combination of Santander's Banespa and Real is expected to create one of the leading banks in Brazil, ranked second in deposits, third for network size (with more than 3,900 branches and banking service points), third in total loans and fourth in revenues.

Santander believes that this increased presence will deliver greater economies of scale, stronger commercial capability and an advantage in distribution intensive businesses. The combined bank is expected to be on par with Bradesco and Itaú in terms of market presence. From a geographical point of view, the combined bank will have a leading presence in the South/South East of Brazil, the economic hub of the country, which is the source of approximately 64% of the Brazilian gross domestic product, with a 16% combined market share. In particular, the combined bank is expected to have branch market shares of 20% in São Paulo, 13% in Rio de Janeiro, 11% in Rio Grande do Sul and 9% in Minas Gerais, based on 2006 data.

In addition, Santander believes that Real's geographic coverage is complementary to that of Santander Banespa since Real provides presence in areas where Santander is currently underrepresented, such as Rio de Janeiro and Minas Gerais, whilst Santander Banespa is strong in regions in which Real is weaker, such as Rio Grande do Sul.

Santander Banespa and Real also have a complementary business mix since Real is stronger than Santander in areas such as mass market, consumer loans and SMEs whilst Santander Banespa is stronger than Real in areas such as affluent banking and business/corporate banking.

Banca Antonveneta

Antonveneta is a commercial bank headquartered in Padua (Veneto) with operations across Italy but with its core operations in the North East of Italy, principally Veneto and Friuli.

Santander believes that Antonveneta is an attractive franchise with significant potential. Antonveneta has a strong retail banking franchise, especially in some of the affluent regions in the North of Italy.

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Santander believes Antonveneta is well placed to benefit from the long-term growth opportunity that the Italian market offers.

Antonveneta's branch market share in the Italian market is around 3% but it has strong market positions in its core regions. Santander is confident that the Antonveneta franchise and its 1,045 associated branches are an excellent platform from which to create value through organic growth and develop a strong retail and commercial banking franchise in Italy. Antonveneta has a clear bias towards retail and commercial banking, which accounts for around 80% of its loan portfolio. It has more than 1.5 million retail clients, with 600,000 credit cards issued and 200,000 SME customers.

Antonveneta has critical mass in its two main home markets with branch market shares of 8.9% in Veneto and 6.8% in Friuli, and a good starting position in other key markets in Italy, such as Lazio (2.4%), Emilia Romagna (1.7%), Piedmont (1.3%) and Lombardia (1.1%). In summary, Antonveneta has leading positions in regions representing 12% of the Italian GDP and a good starting base in regions representing another 50% of the Italian GDP and which are the core of the Italian economy.

Antonveneta has a 3.2% branch market share in Italy with just a 2.2% share in loans and 2.3% in deposits.

Italy shares certain behavioural patterns with Spain, and it has underdeveloped areas such as retail mortgages or consumer finance and large revenue pools in areas such as SME lending or mutual funds, which allow the sector to achieve good structural profitability. Santander is already present in consumer finance and private banking in Italy. This experience supports Santander's positive view of the Italian market.

Santander believes Antonveneta has significant potential to improve its performance and that it offers an excellent platform from which to grow organically. Although in Italy as a whole its market share is below 5%, it has strong positions in core regions. Santander believes that Antonveneta has an adequate critical mass, comparable to its Banesto and Santander Totta businesses, which should enable it to reach levels of efficiency and profitability in line with the other retail banking operations in the Santander Group. Santander also believes that, once its scalable information technology system will be in place, Santander will be in an excellent position to expand its presence in Italy at limited cost.

ABN AMRO Interbank and DMC Consumer Finance

The Interbank business is active in consumer finance in Holland, through a proprietary and third party broker distribution network. The business will be integrated into the Santander Consumer Finance structure and use the Interbank distribution network to distribute Santander products. Santander Consumer Finance is present in 14 countries globally and had more than nine million customers at the end of 2006. It operates mainly in Europe and the United States and already has activities in the Netherlands in car financing (both new vehicles and second hand vehicles) and a Stock Finance business line. At the same time DMC is a network of brokers that generate business for Interbank.

Cost Savings and Revenue Benefits

Overall, by the end of 2010, Santander expects the Transaction to deliver €855 million of cost savings (which will be achieved mainly through the implementation of Santander's proprietary IT system and the integration of back office structures) and €175 million of revenue benefits (which will follow from the more efficient use of distribution networks and sharing of best practices with the acquired businesses). Santander expects the total integration costs relating to the ABN AMRO Businesses it will acquire to be €1.0 billion.

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The following table sets out the pre-tax benefits that Santander expects to gain by the end of 2010 as a result of the integration of the ABN AMRO Businesses.

 
  Estimated Cost Savings per annum by end of 2010
  Estimated Revenue Benefits per annum by end of 2010
 
  (euro millions)

  (euro millions)

Real   700   110
Banca Antonveneta   150   60
Consumer Finance Business   5   5
   
 
Total   855   175
   
 

Expected Financial Impact

Allowing for the acquisition of the relevant ABN AMRO Businesses, Santander's Tier 1 capital ratio is expected to be in excess of 7% at the end of 2007, assuming that there is a full consolidation of the acquired businesses by the end 2007. Based on Santander's forecasts for business growth and transaction benefits, the acquisition is expected to lead to accretion in earnings per share in 2010 in excess of 5% and to produce a return on investment in excess of 12.5%(a) in 2010.


Note:

(a)
Expected 2010 earnings (including synergies) divided by consideration expected to be paid for the ABN AMRO Businesses by Santander, plus the net present value of Antonveneta acquired intangibles.

Cautionary Statement

The foregoing discussion is based on assumptions regarding the revenue benefits, cost savings and business growth opportunities the Banks expect to achieve following the Transaction. However, these expected revenue benefits, cost savings and business growth opportunities may not develop. There can be no assurance that the Banks will be able to successfully implement the strategic or operational initiatives that are intended. See also "Cautionary Statement Concerning Forward-Looking Statements" and "Risk Factors".

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PLANS AND PROPOSALS FOR ABN AMRO

Overview

Immediately upon completion of the offers, ABN AMRO will be owned by the Banks through RFS Holdings and will be a subsidiary undertaking of RBS. However, there will be no immediate change to the structure or operations of ABN AMRO. Subject to legal and regulatory requirements, a limited number of senior appointments will be made by the Banks to the Managing Board and the Group Business Committee of ABN AMRO. The Banks' immediate priority will be to ensure that the organisation continues to provide high quality service to its customers and to meet all regulatory requirements.

RBS will co-operate with Bank of America to ensure an orderly separation of LaSalle and the continuing businesses of Business Unit North America.

Following completion of the offers, the Banks will work with the management of ABN AMRO to verify and expand the information received from, and assumptions made on the basis of, the limited due diligence access granted before announcement of the offers. Within 45 days of completion of the offers, the Banks intend to have validated a base-lined plan for the achievement of synergies and for the separation and transfer of the ABN AMRO Businesses to the respective banks. This plan will form the basis for continued consultation with employee bodies and regulators with whom there have already been extensive discussions as part of an ongoing process. Implementation of the plan will begin only when the necessary approvals have been received.

To the extent considered appropriate by the Banks, as an interim step towards the separation of the ABN AMRO Businesses, ABN AMRO will be reorganised into three units containing the businesses that will ultimately be transferred to the respective banks. A fourth unit will contain the Head Office functions and assets which are regarded as non-strategic.

Additionally, as soon as reasonably practicable, certain businesses which can readily be separated will be legally transferred to the respective banks. Fortis and RBS will work together to separate the Netherlands retail and commercial banking operations from the global wholesale banking operations. The former will be transferred to Fortis while the latter will be owned by RBS. The separation and transfer of businesses will be subject to regulatory approval and appropriate consultation processes with employees, employee representatives and other stakeholders.

Information technology systems will in general be separated and transferred with the businesses they support. However, where appropriate, the Banks may take advantage of opportunities to create greater economic value by sharing platforms.

During the reorganisation, the Banks will retain a shared economic interest in all central functions (including Head Office functions) that provide support to the ABN AMRO Businesses. The Banks will also retain shared economic interests in certain assets and liabilities of ABN AMRO which the Banks regard as non-strategic. These include ABN AMRO's private equity portfolio, its stakes in Capitalia and Saudi Hollandi, and Prime Bank. These are expected to be disposed of over a period of time with a view to maximising value.

The Banks believe that the structure they intend to implement following completion of the offers will strengthen the ABN AMRO Businesses.

The Banks believe that holders of ABN AMRO's debt securities will, in general, benefit from the expected positive impact of the Transaction on ABN AMRO's credit profile.

At the outset, the entire portfolio of ABN AMRO derivative transactions will be managed to ensure that all the derivative risk management needs of the component ABN AMRO Businesses are

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satisfied. In time, there will be an orderly migration of transactions to the appropriate trading entities of the Banks in line with normal novation or assignment processes.

RBS

ABN AMRO's Global Wholesale Businesses

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

ABN AMRO is one of a small number of banks with the global reach and product capability to be effective in international cash management, payments and trade finance. Through these transactional banking products, ABN AMRO has been able to establish large numbers of corporate and institutional customer relationships globally. However, RBS believes that many of these relationships are relatively under-developed, reflecting ABN AMRO's insufficient strength in many of the financing and risk management products which are most relevant and complementary for these customers.

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

The businesses which RBS will acquire are those that constituted ABN AMRO's Wholesale Clients Business Unit, or WCS, in 2005 (including the continuing businesses of Business Unit North America following the sale of LaSalle, and including the Netherlands, but excluding Brazil (other than Global Clients customers)) and the product capabilities serving wholesale clients within its Global Markets and Transaction Banking Product Business Units. In 2006, WCS customers were transferred to the regional Business Units, except for the largest customers which were maintained in ABN AMRO's Global Clients Business Unit. In 2007, Global Clients customers have also been allocated to the regional Business Units. RBS estimates that ABN AMRO's Global Wholesale Businesses generated income of €5,677 million and profit before tax of €630 million in 2006, on an IFRS basis.

Strategic Rationale

RBS believes that there is a strong strategic fit between GBM and ABN AMRO's Global Wholesale Businesses. GBM has considerable strength across a broad range of financing and risk management products and in 2006 had what it believes to be an industry leading cost:income ratio of 40%, reflecting deep client relationships and strong income per customer metrics. However, whilst GBM has been expanding its international reach in recent years, it still has limited presence outside major financial centres. The acquisition of ABN AMRO's global branch network should enable GBM to accelerate this expansion relative to its current strategy, under which the establishment of a global branch network and customer base would take a significant period and would require significant investment.

ABN AMRO's considerable reach, through its global branch network, supports its strength in transactional products such as international cash management and trade finance. ABN AMRO is also strong in faster growth, but more specialised areas including equity derivatives and emerging markets. However, RBS believes that ABN AMRO's lack of depth and scale in some important products has led to relatively weak income per customer and per employee, resulting in a high estimated cost:income ratio for its Global Wholesale Businesses of 89% in 2006.

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RBS's relationship-driven model and focus on deepening customer relationships enables it to generate high levels of income from its customers. GBM believes that this revenue generation is significantly above the level achieved by ABN AMRO from its Global Clients franchise. For these equivalent customer groups, GBM estimates that it generated more than 50% higher income per customer than ABN AMRO and more than 150% higher income per front office employee than ABN AMRO.

RBS expects that it will be able to deepen customer relationships and increase revenues per customer and per employee across ABN AMRO's extensive base of large and mid-corporate customers. To achieve this, GBM will apply its relationship-driven model in which relationship managers are enabled and incentivised to deliver the bank's full range of products and services from debt capital markets to cash management. The RBS model focuses on the overall profitability of customer relationships and encourages a collaborative approach between relationship and product teams. The model is supported by clear client and revenue accountabilities, transparent incentives for collaboration, a focus on higher value added income streams and a simple organisation structure which encourages the development of cross-product customer solutions.

In addition to the application of its relationship management model, GBM expects to be able to create additional value from ABN AMRO's customer franchise through leveraging its strengths in the product areas that are both most relevant to large corporate and institutional customers and which offer the highest value revenue streams, for example in structured finance, risk management and securitisation. GBM believes that it brings the requisite scale and strength in these key product areas that ABN AMRO currently lacks.

RBS expects that the combined business will have product leadership across a broad range of corporate banking products, benefiting from the complementary and overlapping product strengths of GBM and ABN AMRO. The combined business will rank third in all bonds and loans globally, first in global securitisations, global project finance and all international bonds, second in emerging markets syndicated credits, third in foreign exchange and fifth in international cash management. RBS also expects it to be a leading player in the global interest rate derivatives market, where GBM

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has had particular success in the distribution of sophisticated risk management products to its large and mid-corporate customers.

 
  2006
Ranking by Product(1)

  GBM
  ABN AMRO
  Combined GBM + ABN AMRO(2)
GBM Strengths            
Global All Bonds and Loans   #  6   # 17   # 3
Foreign Exchange   #  4   # 12   # 3
Global Securitisations   #  2   # 18   # 1
European Leveraged Loans   #  2   # 16   # 1
Global Project Finance   #  1   #  5   # 1
EMEA Syndicated Loans   #  1   #  9   # 1

ABN AMRO Strengths

 

 

 

 

 

 
Euro Denominated Bonds   #  8   #  4   # 1
International Covered Bonds   # 18   #  1   # 1
Emerging Markets Syndicated Credits   # 31   #  2   # 2
International Cash Management   # 28   #  6   # 5

GBM + ABN AMRO Strengths

 

 

 

 

 

 
All International Bonds   #  8   # 10   # 1
Asia-Pacific Syndicated Loans   # 13   # 15   # 5
U.S. Syndicated Loans   #  8   # 18   # 7

Notes:

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

(2)
Combined estimates based on publicly available 2006 data.

RBS believes that the combined business will be well diversified by geography across the United Kingdom, the rest of Europe, the United States and Asia-Pacific, with a small contribution from Latin America. Within these regions, it is anticipated that the combined business will have considerable local presence through which to distribute its strong and broad product offering.

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

In North America, GBM has been implementing a strategy with the objective of becoming a top five corporate bank. RBS believes that the combination with ABN AMRO's Global Wholesale Businesses will enable GBM to accelerate the implementation of this strategy. The combined product strengths, including the capital markets expertise of RBS Greenwich Capital, should enable the combined group to generate increased revenues from the existing GBM and ABN AMRO client bases. RBS believes the business will be positioned to build on the combined industry sector strengths of GBM and ABN AMRO in consumer products, retail, healthcare, industrials, energy and utilities, and intends to leverage their complementary strengths in real estate financing to create a leading business in this area. In addition to the significant opportunity to grow the large corporate and

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institutional franchise in the United States, the combined business is expected to be able to deliver a full range of financial and risk management solutions to mid-corporate customers.

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

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

RBS estimates that the combined business will be the third largest corporate and institutional banking and markets business globally by fixed income revenues (revenues from all areas except M&A advisory, cash equity and asset management businesses). Based on 2006 data, GBM will rank first in the United Kingdom and Continental Europe, fifth in the United States and fifth in Asia-Pacific (excluding Japan) by client relationships.

Business Plan

The management team of GBM has developed a clear and detailed roadmap for the integration of ABN AMRO's Global Wholesale Businesses. GBM will follow the Group's established integration principles: minimising disruption to customers and customer-facing activities, retaining the best talent from each organisation through a fair appointment process based on merit and competencies, creating single global platforms and creating the capability for future growth while maintaining leading efficiency ratios.

The integration of GBM and ABN AMRO's Global Wholesale Businesses will be led by a management team including many who were actively involved in the integration of NatWest.

During the first 45 days after completion of the offers, GBM will work with the management of ABN AMRO to verify and expand the information received and assumptions made on the basis of the limited due diligence access granted before completion of the offers. By day 45, GBM intends to have validated a base-lined plan for the achievement of synergies. This plan will form the basis for consultation with employee bodies and regulators.

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

Transaction Benefits

GBM believes that it will be able to generate significantly higher revenues from ABN AMRO's customer franchise by leveraging the combined businesses' enhanced product strengths and by applying its proven management capabilities. RBS believes that it will also be able to achieve substantial cost savings through de-duplication of infrastructure and support activities. GBM believes that it will be able to reduce the cost:income ratio of ABN AMRO's Global Wholesale Businesses from 89% in 2006 to under 65% in the third year after completion of the offers.

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GBM expects to deliver transaction benefits which will increase its profit before tax by €1,718 million in the third year after completion of the offers. Of this total, GBM estimates that cost savings will amount to €1,237 million and that net revenue benefits (after associated costs and impairment losses, and allowing for attrition) will increase profit before tax by €481 million.

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

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

The expected net revenue benefits of €481 million in the third year after completion of the offers represent 8% of ABN AMRO's relevant 2006 revenues.

 
  Estimated
Net Revenue
Benefits per
Annum by
end of 2010

  Number of Initiatives
 
  (euro millions)

   
Global Banking   61   7
Global Markets   292   12
Transaction Banking   128   11
   
 
Overall Impact on Profit Before Tax   481   30
   
 

The combination of GBM and ABN AMRO's Global Wholesale Businesses is expected to enable substantial cost savings to be achieved, as RBS implements a single business architecture. Cost savings will be achieved by de-duplication of information technology platforms and supporting infrastructure. RBS's existing information technology platform will be used for the majority of products and functions, but it is expected that the information technology platform supporting ABN AMRO's cash management and trade finance business, as a core strength of that global business, will be retained.

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

Additional cost savings are expected to be achieved by the elimination of overlaps in front office trading and support functions, as trading activities are consolidated into regional centres, while minimising disruption to customer-facing activities.

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The expected cost savings resulting from these initiatives amount to €1,237 million in the third year after completion of the offers, representing 24% of ABN AMRO's relevant 2006 expenses. The four principal areas of rationalisation and efficiency savings are set out below:

 
  Estimated
Cost Savings
per Annum
by end of 2010

  Number of Initiatives
 
  (euro millions)

   
Front Office   352   10
Information Technology and Operations   611   27
Functional Support   166   16
Procurement and Property   108   5
   
 
Total Cost Savings   1,237   58
   
 

After allocating the support cost savings to the main business groupings, approximately €887 million of savings arise from global corporate and institutional businesses and €350 million from mid-corporate and commercial businesses and transaction banking services.

International Retail Businesses

ABN AMRO Retail Businesses in Asia, Middle East and Europe

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

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


(1)
Excluding ABN AMRO's 40% stake in Saudi Hollandi which, although reported in BU Asia, will be included in the Shared Assets.

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

South Asia: India, Pakistan

Middle East: United Arab Emirates

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

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

The principal product lines currently offered by ABN AMRO in Asia and the Middle East are mass market retail banking, affluent banking, under the Van Gogh brand, and credit cards. ABN AMRO has about 3.5 million retail customers in the region, including about 100,000 Van Gogh customers and approximately 3 million credit cards, which are mainly in Taiwan and India, with smaller portfolios in Singapore, Indonesia, Hong Kong and United Arab Emirates.

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

RBS believes that there are attractive opportunities for growth, building on ABN AMRO's established infrastructure to support retail activities in countries with large populations and high growth rates. However, RBS notes that the retail businesses in Asia, the Middle East and Europe are thinly spread across many countries. RBS estimates that ABN AMRO's retail businesses in Asia, the Middle East and Europe together generated income of €607 million and profit before tax of €88 million in 2006, on an IFRS basis. Because of limited scale, some of these retail businesses may have relatively high operating costs and customer acquisition costs, and so lack competitive advantage.

After completion of the offers, RBS will analyse the retail activities country by country. RBS expects to focus on growing significant retail businesses in selected ABN AMRO countries. Factors affecting the selection of countries will include competitive advantage and scalability of the existing operations, economic growth rates and the competitive and regulatory environment for financial services. RBS also expects to focus on affluent banking and credit cards, products where RBS is strong in the United Kingdom and has significant activities outside the United Kingdom, and products likely to appeal to growing numbers of affluent customers in these high growth economies. The existing infrastructure supporting current accounts provides the possibility of a broader product offering.

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

Fortis

Fortis intends to integrate the ABN AMRO Businesses over a 36-month period, focusing on, amongst others, the identification and mitigation of all relevant integration risks. During integration, Fortis will focus strongly on ensuring minimal disruption for clients and employees.

In the pre-acquisition period, Fortis expects to install an integration office, prepare a retention scheme and communicate with all stakeholders. Within a few months of the acquisition, Fortis expects that key management teams will be re-appointed for all major integration projects and the business plans, focusing on cost savings and revenue benefits, will be confirmed. Over the next phase, the business plans will be implemented and refined, with specific attention to human resources and cultural integration. Within three years of the acquisition, Fortis expects to have implemented its integration plans fully, by delivering cost savings and revenue benefits, setting new commercial targets, leveraging best practices across its organisation and accelerating international expansion.

Business Unit Netherlands

Fortis values the strong brand of ABN AMRO in the Netherlands, and, as an owner, intends to capitalise on it, as well as on the Fortis brand. Combining Fortis's and ABN AMRO's retail and commercial banking activities in the Netherlands will create a key player in the market, with top-three market positions in all segments.

Furthermore, the combination will create the largest network in the Benelux countries, with almost 2,000 branches and some 45 business centres serving more than 10 million customers. The network will have full geographic coverage in all three countries of the Benelux and a particularly strong presence in the most affluent regions (Randstad Holland, Flanders and Luxembourg).

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Retail Banking

Retail banking at ABN AMRO includes the Consumer Division of the Business Unit Netherlands, Small Enterprises, part of the Commercial Division of the Business Unit Netherlands, and "other", including ABN AMRO credit cards and ABN AMRO Mortgage Group. It does not include Interbank, ABN AMRO's consumer finance player in the intermediary market, which will be acquired by Santander.

ABN AMRO ranks third in the Dutch retail market, and has an extensive customer base of more than 4 million retail clients, around 400,000 affluent clients and approximately 300,000 SME clients (with turnover below €2.5 million per annum). ABN AMRO services these clients by means of a multichannel distribution strategy: 78 advisory branches for SME, 561 branches, including 80 Preferred Banking lounges, 1,599 ATMs, Internet, mobile and electronic banking. ABN AMRO is also active in the intermediary market for mortgages through Florius. Fortis is a rising challenger in the Dutch retail market with an overall number-four market position. Its retail customer base comprises more than 800,000 retail clients, more than 80,000 affluent customers and more than 60,000 small enterprises and professionals. Its distribution network in the Netherlands currently comprises 159 branches, complemented by a rapidly growing direct offering. Fortis is active in the intermediary market for mortgages through Direktbank and for personal loans via Alfam. Furthermore, Fortis is one of the leaders in the credit card market via International Card Services (ICS) with around 2.4 million credit cards.

Strategic Rationale

The Netherlands will truly become Fortis's retail home market with a solid overall top-three position and clear leadership in high-potential segments such as Affluent and SME banking.

Pro forma Market Positions and Client Base

 
  Ranking
SME lending   # 1
Investment funds   # 1
Consumer lending   # 2
Online brokerage   # 2
Mortgages   # 1
Savings   # 3

Mass retail customers

 

Approx.   5 million
Affluent customers   Approx. 0.5 million
SME   Approx. 0.4 million
Credit cards   3.2 million

Business Plan

Fortis's retail activities in the Netherlands will merge with ABN AMRO's existing platform, which Fortis believes will allow a smooth transition and undisrupted service to all customers. In the future, Fortis expects that its customers will benefit from an even stronger product portfolio, full-service SME banking and a combined personal/preferred banking proposition.

Fortis anticipates that individual customers will have access to this enlarged product offering through a wider branch network with nationwide coverage, intermediary channels and an advanced on-line banking platform. In addition, Professionals and Small Businesses will have access to 78 dedicated advisory branches.

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To strengthen its competitive positioning and stimulate entrepreneurship, Fortis intends to roll-out a performance-driven reward system. Striving for higher customer satisfaction remains at the heart of its strategy.

Transaction Benefits

Fortis has a strong track record in value creation through retail bank integrations in both Belgium and the Netherlands. Cost savings at Retail Netherlands are expected to amount to €307 million and will be achieved within a three-year timeframe. Revenue benefits are expected to reach €56 million.

Dutch retail activities have contributed almost 18% to Fortis Retail Banking's total 2006 net profit. On a pro forma basis, the Transaction will more than double the Dutch retail contribution, which clearly indicates the importance of the Netherlands to Fortis's retail business.

Commercial Banking

ABN AMRO has a large commercial banking operation in the Netherlands. Its customer base comprises more than 50,000 SME clients (with turnover over €2.5 million per annum) and 5,600 corporate clients.

Fortis has a unique network of 125 business centres in 19 different countries across Europe, and gives internationally active medium-sized enterprises access to all countries through a single Global Account Manager. In the last three years, Fortis has twice been awarded the title "Best Commercial Bank" in the Netherlands. Clients are served via a network of 23 dedicated business centres in the Netherlands, which are integrated in the wider international business centre network. The product offering encompasses a wide range of services including factoring, leasing, trade finance and global market solutions. Larger commercial clients are served by Corporate Clients Netherlands in Rotterdam.

Strategic Rationale

Fortis aims to be the European bank of choice for the internationally active mid-size corporate market. The combination of Fortis and ABN AMRO will make Fortis market leader in Commercial Banking in each of the three Benelux countries with a strong foothold in 16 other countries.

The combined businesses will also secure leading European market positions (top five) among pan-European lessors, and in commercial finance. In the Netherlands, Fortis will become the number two player in leasing and the number one player in commercial finance and will build on its leading positions in trade finance and in global markets. As a result of the Transaction, Fortis will be able to cross-sell, locally and through its international coverage, a full service offering to an extended client base.

Pro Forma Market Positions in the Netherlands

 
  Ranking
Commercial Banking   # 1
Cash Management   # 1
Leasing   # 2

Business Plan

Fortis expects that internationally active medium-sized enterprises will be able to take advantage of a distinctive network of business centres in 19 countries across Europe. One global account

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manager with access to the combined Fortis and ABN AMRO Businesses using an integrated platform, will serve these clients' interests in the different countries where they are active.

Fortis believes the combination with the ABN AMRO Businesses will lead to a wider-reaching, geographical footprint of 40 to 45 dedicated business centres in the Netherlands. These centres will be fully integrated into Fortis's international business centre network and will benefit from the continuous upgrade of staff quality, coming from both of Fortis and ABN AMRO.

Fortis will endeavour to share best practices and intends to implement new added-value solutions for risk management, liquidity and asset-based finance with short time to market, drawing on the capabilities of Fortis and ABN AMRO locally as well as Fortis on a global basis.

Fortis's Enterprise & Entrepreneur solutions, by which owners and managers of companies serviced by Commercial Banking—in which Fortis has strong market positions—are offered wealth management solutions, will be transposed onto the enlarged customer base in the business community and private Dutch market in order to fuel the growth of Private Banking.

Transaction Benefits

Cost savings at Commercial Banking Netherlands are expected to amount to €124 million and will be achieved within a three-year timeframe. These cost savings will derive from the rationalisation of the distribution network, focused on the business centre approach. Overlapping management and support functions such as mid-offices, financial and human resources will be optimised. Best practices in credit risk management will also be shared.

The Transaction is expected to generate net additional revenue of €19 million. These synergies will be driven by the "network effect", i.e., additional cross-selling revenues (leasing, commercial finance, trade finance and global markets) realised from the enlarged client base throughout the pan-European network of around 145 business centres.

Private Banking

ABN AMRO Private Clients is a worldwide player with €142 billion in AuM (as at 31 December 2006) and over 3,300 employees. It operates in more than 20 countries throughout the world and focuses on wealthy individual customers with €1 million or more in net investible assets. ABN AMRO is market leader in the Netherlands and holds strong positions in France, Switzerland, Germany, Luxembourg and Belgium. In France and Germany, it operates under separate, well-regarded brands.

Fortis Private Banking aims to be the service provider of choice for high net worth, or HNW, and ultra high net worth, or UNHW, clients, offering integrated and international solutions for their assets and liabilities. Fortis Private Banking has €79 billion in AuM (as at 31 December 2006) and is present in 18 countries with around 1,900 employees. Fortis Private Banking is a leading player in the Netherlands, holds strong positions in Belgium, Luxembourg and Switzerland, and is expanding its activities in Asia.

Strategic Rationale

Fortis expects the addition of ABN AMRO Private Clients (which excludes the private banking business in Latin America) will strengthen Fortis's Private Banking franchise in Europe and establish a solid growth platform in Asia. Based on 2006 data, the combination is expected to create the third largest European private bank with more than €200 billion in AuM.

With its leading position in the Benelux countries and relevant presence in international private banking centres, Fortis aims to be the service provider of choice for HNW and UHNW clients,

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based on a dedicated, broad and differentiated service offering. The combined Private Banking operations are expected by Fortis to be positioned to reap the benefits of enlarged scale and a broader skill set.

Fortis anticipates that its enlarged geographic footprint will allow for an accelerated rollout of a full service offering in growth locations and will strengthen its competitive position. As a result of the acquisition, Fortis expects to build a solid platform in Asia for capturing future growth. The combined organisation is expected to be well diversified geographically, with around 50% of its business (in terms of AuM) coming from non-Benelux countries based on 2006 data.

Fortis believes that a close match in service philosophy and similar client focus will allow the new combined businesses to leverage best practices and local market strengths across the international network.

The enhanced operating scale and heightened private bank identity will facilitate the recruitment, development and retention of international talent.

Unique joint customer model:

Exclusive focus on HNW and UHNW individuals

Dedicated services for international business owners (Enterprise & Entrepreneur)

Unique needs-based approach

Broad service offering covering all aspects of personal asset and liability management (e.g. wealth structuring, real estate, credits)

Transaction Benefits

Combining the two private banks will generate substantial synergies in terms of both cost savings and revenue benefits. Total cost savings of €160 million have been identified. These relate to leveraging investment in platforms and systems, combining and integrating overlapping functions, processes and offices.

In addition, revenue benefits of €43 million are expected to be generated by leveraging best practices in such areas as credits and alternative investments.

Asset Management

ABN AMRO Asset Management operates in over 20 locations worldwide and has €193 billion in AuM (as at 31 December 2006) for private investors and institutional clients.

Fortis Investments has established itself as a strong European asset manager with €121 billion in AuM (as at 31 December 2006) and as an innovative investment solutions provider. Its multi-product development skills are delivered through a unique network of 21 investment centres.

Strategic Rationale

Fortis believes that its and ABN AMRO's fund managers share a common management philosophy and comparable strategy. Fortis expects that since the products are highly complementary, the combined businesses will enjoy an established European footprint along with global reach and scale.

With pro forma AuM of over €300 billion, the combined businesses will become a top tier European player, with global scale.

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The combined businesses will be based on individual investment centres, offering a broad range of asset classes. Fortis expects that each investment centre will have access to core proprietary research in order to be able to offer true multi-product investment and structuring solutions. Based on year-end 2006 figures, the new team would comprise some 570 investment professionals, supported by more than 500 specialist sales and marketing executives. The offering will include the whole range of investment styles from traditional long only products to long/short products focused on absolute return strategies.

The complementary nature of the two product ranges is expected to allow the combined businesses to reach top quartile position across many asset classes and achieve scale in core growth products (such as, equity and structured products, Socially Responsible Investors, global property, asset and liability management, or ALM, capability and alternatives).

Leadership position:

Leading market positions in Benelux countries, Nordics, the United Kingdom and France

Solid base for growth in other European countries, i.e., Italy, Spain and Germany

Highly profitable capabilities for US institutional clients

Critical size in several Asian and Latin American countries (among top five in Brazil)

Unique customer model:

Client-centric approach to retail, private and institutional segments

Uniquely placed to take advantage of growth in third party assets on the back of broad top quartile performance

Strong European and US institutional client base

Well balanced asset split by geography, client segmentation, channel and asset class

Integration will be facilitated by the good fit and complementary nature of the two operations, which will enable a fast-track merger. The large pool of talented professionals available to head and manage the combined businesses is another benefit.

Business plan

The Transaction is expected to create a combined business geared strongly to growth and Fortis Investments is planning to complete the integration within 12 to 18 months.

Cost savings of €145 million are expected owing to overlapping capabilities and the application of best practices. Potential revenue benefits are estimated at €15 million, deriving from the larger geographic footprint and stronger offering to third party distributors.

In order to validate and detail the integration plans, Fortis expects to make a complete analysis of the combined Asset Management business in cooperation with the ABN AMRO teams. Fortis expects that this plan will clarify all the actions and responsibilities to be undertaken in order to realise the targeted business model and to deliver the expected synergies.

By enhancing exposure to high growth markets and products, Fortis Investments is looking to achieve profitable growth in attractive business segments. The target is to grow net profit by 20% per annum and AuM by close to a double-digit percentage over the next five years, in line with Fortis Investments' achievements over the last five years.

This is expected to make the new business one of the most efficient in the industry.

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Santander

Following completion of the offers there will be a reorganisation of ABN AMRO which will include the orderly separation of the ABN AMRO Businesses from ABN AMRO. Santander believes that it can successfully integrate Real in Brazil and Antonveneta in Italy into the structure of its group. Santander successfully completed a number of similar integrations, including the integration of Santander Mexicano and Serfin, Santander Chile and Banco Santiago, Santander Brazil and Banespa, Totta in Portugal and Abbey in the United Kingdom. In all cases, Santander has created stronger integrated units, with improved operating efficiency and enhanced commercial capabilities.

Real

Cost Savings

Santander has structured a plan with five clear initiatives to improve efficiency throughout the combined bank:

Efficiency Best Practices

    Due in part to Santander's information technology system, the ratio of administrative (i.e., non-staff) expenses in 2006 to total customer volume (loans plus deposits plus off balance sheet funds) as of year end 2006 was 1.85% at Santander Banespa against 2.24% at Real. Santander believes it can bring Real's ratio closer to that of Santander Banespa, through a combination of better practices (which Santander expects to implement upon taking control of Real) and, over time, the implementation of its proprietary information technology system. Santander expects to introduce Santander Banespa's operating practices to Real before fully integrating the banks.

    Initiatives for improving operating practices include:

information technology and operations rationalisation;

tighter management of contracts to reduce costs to a level equivalent to Santander's;

channel structure optimisation (branches, contact centres);

marketing and product rationalisation and simplification; and

headcount optimisation, if necessary.

Information Technology Integration

    Over time, Santander's combined bank will operate with a single integrated, multibank information technology system. Santander has recently completed the migration of all of the banks it currently owns in Brazil onto a single information technology platform. Santander is confident Santander can also migrate Real's operations to this platform with very little incremental cost. This is consistent with their stated goal of putting the entire Santander Group on a single information technology platform by 2010.

Operations Integration

    Santander will also integrate the respective banks' back office functions. During integration, the networks of the two banks will be kept separate, in order to avoid disruption in their commercial activities. The relevant initiatives to achieve this include:

back office integration and outsourcing to Santander LatAm Factory in Sao Paolo; and

information technology services integration and outsourcing to Santander IT Factory in Brazil.

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Head Office Integration

    Santander will also fully integrate the head offices of both banks, including all product factories and support functions. The relevant initiatives to achieve this include:

rationalisation and integration of support functions: finance, compliance, risk, human resources, legal, building maintenance, security and administration; and

integration of global businesses: treasury, global markets, payments, insurance and asset management.

Combination and Network Optimisation

    As part of the full integration of both banks, Santander expects to undertake a network optimisation initiative. As mentioned above, Santander believes that the geographical fit of the banks is excellent. However, there will unavoidably be a certain degree of duplication between the two networks. As a result, some branches will be closed or relocated. However, Santander believes this will affect a very limited number of branches. Its preliminary studies suggest that there will be no net reduction of branches over the medium term.

    As explained above, a key limb of Santander's future strategy is to continue to invest in developing its presence in the Brazilian banking system and maintain a clear growth strategy for the region. Santander has opened more than 350 branches across Latin America in the past two years and its plan is to continue expanding its installed capacity in order to be better positioned to take part in the structural growth of the banking systems in the region.

    The relevant initiatives to achieve this include:

a degree of regional structure rationalisation; and

a degree of optimisation of the commercial organisation and a single branding strategy, at the appropriate time. In most banking integration processes in Latin America (e.g., Mexico, Chile or Brazil), Santander has kept separate brands over relatively long periods of time. All of Santander's units in Latin America are now converging to a single brand, "Santander", in order to benefit from a single identity as well as marketing initiatives at group level.

    Santander is confident that the Transaction will enhance the service and the product offering to its customers and at the same time generate greater career opportunities for Santander employees.

    Santander's strategy is to continue investing in its front office and strengthening its commercial structure. Between December 2004 and December 2006, Santander added more than 6,000 net employees to Santander Group's Latin American operations, which is the net result of (information technology-enabled) efficiency improvements in Santander's support areas and strong investments in commercial areas.

    In addition, Santander will make an effort to offer opportunities elsewhere in Santander's organisation to staff working in areas in which there is clear duplication. Furthermore, part of the cost cutting exercise will relate to Real's outsourcing agreements, which will not affect Real employees.

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In-market revenue benefits

In addition to cost savings, Santander also expects to generate significant revenue enhancement as a result, principally, of four initiatives:

Taking full advantage of the scale of the combined bank

    Santander believes the combined bank will be able to take advantage of enhanced growth opportunities associated with its increased scale. Santander believes the enlarged distribution network of the combined bank will result in an enhanced competitive position.

    The combined branch network will give Santander a better coverage of the Brazilian market, especially in regions such as Rio de Janeiro and Minas Gerais. This leaves it better placed to take advantage of commercial opportunities, mainly in the business market but also in the retail sector and, in particular, in those parts of the commercial sector, such as transactional business, where full coverage of the market is key.

Sharing best practices

    Santander trusts that it can benefit from its expertise in areas in which it has traditionally been strong, such as affluent banking, retail mutual funds and business banking. Similarly, Santander Banespa can benefit from Real's strength in areas such as mass market and the small companies segment.

Leveraging the commercial potential of Santander's IT system

    Santander believes the implementation of Santander's IT system in Real's network will enhance its revenue generation potential by increasing the time allocated to commercial activities (instead of administration) and generating customer relationship management (CRM) intelligence.

Synergies with Santander's global units

    Santander believes that, by working together with Santander's global business units, such as its Global Insurance division, its Global Asset Management division and its Global Credit Cards division, Real can achieve significant improvements in commercial performance. Santander global support units can also contribute to more efficient management, control and administration in Brazil.

Integration Plan

During the initial integration stages described above, Santander intends to keep the commercial structures of Santander Banespa and Real separate, with each operating under its own brand, while the operating areas are integrated. This is to ensure that there are no distractions during this initial phase and that the two organisations keep their commercial focus. Once the operating functions have been integrated Santander intends to make a decision on the combination of the banks' commercial structures.

This is consistent with the approach Santander has taken in other Latin American markets. For example, Santander has operated successfully in markets such as Mexico and Chile with two brands for a significant period of time before taking the decision to unify the brands.

In 2006 and 2007 the Santander Group has moved towards a single brand name in all of the markets in which it operates (with very few exceptions, such as Banesto and Banif in Spain). Santander will therefore expect to bring the combined bank under the Santander brand in due course.

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Banca Antonveneta

Cost Savings

Santander believes that there is significant potential to improve Antonveneta's operating efficiency. Santander estimates that the percentage of revenues represented by general and administrative expenses at Antonveneta is more than 6% above Santander's least efficient Continental European retail banking operation and more than 12% above the most efficient one.

Following completion of the offers, Santander will focus its efforts on the improvement of efficiency at Antonveneta. Santander expects these initiatives to have three pillars:

Improving efficiency through best practices across the Santander Group.

    The initiatives for improving efficiency by applying Santander Group's best practices (i.e. ordinary cost cutting) will include:

information technology and operations rationalisation: banking operation and communication rationalisation, revisiting outsourcing contracts and cancellation of non-critical projects;

tighter management of contracts to reduce costs to Santander level;

channel structure optimisation (branches, contact centres);

marketing and product rationalisation and simplification; and

headcount optimisation, if necessary.

    Santander believes there is clear scope for improvement within Antonveneta, which in 2006 had 9.8 employees per branch, compared to 8.4 in Santander Totta, 6.7 in Santander Spain and 5.7 in Banesto.

Information technology consolidation

    Santander's information technology consolidation initiatives are expected to include implementation of Partenon, Santander's proprietary information technology system, data processing centre consolidation and server consolidation.

Consolidation of support functions

    Support functions centralisation initiatives are expected to include back-office functions and information technology services outsourced to the global Santander Group, integration of purchasing activities and partial consolidation of other support functions (i.e. human resources and finance).

Revenue Benefits

Santander has identified three main opportunities to enhance revenue growth within Antonveneta:

Improving Antonveneta's commercial performance.    Santander is confident Antonveneta can benefit from its commercial practices and retail product development skills, particularly in areas such as retail asset management. Santander also believes that Antonveneta has market shares which are lower than they should be in mortgages and consumer finance. Santander believes that growth potential in these areas is very high and they are areas in which it holds a very strong position (top three in Europe by residential mortgage loan book in 2006). Lastly, Santander expects that its proprietary information technology system, Partenon, will reduce operating and administrative burdens on Antonveneta's staff and effectively increase the time available for customer-facing and sales activities.

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Leveraging Santander's global units.    Santander believes that Antonveneta will benefit from the capabilities of its global units in several segments, such as Cards, Insurance, Asset Management, Private Clients and Consumer Lending. Santander believes there is a clear potential for cross selling of credit cards or insurance-related products through the Antonveneta network of customers. In addition, Santander's Global Wholesale Banking capabilities can be used to develop a treasury and derivative-based offer for Antonveneta's SME customers. Santander is confident its global business units can significantly improve Antonveneta's corporate business in Northern Italy by leveraging Santander's skills. Santander also believes that it can significantly improve the credit card business and cross selling of saving and insurance products to ratios of Antonveneta similar to those prevailing in the rest of the Santander Group.

Expanding the franchise organically.    Santander believes that Antonveneta offers an excellent platform from which to grow organically and the current competitive situation in Italy (with at least four major groups focused on their own internal integration) offers a tremendous opportunity to gain market share. Santander has substantial experience in opening branches and from March 2006 to March 2007 it has added (on a net basis) more than 380 branches in Spain and Portugal. Santander believes that there is an opportunity to expand Antonveneta's branch network as other banks integrate their own networks and close down branches. Santander believes its experience in Spain and Portugal proves that it can successfully open small branches, with low marginal costs, while maintaining control over its overall cost base.

ABN AMRO Interbank and DMC Consumer Finance

The Interbank business is active in consumer finance in Holland, through a proprietary and third party broker distribution network. As noted earlier, the business will be integrated into the Santander Consumer Finance structure.

Plans for Non-Strategic Businesses of ABN AMRO

During the reorganisation, the Banks will retain a shared economic interest in all central functions (including Head Office functions) that provide support to the ABN AMRO Businesses. The Banks will also retain shared economic interests in certain assets and liabilities of ABN AMRO which the Banks regard as non-strategic. These include ABN AMRO's private equity portfolio, its stakes in Capitalia and Saudi Hollandi, and Prime Bank. These are expected to be disposed of over a period of time with a view to maximising value.

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THE U.S. OFFER

The U.S. Offer and the Dutch Offer

RFS Holdings, which was formed by the Banks, is offering to acquire all of the issued and outstanding ABN AMRO ordinary shares and all of the issued and outstanding ABN AMRO ADSs through two offers:

the U.S. offer made pursuant to this document to all holders of ABN AMRO ordinary shares who are U.S. holders (within the meaning of Rule 14d-1(d) under the Exchange Act) and to all holders of ABN AMRO ADSs, wherever located; and

the Dutch offer made pursuant to the Dutch offer document to all holders of ABN AMRO ordinary shares who are located in the Netherlands and to all holders of ABN AMRO ordinary shares who are located outside of the Netherlands and the United States,

in each case, if, pursuant to the local laws and regulations applicable to such holders, they are permitted to participate in the relevant offer.

The offers are being conducted simultaneously and have the same terms and are subject to the same conditions.

The offers are being made for all ABN AMRO ordinary shares and all ABN AMRO's ADSs. According to ABN AMRO's Form 6-K dated 23 April 2007 there were 1,852,448,094 ABN AMRO ordinary shares outstanding and, according to ABN AMRO's 2006 Annual Report on Form 20-F, as of 31 December 2006, there were options to acquire 53,253,000 ABN AMRO ordinary shares outstanding.

The offers do not extend to any other securities of ABN AMRO, including any ABN AMRO Convertible Preference Shares, any ABN AMRO formerly convertible preference shares or any other hybrid capital instruments. See "Treatment of ABN AMRO Options, Convertible Preference Shares and Formerly Convertible Preference Shares".

The U.S. offer and the Dutch offer will commence on 23 July 2007. The U.S. offer and the Dutch offer will expire at 9:00 a.m., New York City time (3:00 p.m. Amsterdam time) on 5 October 2007, unless extended.

Holders of ABN AMRO ordinary shares located in the United States, and holders of ABN AMRO ADSs, wherever located, cannot tender their ABN AMRO ordinary shares or ABN AMRO ADSs in the Dutch offer, and holders of ABN AMRO ordinary shares who are not located in the United States cannot tender their ABN AMRO ordinary shares in the U.S. offer. The Dutch offer is being made using a Dutch offer document which incorporates the U.K. prospectus. Except to the extent that exemptions or relief from compliance are available or have been obtained, RFS Holdings intends to conduct the U.S. offer in compliance with the U.S. tender offer rules (principally Regulations 14D and 14E under the Exchange Act) and the Dutch offer in compliance with the tender offer rules of the Netherlands (the jurisdiction in which ABN AMRO's ordinary shares are primarily listed and also ABN AMRO's jurisdiction of incorporation).

The Dutch offer is not being made, directly or indirectly, in or into, and may not be accepted in or from, the United States. Copies of the offer documentation being used in the Dutch offer and any related materials are not being and should not be mailed or otherwise distributed or sent in or into the United States.

The distribution of this document and the making of this U.S. offer may, in some jurisdictions, be restricted by law. The U.S. offer is not being made, directly or indirectly, in or into, and may not be accepted from within, any jurisdiction in which the making of the U.S. offer or the

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acceptance thereof would not be in compliance with the laws of that jurisdiction. Persons who come into possession of this document are urged to inform themselves of and observe any and all of these restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of that jurisdiction. None of the Banks or RFS Holdings assumes any responsibility for any violation by any person of any of these laws or restrictions.

Terms of the U.S. Offer

In this U.S. offer, RFS Holdings is offering to exchange for each ABN AMRO ordinary share and each ABN AMRO ADS validly tendered and not properly withdrawn:

€35.60 in cash; and

0.296 newly issued RBS ordinary shares.

The cash consideration paid to tendering holders of ABN AMRO ordinary shares and ABN AMRO ADSs will be paid in euros. The cash consideration payable in euros to which tendering holders of ABN AMRO ADSs would otherwise be entitled pursuant to the terms of the U.S. offer will be converted by the U.S. exchange agent, net of fees and expenses, into U.S. dollars at the exchange rate obtainable on the spot market in London on the date the cash consideration is received by the U.S. exchange agent for delivery in respect of such tendered ABN AMRO ADSs. See "Risk Factors—The value of the RBS ordinary shares and U.S. dollar cash consideration being offered will fluctuate". Under no circumstances will interest be paid on the cash to be received.

As at 13 July 2007, the last trading day prior to the Banks' announcement on 16 July 2007, the total value of the consideration being offered by RFS Holdings was €71.1 billion, based on the closing price of 640p for the RBS ordinary shares on the LSE on that date and an exchange rate of €1.00 per £0.6777 published in The Financial Times on 14 July 2007.

Based on the price of Barclays ordinary shares of 712.5p at the close of business on 24 April 2007 (the day before the Banks first announced details, including a price indication, of their proposals), the value of the Barclays proposed offer was €33.78 per ABN AMRO ordinary share (using an exchange rate of €1.00 per £0.6802, as published in The Financial Times on 25 April 2007).

Based on the price of Barclays ordinary shares of 724.5p at the close of business on 13 July 2007, the last trading day prior to the Banks' announcement on 16 July 2007, the value of the Barclays proposed offer as at 13 July 2007 was €34.48 per ABN AMRO ordinary share (using an exchange rate of €1.00 per £0.6777, as published in The Financial Times on 14 July 2007). Based on the price of RBS ordinary shares of 640p at the close of business on 13 July 2007 and using the same exchange rate, the value of the consideration being offered by RFS Holdings as at 13 July 2007 was €38.40 per ABN AMRO ordinary share.

Fractional Entitlements

Fractions of RBS ordinary shares will not be issued to persons whose ABN AMRO ordinary shares or ABN AMRO ADSs are exchanged in the U.S. offer.

Admitted Institutions that tender ABN AMRO ordinary shares into the U.S. offer on behalf of their clients will have to aggregate fractional entitlements to RBS ordinary shares in accordance with the usual practice of the Admitted Institutions and sell them on the London Stock Exchange (or possibly, in the event a listing is obtained, on Euronext Amsterdam), and then remit the net proceeds pro rata to such holders of ABN AMRO ordinary shares. The fractional entitlements to RBS ordinary shares of holders of ABN AMRO ordinary shares who hold their shares in registered form will be aggregated, sold in the market by the Dutch exchange agent and then distributed pro

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rata by the Dutch exchange agent in a similar way to that described above. The U.S. Exchange Agent will aggregate the fractional entitlements to RBS ordinary shares to which holders of ABN AMRO ADSs are entitled in accordance with its usual practice and sell them on the LSE and then remit the net proceeds pro rata to holders of ABN AMRO ADSs. The U.S. exchange agent will convert the euros to which holders of ABN AMRO ADSs would have otherwise been entitled, net of fees and expenses, into U.S. dollars at the exchange rate obtainable on the spot market in London on the date the cash consideration is received by the U.S. exchange agent.

Under no circumstances will interest be paid on the cash to be received in lieu of any fraction of a RBS ordinary share, regardless of any delay in making the payment.

Adjustment of Consideration Upon Payment of Certain ABN AMRO Dividends

The consideration set out above assumes the payment by ABN AMRO of an interim (cash or share) dividend in respect of 2007 in an amount not to exceed €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes). If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share (before deduction of any applicable withholding taxes) or any other (cash or share) dividend, distribution, share split or analogous transaction in respect of the ABN AMRO ordinary shares, including the ABN AMRO ordinary shares represented by ABN AMRO ADSs, and the record date for such (cash or share) dividend, distribution, share split or analogous transaction precedes the settlement of the offers, the consideration set out above may be reduced by an amount, in the case of an interim (cash or share) dividend in respect of 2007 in excess of €0.55 per ABN AMRO ordinary share equal to such excess (before deduction of any applicable withholding taxes), or otherwise by the full amount of any other such dividend, distribution, share split or analogous transaction (before deduction of any applicable withholding taxes). If ABN AMRO declares an interim (cash or share) dividend in respect of 2007 of €0.55 or less per ABN AMRO ordinary share (before deduction of any applicable withholding taxes) and the record date for such dividends precedes settlement of the offers, the consideration set out above will not be adjusted.

Ownership of RBS after Completion of the Offers

If all of the issued and outstanding ABN AMRO ordinary shares and ABN AMRO ADSs on a fully-diluted basis are tendered and exchanged pursuant to the terms of the offers, the former holders of ABN AMRO ordinary shares and ABN AMRO ADSs (other than ABN AMRO) and the holders of the existing RBS ordinary shares (other than RBS), will hold the following percentages of RBS's outstanding ordinary shares immediately after the completion of the offers:

 
  Owned by current holders of RBS ordinary shares
  Owned by former holders of ABN AMRO ordinary shares and ABN AMRO ADSs
 
Number of outstanding RBS ordinary shares held after completion of the offers(1)   9,456,448,005   556,143,700  
Percentage of ordinary shares of RBS   94 % 6 %

Note:

(1)
Assuming the number of issued and outstanding ABN AMRO ordinary shares is as set out in ABN AMRO's Form 6-K dated 23 April 2007 and exercise of all ABN AMRO options based on information as set out in the ABN AMRO 2006 Annual Report on Form 20-F.

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Conditions to the U.S. Offer

RFS Holdings will not be obliged to declare the U.S. offer unconditional and purchase any ABN AMRO ordinary shares or ABN AMRO ADSs validly tendered in the U.S. offer and not properly withdrawn:

(a)       Minimum Acceptance

if the ABN AMRO ordinary shares, including ABN AMRO ordinary shares represented by ABN AMRO ADSs, which have been validly tendered and not properly withdrawn in the offers on a combined basis, or which are otherwise held by RFS Holdings, do not represent at least 80% of the issued and outstanding ABN AMRO ordinary shares, calculated on a fully-diluted basis. This condition is referred to as the "minimum acceptance condition".

For purposes of determining whether the minimum acceptance condition has been satisfied, the numerator will include all ABN AMRO ordinary shares, including all ABN AMRO ordinary shares represented by ABN AMRO ADSs, validly tendered and not properly withdrawn, in the Dutch offer and the U.S. offer, on a combined basis, or which are otherwise held by RFS Holdings, at the end of the offers, and the denominator will be ABN AMRO's fully diluted share capital, including all:

ABN AMRO ordinary shares issued and then outstanding, including all ABN AMRO ordinary shares represented by ABN AMRO ADSs;

ABN AMRO ordinary shares issuable upon the conversion of all ABN AMRO Convertible Preference Shares; and

ABN AMRO ordinary shares issuable (i) upon the exercise of any outstanding rights to subscribe for ABN AMRO ordinary shares (including any outstanding ABN AMRO options) whether or not exercisable during the offers or (ii) under any other agreement giving the right to any person to subscribe for ABN AMRO ordinary shares,

but excluding all ABN AMRO ordinary shares held as treasury stock by ABN AMRO;

(b)       Sale of LaSalle

      if the Purchase and Sale Agreement, dated as of 22 April 2007, between Bank of America and ABN AMRO Bank in respect of ABN AMRO North America Holding Company, the holding company for LaSalle Bank Corporation, including the subsidiaries LaSalle N.A. and LaSalle Midwest N.A. (exclusive of any restatements of, or amendments to, such agreement), has not completed in accordance with its terms or if the proceeds of sale received on such completion are not held within the ABN AMRO Group;

(c)       No Material Adverse Change

      if any material adverse change in respect of ABN AMRO, RFS Holdings, Fortis, RBS or Santander has occurred;

        For this purpose, "material adverse change" means:

      (i)
      any event, events or circumstance that results or could reasonably be expected to result in a material adverse effect on the business, cash flow, financial or trading position, assets, profits, operational performance, capitalisation, prospects or activities of any of ABN AMRO, RFS Holdings, Fortis, RBS or Santander (each, taken as a whole), as the case may be; or

      (ii)
      a material adverse change since the date hereof in national (including, without limitation, United States, United Kingdom, the Netherlands or any other member

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        state of the European Economic Area) or international capital markets (including without limitation, an adverse change in the tax laws of such states), financial, political or economic conditions or currency exchange rates or exchange controls (whether or not arising as a result of or in connection with any outbreak or escalation of hostilities or declaration of war or national emergency or act of terrorism or other national or international calamity); or

      (iii)
      any suspension of or limitation in trading in the ABN AMRO ordinary shares or ABN AMRO Formerly Convertible Preference Shares or in the Fortis, RBS or Santander shares (other than on a temporary basis in the ordinary course of trading);

(d)       No Litigation or Other Proceedings

if any litigation or other legal, governmental or regulatory proceedings or investigations by a third party (including any regulatory body or governmental authority) has or have been instituted or threatened or are continuing or if any judgment, settlement, decree or other agreement relating to litigation or other legal, governmental or regulatory proceedings or investigations instituted by a third party (including any regulatory body or governmental authority) is in effect, which might, individually or in the aggregate, reasonably be expected to materially and adversely affect ABN AMRO, RFS Holdings, Fortis, RBS, Santander or any of their respective affiliates;

(e)       No Injunctions or Other Restrictions

if an order, stay, judgment or decree is issued by any court, arbitral tribunal, government, governmental authority or other regulatory or administrative authority and is in effect, or any statute, rule, regulation, governmental order or injunction shall have been proposed, enacted, enforced or deemed applicable to the offers, any of which restrains, prohibits or delays or is reasonably likely to restrain, prohibit or delay consummation of the offers in any material respect, or if prior to the end of the U.S. offer period:

(i)
a notification has been received from the AFM that the Dutch offer has been made in conflict with any of the stipulations of Chapter IIa of the 1995 Securities Act, within the meaning of Article 32(a) of the 1995 Securities Decree (or any of its successor provisions) in which case the securities institutions would not be allowed to co-operate with the consummation of the Dutch offer;

(ii)
trading in the ABN AMRO ordinary shares on Euronext Amsterdam has been permanently suspended as a result of a listing measure taken by Euronext Amsterdam in accordance with Article 2706/1 of Euronext Rulebook II; or

(iii)
any of RFS Holdings, Fortis, RBS or Santander receives notification from its home country regulator that there is likely to be a material and adverse change in the supervisory, reporting or regulatory capital arrangements that will apply to ABN AMRO, Fortis, RBS, Santander or, to the extent applicable, RFS Holdings, as the case may be;

(f)        Regulatory Approvals

if all authorisations and consents in connection with the offers have not been obtained or relevant waiting periods have not expired or all mandatory or appropriate regulatory approvals from domestic and international regulatory authorities, insofar as reasonably required in connection with the offers have not been obtained;

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(g)       Competition and Antitrust

if the European Commission has not declared the concentration or concentrations resulting from the Transaction, including the concentrations following from the ultimate acquisition by each of the Banks of their respective parts of ABN AMRO's assets, compatible with the common market or has not otherwise granted its approval for the Transaction or if the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in relation to the Transaction has not expired or been terminated or if other competent antitrust or competition authorities have not granted approvals reasonably deemed necessary;

(h)       Registration Statement Declared Effective by the SEC

if the registration statement containing the U.S. prospectus filed with the SEC is not declared effective by the SEC or if any stop order has been issued or proceedings for suspension of the effectiveness of the registration statement containing the U.S. prospectus have been initiated by the SEC;

(i)        Admission to London Stock Exchange and Euronext Amsterdam

if confirmation has not been obtained that the RBS ordinary shares to be issued in the offers will be admitted to:

(i)
the Official List maintained by the FSA;

(ii)
trading on the LSE's main market for listed securities; and

(iii)
trading and listing on Euronext Amsterdam;

no later than the date of settlement of the offers;

(j)        Shareholder Approvals

if, to the extent required, the general meetings of shareholders of each of Fortis and RBS have not passed the resolutions to approve the Transaction or if the general meetings of shareholders of each of Fortis, RBS and Santander have not passed resolutions to approve the capital increase or, as the case may be, the issuances of securities described in "Source and Amount of Funds";

(k)       No Other Transactions

if, other than the Bank of America Agreement, ABN AMRO or any of its subsidiaries or subsidiary undertakings has entered into any agreement, or completed any transaction, involving the sale, repurchase, redemption or issue by ABN AMRO or its affiliates to third parties of any shares in ABN AMRO's own share capital (or securities convertible or exchangeable into shares or options to subscribe for any of the foregoing (other than pursuant to equity incentive plans operated in the normal course of business)), or involving the acquisition of material assets or the sale or transfer of a material part of its business or assets, including but not limited to any or all of the assets or businesses set out under "Background to and Reasons for the Offers—Reasons for the Offers—Businesses to be Acquired" whether by way of any legal merger, legal demerger, liquidation or any other transactions with similar effect, or entered into, varied or terminated any material contract outside the ordinary course of business or given any undertaking to do any of the foregoing, or if ABN AMRO has approved, declared or paid a dividend outside of the normal course of its business, or inconsistent with past practice; or

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(l)        No Third Party Offer

if any public announcement has been made indicating that a third party is preparing or is to make an offer (or any amendment to, or revision of, an existing or proposed offer) for the ABN AMRO ordinary shares or ABN AMRO ADSs, or if Barclays has announced or is to make (i) any offer, under terms and conditions different from the terms and conditions announced by it on 23 April 2007 or (ii) any amendment to the terms and conditions of an existing offer such that the terms and conditions of that offer are different from the terms and conditions announced on 23 April 2007.

The conditions to the U.S. offer are the same as the conditions to the Dutch offer. The conditions to the U.S. offer are for the benefit of RFS Holdings and the Banks and to the extent legally permitted, may be waived by RFS Holdings at any time.

The conditions in (e)(i), may not be waived by RFS Holdings except where the notification referred to in that condition has seen or will be revoked by the AFM or if such notification is overruled by a court decision or other consultation with the AFM. Notice of any such waiver will be given in the manner provided by applicable law.

Subject to the U.S. tender offer rules (including U.S. tender offer rules that require that material changes of a condition be promptly disseminated to shareholders in a manner reasonably designed to inform them of such changes) and the Dutch tender offer regulations, RFS Holdings reserves the right, at any time and, to the extent legally permitted, to waive any of the conditions to the U.S. offer (including the minimum acceptance condition), by giving oral or written notice of the waiver to the U.S. exchange agent and the Dutch exchange agent and by making a public announcement in accordance with the procedures outlined in "—Expiration Date; Extension of the U.S. Offer". For details of the impact that waiving the minimum acceptance condition may have on holders of ABN AMRO ordinary shares and ABN AMRO ADSs, see "Effects of the Offers and Post-Closing Restructuring".

Determination of the Offer Terms

The Banks jointly determined the terms of the offers and in doing so each Bank individually and separately conducted its own review of relevant information and financial analyses. In particular, the Banks:

reviewed publicly available information about ABN AMRO and its principal business units;

reviewed the market prices and trading activity of ABN AMRO ordinary shares;

reviewed the financial performance and trading activity of ABN AMRO against European peers, including BBVA, BNP Paribas, Crédit Agricole, Credit Suisse, Deutsche Bank, Dexia, HBOS, ING, Intesa Sanpaolo, KBC, Lloyds TSB, Nordea, Société Générale, UBS and Unicredit;

examined the terms of over 100 transactions in a number of jurisdictions involving businesses comparable to the business units or other businesses of ABN AMRO; and

estimated the revenue benefits, cost savings and expected financial impacts of the acquisition of the respective ABN AMRO Businesses as described under "Background to and Reasons for the Offers", taking into account the anticipated financings to be undertaken in connection with the offers.

In addition, each of the Banks also considered the impact on its respective regulatory capital position and their respective expectations for their financial performance and the financial performance of ABN AMRO following completion of the offers.

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Premiums

As set out above, as at 13 July 2007, the value of the offers was €38.40 per ABN AMRO ordinary share. This represents:

a premium of 40.7% to the closing price per ABN AMRO ordinary share of €27.29 on 16 March 2007, the last full trading day on the LSE, Euronext Amsterdam and the NYSE before rumours and press articles significantly affected the share prices and trading volumes of RBS ordinary shares and ABN AMRO ordinary shares and ABN AMRO ADSs;

a premium of 7.1% to the closing price per ABN AMRO ordinary share of €35.85 on 13 July 2007, the most recent practicable trading day prior to the date of this document;

premiums of 64.9% and 74.5%, respectively, to the average closing prices of €23.28 and €22.00 of ABN AMRO ordinary shares over the 12 and 24 months prior to 16 March 2007, the last full trading day on the LSE, Euronext Amsterdam and the NYSE before rumours and press articles significantly affected the share prices and trading volumes of RBS ordinary shares and ABN AMRO ordinary shares and ABN AMRO ADSs; and

a multiple of 15.4x ABN AMRO's basic earnings per share from continuing operations for the year ended 31 December 2006 of €2.50.

Regulatory Matters

As described above, RFS Holdings will not be obliged to purchase any tendered ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the U.S. offer if all authorisations and consents in connection with the offers have not been obtained or relevant waiting periods have not expired or all mandatory or appropriate regulatory approvals of domestic and international regulatory authorities insofar as reasonably required in connection with the offers have been obtained.

RFS Holdings and the Banks have made all necessary filings for the approval of the change of control of ABN AMRO with their home regulators, in so far as these are required, and have made substantially all other applications for regulatory change of control approval. Approval has been requested from, amongst others, the FSA, the Dutch Central Bank (De Nederlandsche Bank), the Spanish Securities Market Commission (Comisión Nacional del Mercado de Valores), and the Belgian Banking, Finance and Insurance Commission (Commission Bancaire, Financière et des Assurances).

In addition, in order for the conditions to the U.S. offer to have been satisfied, RFS Holdings and/or the Banks must make certain competition and antitrust filings with, and obtain approvals from, certain regulatory authorities. In particular, competition consents or confirmations are being sought from, among others, the European Commission under the European Union Merger Regulation, the Federal Trade Commission, the antitrust division of the Department of Justice and CADE, the Brazilian antitrust authority.

While RFS Holdings and the Banks have made, and will continue to make, significant efforts to obtain requisite regulatory approvals, there can be no assurances regarding the timing of the approvals, their ability to obtain the approvals on satisfactory terms or the absence of litigation challenging these approvals. There can likewise be no assurance that U.S. federal or state and non-U.S. regulatory authorities will not attempt to challenge the combination on antitrust grounds or for other reasons, or, if a challenge is made, as to the results of the challenge.

In certain jurisdictions where ABN AMRO has operations, the local regulatory regime imposes a statutory timeframe within which the relevant regulator must communicate its decision on the application for regulatory change of control consent. In many instances, the timeframe imposed on the regulator is shorter than the initial offer period. In others, there is no such timeframe and RFS

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Holdings cannot, therefore, be certain as to when consent might be granted (if at all). Whilst certain regulators have indicated their willingness to provide as much assistance as possible in reviewing the relevant application for regulatory change of control consent, there can be no guarantee that such consents will be granted within the initial offer period or at all.

Expiration Date; Extension of the U.S. Offer

The U.S. offer will expire at 9:00 a.m., New York City time (3:00 p.m. Amsterdam Time) on 5 October 2007, unless the U.S. offer is extended in accordance with U.S. tender offer rules. RFS Holdings intends for the U.S. offer and the Dutch offer to expire on the same date and, if either offer is extended, to similarly extend the other offer.

RFS Holdings may, from time to time, extend the period of time for which the U.S. offer is open until all the conditions listed above under "—Conditions to the U.S. Offer" have been satisfied or, to the extent legally permitted, waived.

U.S. tender offer regulations require that RFS Holdings extends the acceptance period of the U.S. offer if it increases or decreases the consideration being offered within ten U.S. business days of the then-scheduled expiration date of the U.S. offer, so that the U.S. offer will expire no less than ten U.S. business days after the publication of the change. In order to ensure concurrent acceptance periods for both offers, the Dutch offer period will in such event be similarly extended. If RFS Holdings increases or decreases the consideration being offered in the offers, the increased or decreased consideration will be paid to all holders of ABN AMRO ordinary shares and ABN AMRO ADSs whose ABN AMRO ordinary shares and ABN AMRO ADSs are accepted for exchange in the U.S. offer whether or not those ABN AMRO ordinary shares and ABN AMRO ADSs were accepted for exchange prior to the change.

RFS Holdings will also extend the U.S. offer, to the extent required by applicable U.S. tender offer rules or to the extent it extends the Dutch offer if required by Dutch tender offer regulations, if RFS Holdings:

makes a material change to the terms of the U.S. offer, other than a change in the consideration being offered in the U.S. offer; or

makes a material change in the information concerning the U.S. offer, or waives a material condition of the U.S. offer.

RFS Holdings reserves the right to waive the minimum acceptance condition at any time after the expiration of the U.S. offer and prior to the Dutch offer being declared unconditional. In accordance with the U.S. tender offer rules and exemptive relief granted by the SEC, if RFS Holdings intends to waive the minimum acceptance condition after the expiration of the U.S. offer and provided that the number of ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) validly tendered and not properly withdrawn in the U.S. offer and the Dutch offer, on a combined basis, together with all ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) held by RFS Holdings, represents not less than a majority of the issued and outstanding ABN AMRO ordinary shares on a fully-diluted basis, then five U.S. business days prior to the scheduled expiration date of the U.S. offer, RFS Holdings will announce that it may effect such waiver of the minimum acceptance condition. RFS Holdings will make this announcement by issuing a press release on, among others, the Dow Jones News Service, by publication in the Daily Official List of Euronext Amsterdam and by placing an advertisement in the Wall Street Journal, National Edition, which will state the exact percentage to which the minimum acceptance condition may be waived, such percentage being not less than a majority of the issued and outstanding ABN AMRO ordinary shares on a fully-diluted basis and, furthermore, state that such waiver is possible and advise shareholders to withdraw their tenders

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immediately if their willingness to tender into the U.S. offer would be affected by such waiver of the minimum acceptance condition. Notwithstanding the foregoing, RFS Holdings will not by virtue of issuing such an announcement be obliged to waive the minimum acceptance condition. During the five U.S. business day period after RFS Holdings makes the announcement described in this paragraph, the U.S. offer will be open for acceptances and holders of ABN AMRO ordinary shares and ABN AMRO ADSs who have tendered their securities in the U.S. offer will be entitled to withdraw their securities. RFS Holdings will not extend the expiration date of the U.S. offer in connection with any such waiver. Once the U.S. offer has expired, holders of ABN AMRO ordinary shares and ABN AMRO ADSs will not be entitled to withdrawal their tendered securities. RFS Holdings will provide a subsequent offering period of at least five U.S. business days following any such waiver.

In accordance with the U.S. tender offer rules, if RFS Holdings intends to waive the minimum acceptance condition in the event that the number of ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) validly tendered and not properly withdrawn in the U.S. offer and the Dutch offer, on a combined basis, together with all ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) held by RFS Holdings, represents less than a majority of the issued and outstanding ABN AMRO ordinary shares on a fully-diluted basis, RFS Holdings will announce such waiver by publication in the Daily Official List of Euronext Amsterdam and by issuing a press release on, among others, the Dow Jones News Service, by no later than 9:00 am, New York City time (3:00 pm Amsterdam time) on the next U.S. business day after the previously scheduled expiration of the U.S. offer and will extend the U.S. offer (and similarly extend the Dutch offer) to the extent required by the U.S. tender offer rules.

For further details on the impact that waiving the minimum acceptance condition may have on holders of ABN AMRO ordinary shares and ABN AMRO ADSs, see "Effects of the Offers and Post- Closing Restructuring".

If RFS Holdings extends the U.S. offer, it will notify the U.S. exchange agent by written notice or oral notice confirmed in writing and also make an announcement to that effect within three Euronext Amsterdam trading days after the previously scheduled expiration date of the U.S. offer. RFS Holdings will announce any extension of the U.S. offer by issuing a press release on, among others, the Dow Jones News Service and by publication in the Daily Official List of Euronext Amsterdam. During an extension, any ABN AMRO ordinary shares and ABN AMRO ADSs validly tendered and not properly withdrawn will remain subject to the U.S. offer and subject to the right of each holder to withdraw the ABN AMRO ordinary shares or ABN AMRO ADSs that such holder has previously tendered. If RFS Holdings extends the period of time during which the U.S. offer is open, the U.S. offer will expire at the latest time and date to which RFS Holdings extends the U.S. offer.

Subject to the requirements of the U.S. tender offer rules (including U.S. tender offer rules that require that material changes to an offer be promptly disseminated to shareholders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which RFS Holdings may choose to make any public announcement, neither RFS Holdings nor the Banks will have any obligation to communicate any public announcement other than as described above.

Publication of Results; Subsequent Offering Period

Within five Euronext Amsterdam trading days after the expiration of the U.S. offer, RFS Holdings will make a public announcement stating:

that all conditions to the U.S. offer and the Dutch offer have been satisfied or, to the extent legally permitted, waived, and declaring the Dutch offer to be unconditional; or

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that the conditions to the U.S. offer and the Dutch offer have not been satisfied or, to the extent legally permitted, waived, and that, accordingly, the offers have been terminated.

Except as described in "—Expiration Date; Extension of the U.S. offer", announcements will be made by means of a press release on, among others, the Dow Jones News Service and by publication in the Daily Official List of Euronext Amsterdam.

As described above, the U.S. offer and the Dutch offer will be subject to the same conditions, and acceptances of the U.S. offer and the Dutch offer will be counted on an combined basis for purposes of determining whether the minimum acceptance condition has been satisfied. You may not withdraw your ABN AMRO ordinary shares or ABN AMRO ADSs at any time after the expiration of the U.S. offer, including during this five Euronext Amsterdam trading day period.

If the conditions to the offers are satisfied or, to the extent legally permitted, waived, RFS Holdings reserves the right to provide a "subsequent offering period" of no more than 15 Euronext Amsterdam trading days, and in no event more than 20 U.S. business days. During the subsequent offering period, if one is provided, remaining holders of ABN AMRO ordinary shares and ABN AMRO ADSs may tender, but not withdraw, their ABN AMRO ordinary shares and ABN AMRO ADSs not previously tendered. ABN AMRO ordinary shares and ABN AMRO ADSs previously tendered and accepted for exchange in the U.S. offer will not have the benefit of any further withdrawal rights. A subsequent offering period, if one is provided, will not affect the timing of the acceptance and delivery of ABN AMRO ordinary shares or ABN AMRO ADSs previously tendered and accepted for exchange in the U.S. offer, as described below under "—Acceptance of Tendered ABN AMRO Ordinary Shares and ABN AMRO ADSs". As mentioned above, holders of ABN AMRO ordinary shares and ABN AMRO ADSs that tender their ABN AMRO ordinary shares or ABN AMRO ADSs during any subsequent offering period will not have withdrawal rights, and RFS Holdings will accept for exchange any ABN AMRO ordinary shares or ABN AMRO ADSs validly tendered during any subsequent offering period and will pay for such ABN AMRO ordinary shares or ABN AMRO ADSs promptly and, in any event, within five Euronext Amsterdam trading days of the ABN AMRO ordinary shares and ABN AMRO ADSs being tendered. The consideration paid during any subsequent offering period will be the same consideration offered in the initial offer period. Any subsequent offering period will be announced simultaneously with an announcement that the conditions to the U.S. offer and the Dutch offer have been satisfied or, to the extent legally permitted, waived, and declaring the Dutch offer to be unconditional. As mentioned above, in the event the minimum acceptance condition is waived after the end of the U.S. offer period, following expiration of the U.S. offer, to not less than a majority of the issued and outstanding ABN AMRO ordinary shares on a fully-diluted basis, RFS Holdings will provide a subsequent offering period of at least five U.S. business days immediately following such waiver.

Procedures for Tendering ABN AMRO Ordinary Shares

Holders of ABN AMRO ordinary shares

Admitted Institutions

If you hold your ABN AMRO ordinary shares through a financial intermediary that is an Admitted Institution, you should make your acceptance of the U.S. offer known to the Dutch exchange agent through your financial intermediary before the expiration of the U.S. offer. The financial intermediary may set an earlier deadline for receipt of acceptances in order to permit the financial intermediary to communicate acceptances to the Dutch exchange agent in a timely manner. You should contact the financial intermediary through which you hold your ABN AMRO ordinary shares to obtain information about the deadline by which you must make your acceptance of the U.S. offer known to your financial intermediary.

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Admitted Institutions must submit acceptances only to the Dutch exchange agent and in writing. In submitting acceptances, each Admitted Institution is required to indicate the number of ABN AMRO ordinary shares tendered. Each Admitted Institution must deliver the tendered ABN AMRO ordinary shares to the Dutch exchange agent before the expiration of the U.S. offer and declare the following:

the Admitted Institution has the tendered ABN AMRO ordinary shares in its administration;

each tendering holder of ABN AMRO ordinary shares irrevocably represents and warrants that such holder has full power and authority to tender, sell and deliver, and has not entered into any other agreement to tender, sell or deliver, the ABN AMRO ordinary shares to any party other than RFS Holdings;

each tendering holder of ABN AMRO ordinary shares irrevocably represents and warrants that such holder complies with the restrictions described in this document or imposed by securities and other applicable laws or regulations of the jurisdiction in which the holder of the ABN AMRO ordinary shares is resident, and no registration, approval or filing with any regulatory authority of such jurisdiction is required in connection with the tendering of such ABN AMRO ordinary shares; and

each tendering holder of ABN AMRO ordinary shares undertakes to transfer the tendered ABN AMRO ordinary shares free and clear of any rights of pledge or usufruct, liens or attachments or similar charges to RFS Holdings via the Dutch exchange agent on the settlement date.

Registered form

If you hold your ABN AMRO ordinary shares in registered form, an acceptance form will be made available by the Dutch exchange agent and the global information agent to permit you to make your acceptance of the U.S. offer known. You should complete, sign and return the acceptance form so as to reach the Dutch exchange agent before the expiration of the U.S. offer. The acceptance forms are available upon request from the Dutch exchange agent and the global information agent and will serve as a deed of transfer.

Procedures for Tendering ABN AMRO ADSs

Holders of ABN AMRO ADSs

If you hold ABN AMRO ADRs representing ABN AMRO ADSs, you may tender your ABN AMRO ADSs to the U.S. exchange agent by delivering to the U.S. exchange agent a properly completed and duly executed letter of transmittal, with any applicable signature guarantees from an eligible guarantor institution, together with the ABN AMRO ADR evidencing your ABN AMRO ADSs specified on the face of the letter of transmittal, before the expiration of the U.S. offer. If your ABN AMRO ADRs are not available, you may also follow the guaranteed delivery procedures described below under "—Guaranteed Delivery Procedures".

Registered holders of ABN AMRO ADSs should send their properly completed and duly executed letter of transmittal together with the corresponding ABN AMRO ADR only to the U.S. exchange agent and not to RFS Holdings, the Dutch exchange agent, any of the Banks or the global information agent. Letters of transmittal properly completed and duly executed, together with the corresponding ABN AMRO ADRs, must be received by the U.S. exchange agent before the expiration of the U.S. offer to be accepted for exchange.

If you hold your ABN AMRO ADSs through a financial intermediary, you should instruct your financial intermediary through which you hold your ABN AMRO ADSs to arrange for a DTC

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participant holding the ABN AMRO ADSs in its DTC account to tender your ABN AMRO ADSs to the DTC account of the U.S. exchange agent through the book-entry transfer facilities of DTC, together with an agent's message acknowledging that the tendering holder has received and agrees to be bound by the letter of transmittal and the U.S. offer document, before the expiration of the U.S. offer. You should comply with the dates communicated to you by your financial intermediary as they may differ from the dates and times noted in this document. If your ABN AMRO ADSs are not available, you may also follow the guaranteed delivery procedures described in "Guaranteed Delivery Procedures" below.

The method of delivery of ABN AMRO ADRs and letters of transmittal and all other required documents is at your option and risk, and the delivery will be deemed made only when actually received by the U.S. exchange agent. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, you should allow sufficient time to ensure timely delivery. No acknowledgement of receipt of documents will be given by or on behalf of RFS Holdings or the U.S. exchange agent.

Although delivery of ABN AMRO ADSs may be effected through book-entry transfer into the U.S. exchange agent's DTC account, either (i) the letter of transmittal, properly completed and duly executed, together with any required signature guarantees or (ii) an agent's message, and, in either case, any other required documents, must in any case be transmitted to, and received by, the U.S. exchange agent at the relevant address set out in the letter of transmittal before ABN AMRO ADSs will be either counted as a valid acceptance, or purchased, or such holder must comply with the guaranteed delivery procedures described below. Delivery of documents to a financial intermediary or to a DTC participant's book-entry transfer account does not constitute delivery to the U.S. exchange agent.

Tendered ABN AMRO ADSs will be held in an account controlled by the U.S. exchange agent, and consequently you will not be able to sell, assign, transfer or otherwise dispose of your ABN AMRO ADSs until such time as (i) you withdraw your ABN AMRO ADSs from the U.S. offer; (ii) your ABN AMRO ADSs have been exchanged (subject to the terms and conditions of the U.S. offer); or (iii) your ABN AMRO ADSs have been returned to you if the U.S. offer is not completed or because they were not accepted for exchange.

Guaranteed Delivery Procedures

If you wish to tender your ABN AMRO ADSs in the U.S. offer and your ABN AMRO ADSs are not immediately available or time will not permit all required documents to reach the U.S. exchange agent before the expiration of the U.S. offer or the procedure for book-entry transfer cannot be completed on a timely basis, you may nevertheless properly tender your ABN AMRO ADSs if all the following conditions are satisfied:

your tender is made by or through an eligible institution;

a properly completed and duly executed notice of guaranteed delivery, substantially in the form provided with this document, is received by the U.S. exchange agent as provided below before the expiration of the U.S. offer; and

ABN AMRO ADSs in proper form for transfer, together with, in the case of ABN AMRO ADSs evidenced by ADRs, a properly completed and duly executed letter of transmittal, together with any required signature guarantees or, in the case of a book-entry transfer, a book-entry confirmation along with an agent's message and any other required documents, are received by the U.S. exchange agent within three NYSE trading days after the date of execution of the notice of guaranteed delivery. A NYSE trading day is a day on which the NYSE is open for business.

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Any notice of guaranteed delivery may be delivered by hand, mail or facsimile to the U.S. exchange agent and must include a guarantee by an eligible institution in the form set forth in the notice of guaranteed delivery. In the case of ABN AMRO ADSs held through the book-entry transfer system of DTC, the notice of guaranteed delivery must be delivered to the U.S. exchange agent by a DTC participant by means of the DTC book-entry transfer confirmation system.

Election to Deposit RBS Ordinary Shares in the RBS ADS Facility

Holders of ABN AMRO ADSs will be entitled to RBS ordinary shares as part of the consideration in the U.S. offer. As part of the letter of transmittal, but not subject to the terms and conditions of the U.S. offer, accepting holders of ABN AMRO ADSs may make an election to have their RBS ordinary shares deposited in a CREST account maintained by The Bank of New York, as RBS ADS depositary, and receive RBS ADSs in exchange for their RBS ordinary shares following completion of the offers. By making such election, the holders (i) agree to be bound by the terms and conditions of the deposit agreement governing the RBS ADS facility, (ii) will be deemed to have instructed the RBS ADS depositary to deposit their RBS ordinary shares in such facility, (iii) agree to permit The Bank of New York to deduct an amount equivalent to any fees and expenses payable under the ADS deposit agreement, and the 1.5% SDRT charge of the value of such RBS ordinary shares payable on the deposit of the RBS ordinary shares that they received in the U.S. offer from the cash portion of their offer consideration and (iv) agree to hold their RBS ADSs in the direct registration system maintained by The Bank of New York, as RBS ADS depositary. Upon deposit of the RBS ordinary shares into the RBS ADS facility whether by election by holders of ABN AMRO ADSs or after receipt of the RBS ordinary shares by holders of ABN AMRO ordinary shares, The Bank of New York, as RBS ADS depositary, will send to the holders a Direct Registration Transaction Advice indicating their deposit and respective holdings.

Following completion of the U.S. offer, holders of ABN AMRO ordinary shares may deposit the RBS ordinary shares they receive in the U.S. offer in the RBS ADS facility by contacting The Bank of New York, as RBS ADS depositary, and furnishing such documentation and paying such fees and expenses as required under the ADS deposit agreement, as well as the 1.5% SDRT charge on the value of such RBS ordinary shares.

For further details about the RBS ADSs and the RBS ADS facility, see "Description of RBS American Depositary Shares".

In the event that no election is made to deposit RBS ordinary shares into the RBS ADS facility, holders of ABN AMRO ADSs will receive RBS ordinary shares and can either designate a CREST account for the delivery of such shares, elect for the delivery of such shares to the CREST account applicable to the custodian arrangements described under "U.S. Custodian Arrangements" below (provided the eligibility criteria are satisfied) or the CREST account of Euroclear Nederland, or receive certificated RBS ordinary shares. In the absence of a designation, the holders of ABN AMRO ADSs will receive certificated RBS ordinary shares.

For further information about settlement of the U.S. offer, please see "—Settlement of the U.S. Offer".

Withdrawal Rights

ABN AMRO ordinary shares and ABN AMRO ADSs tendered for exchange into the U.S. offer may be withdrawn at any time prior to the expiration of the U.S. offer (including any extensions thereof). Once the U.S. offer has expired, you will not be able to withdraw any tendered ABN AMRO ordinary shares or ABN AMRO ADSs. This means that you will not be able to withdraw any tendered ABN AMRO ordinary shares or ABN AMRO ADSs from the expiration of the U.S. offer to the announcement of the results of the offers, which will occur within five Euronext Amsterdam trading

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days after the expiration of the U.S. offer. You also will not be able to withdraw any ABN AMRO ordinary shares or ABN AMRO ADSs tendered during the subsequent offering period, if one is provided.

You may not rescind a withdrawal. If you withdraw tendered ABN AMRO ordinary shares or ABN AMRO ADS, they will be deemed not validly tendered for purposes of the U.S. offer. However, you may re-tender withdrawn ABN AMRO ordinary shares or ABN AMRO ADSs at any time before the expiration of the U.S. offer by following the procedures described under "—Procedures for Tendering ABN AMRO Ordinary Shares" and "—Procedures for Tendering ABN AMRO ADSs" above.

Withdrawal of Tendered ABN AMRO Ordinary Shares

If you tendered ABN AMRO ordinary shares that you hold through a financial intermediary that is an Admitted Institution and make your acceptance known through your financial intermediary to the Dutch exchange agent, you may withdraw your ABN AMRO ordinary shares by making a withdrawal request through your financial intermediary to the Dutch exchange agent before the expiration of the U.S. offer.

If you tendered ABN AMRO ordinary shares that you hold in registered form registered in your name by sending a form of acceptance to the Dutch exchange agent, you may withdraw your ABN AMRO ordinary shares by delivering to the Dutch exchange agent a properly completed and duly executed notice of withdrawal before the expiration of the U.S. offer.

Withdrawal of Tendered ABN AMRO ADSs

If you tendered your ABN AMRO ADSs to the U.S. exchange agent by delivering a letter of transmittal together with the ABN AMRO ADRs evidencing your ABN AMRO ADSs, you may withdraw your ABN AMRO ADSs by delivering to the U.S. exchange agent a properly completed and duly executed notice of withdrawal, guaranteed by an eligible guarantor institution (if the letter of transmittal required a signature guarantee) before the expiration of the U.S. offer.

If you tendered your ABN AMRO ADSs by means of the book-entry transfer procedures of DTC, you may withdraw your ABN AMRO ADSs by instructing your financial intermediary through which you hold your ABN AMRO ADSs to cause the DTC participant through which your ABN AMRO ADSs were tendered to deliver a notice of withdrawal to the U.S. exchange agent through the book-entry transfer facilities of DTC prior to the expiration of the U.S. offer.

Acceptance of Tendered ABN AMRO Ordinary Shares and ABN AMRO ADSs

If the conditions referred to under "—Conditions to the U.S. Offer" have been satisfied or, to the extent legally permitted, waived, RFS Holdings will accept for exchange and will exchange all ABN AMRO ordinary shares and ABN AMRO ADSs that have been validly tendered and not properly withdrawn pursuant to the terms of the U.S. offer and procure the issuance of RBS ordinary shares and cash for the account of the tendering holders no later than five Euronext Amsterdam trading days after RFS Holdings announces that the conditions to the offers have been satisfied or, to the extent legally permitted, waived.

Under no circumstances will interest be paid on the exchange of ABN AMRO ordinary shares or ABN AMRO ADSs, regardless of any delay in making the exchange or any extension of the offers.

Exchange of ABN AMRO ADSs accepted for exchange pursuant to the U.S. offer will in all cases be made only after timely receipt of (i) certificates representing the tendered ABN AMRO ADSs (or a

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confirmation of a book-entry transfer), (ii) an ADS letter of transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an agent's message in connection with a book-entry transfer of such ABN AMRO ADSs, and (iii) any other required documents.

During a subsequent offering period, if one is provided, RFS Holdings will accept for exchange any ABN AMRO ordinary shares and ABN AMRO ADSs tendered into the U.S. offer and will pay for such ABN AMRO ordinary shares or ABN AMRO ADSs promptly and, in any event within five Euronext Amsterdam trading days of the ABN AMRO ordinary shares and ABN AMRO ADSs being tendered, for the same consideration offered in the initial offer period.

Validity of the Tendered Securities; Waiver of Defects

RFS Holdings will determine questions as to the validity, form, eligibility, including time of receipt, and acceptance for exchange of any tender of ABN AMRO ordinary shares or ABN AMRO ADSs, in its sole discretion and RFS Holdings' determination will be final and binding. RFS Holdings reserves the right to reject any and all tenders of ABN AMRO ordinary shares or ABN AMRO ADSs that it determines are not in proper form or the acceptance for exchange of which may be unlawful. No tender of ABN AMRO ordinary shares or ABN AMRO ADSs will be deemed to have been validly made until all defects and irregularities have been cured or waived. RFS Holdings' interpretation of the terms and conditions of the U.S. offer, including the acceptance forms and instructions thereto, will be final and binding. There shall be no obligation on RFS Holdings, the global information agent, the U.S exchange agent, the Dutch exchange agent or any person acting on its or their behalf to give notice of any defects or irregularities in any acceptance or notice of withdrawal and no liability shall be incurred by any of them for failure to give any such notification. RFS Holdings reserves the right, in accordance with applicable law, to permit a holder of ABN AMRO ordinary shares or ABN AMRO ADSs to accept the offers in a manner other than as set out above.

Return of Tendered ABN AMRO Ordinary Shares or ABN AMRO ADSs

If any ABN AMRO ordinary shares or ABN AMRO ADSs tendered in accordance with the instructions set forth in this document or the other U.S. offer materials are not accepted for exchange pursuant to the terms and conditions of this U.S. offer, RFS Holdings will cause these ABN AMRO ordinary shares or ABN AMRO ADSs to be returned promptly following the announcement of the lapse or withdrawal of the offers, as the case may be.

Settlement of the U.S. Offer

If the conditions to the U.S. offer referred to under "—Conditions to the U.S. Offer" have been satisfied or, to the extent legally permitted, waived, and the Dutch offer is declared unconditional, RBS ordinary shares will be issued to and cash will be paid to the tendering holders of ABN AMRO ordinary shares and ABN AMRO ADSs whose ABN AMRO ordinary shares or ABN AMRO ADSs are accepted for exchange promptly and, in any event, within five Euronext Amsterdam trading days thereafter.

In the event of a subsequent offering period, if any, RFS Holdings will accept for exchange and promptly pay for any ABN AMRO ordinary shares or ABN AMRO ADSs tendered during any subsequent offering period promptly and, in any event, within five Euronext Amsterdam trading days of such ABN AMRO ordinary shares or ABN AMRO ADSs being tendered into the U.S. offer.

The RBS ordinary shares will be capable of being held in certificated form or in uncertificated form under U.K. law. Euroclear UK is the Central Securities Depository for the United Kingdom, Republic of Ireland, Isle of Man, the Bailiwick of Jersey and the Bailiwick of Guernsey. Euroclear UK operates the CREST settlement system, allowing securities trading in these jurisdictions to take place in

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uncertificated form and transfers of such securities to be settled electronically. Although U.S. holders of ABN AMRO ordinary shares and holders of ABN AMRO ADSs will receive RBS ordinary shares pursuant to the U.S. offer, they will be able to deposit their RBS ordinary shares into the RBS ADS facility and receive RBS ADSs as described above in "—Election to Deposit RBS Ordinary Shares in the RBS ADS Facility" subject to the payment of SDRT and other associated costs and expenses (as described further below).

The RBS ordinary shares to which each tendering holder of ABN AMRO ordinary shares and ABN AMRO ADSs is entitled will initially be delivered in uncertificated form to a nominee that is a CREST participant, which will hold the newly issued RBS ordinary shares as nominee on behalf of such accepting holders. Such issuance shall be effected by RBS on behalf of RFS Holdings and shall accordingly satisfy in full the obligations of RFS Holdings towards the accepting ABN AMRO ordinary shareholders and holders of ABN AMRO ADSs with regard to the issue of RBS ordinary shares as part of the consideration for the tendered ABN AMRO ordinary shares and ABN AMRO ADSs.

The RBS ordinary shares will thereafter be delivered as follows:

The RBS ordinary shares to which a tendering holder of ABN AMRO ordinary shares or ABN AMRO ADSs is entitled will be delivered within the CREST system to a CREST account designated by the tendering holder of ABN AMRO ordinary shares in its acceptance form (if applicable) or, where the tendering ABN AMRO shareholder holds through an Admitted Institution, by the Admitted Institution or by the tendering holder of ABN AMRO ADSs.

In the case of holders of ABN AMRO ordinary shares who hold their shares through an Admitted Institution, in most cases, it is expected that the designated account will be the CREST account of, or of a nominee for, the relevant Admitted Institution. In this case, the 1.5% SDRT charge should not generally arise. A tendering holder of ABN AMRO ordinary shares or ABN AMRO ADSs wishing to trade its RBS ordinary shares on Euronext Amsterdam may instead designate the CREST account of Euroclear Nederland, in which case a SDRT charge of 1.5% of the value of the RBS ordinary shares will arise and will be deducted from the cash consideration to which such holder is entitled. However, should RBS not achieve its aim of having the RBS ordinary shares listed and traded on Euronext Amsterdam, then the RBS ordinary shares, to which tendering holders of ABN AMRO ordinary shares or ABN AMRO ADSs who elected for the CREST account of Euroclear Nederland are entitled, will instead be issued in certificated form. A tendering holder of ABN AMRO ADSs wishing to deposit its RBS ordinary shares in the RBS ADS facility in exchange for RBS ADSs can designate the CREST account of The Bank of New York, in which case any fees and expenses payable under the RBS ADS deposit agreement and a 1.5% SDRT charge will be deducted from the cash consideration to which such tendering holder of ABN AMRO ADSs is entitled.

In the event that (i) the Admitted Institution through which a tendering holder of ABN AMRO ordinary shares holds its shares does not offer a CREST account, (ii) a tendering holder does not wish to hold its RBS ordinary shares through such account, (iii) a tendering holder does not hold its ABN AMRO ordinary shares through an Admitted Institution or (iv) a tendering holder of ABN AMRO ADSs does not wish to exchange its RBS ordinary shares for RBS ADSs, such holder of ABN AMRO ordinary shares or ABN AMRO ADSs may instead elect for the CREST account applicable to the custodian arrangements described under "U.S. Custodian Arrangements" below (provided the relevant eligibility criteria are satisfied) or may designate any other CREST account, in which case no SDRT charge should be payable unless the tendering holder of ABN AMRO ordinary shares or ABN AMRO ADSs designates a CREST account that is within the 1.5% SDRT regime which generally applies to providers of depositary receipt services and certain overseas clearance systems and their nominees (including Euroclear Nederland). If the CREST account designated by

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a tendering holder of ABN AMRO ordinary shares or ABN AMRO ADSs is within the 1.5% SDRT regime, the 1.5% SDRT charge will be deducted from the cash consideration to which such tendering holder of ABN AMRO ordinary shares or ABN AMRO ADSs is entitled.

Alternatively, a tendering holder of ABN AMRO ordinary shares or ABN AMRO ADSs may request that its RBS ordinary shares be delivered in certificated form, in which case no 1.5% SDRT charge will be payable (unless the person to whom the RBS ordinary shares are delivered is a provider of clearance services or a provider of depositary receipt services or the nominee of such a person, in which case a 1.5% SDRT charge may arise).

To the extent that no, or invalid, account details are furnished (and no valid election is made for the U.S. custodian arrangements, Euroclear Nederland, or to deposit the RBS ordinary shares into the RBS ADR facility), the RBS ordinary shares to which such shareholder is entitled will, provided the ABN AMRO ordinary shares or ABN AMRO ADSs have otherwise been validly tendered, be rematerialised and delivered to the tendering holder in certificated form.

Any 1.5% SDRT charge that arises in connection with the delivery of the newly issued RBS ordinary shares to a holder of ABN AMRO ordinary shares or ABN AMRO ADSs, whether in certificated or uncertificated form, will in practice be required to be borne by the holder of the ABN AMRO ordinary shares or ABN AMRO ADSs.

Holders of ABN AMRO ordinary shares and ABN AMRO ADSs who are unsure as to whether the CREST account they wish to designate is within the 1.5% SDRT regime should seek clarification from their financial intermediary. Holders of ABN AMRO ordinary shares who hold through an Admitted Institution should confirm with the Admitted Institution that they will be able to hold their RBS ordinary shares through the CREST account of, or of a nominee for, the Admitted Institution as expected.

For further information about the circumstances under which an SDRT charge may apply to you, please see "Material U.S. Federal Income Tax, Dutch Tax and U.K. Tax Consequences—Certain U.K. Tax Considerations".

The settlement mechanics during the subsequent offering period, if any, will be the same as those described above.

U.S. Custodian Arrangements

U.S. custodian arrangements are available and will allow U.S. holders of the RBS ordinary shares issued pursuant to the U.S. offer who satisfy the eligibility criteria to hold their shares within CREST and to trade them on the LSE without incurring a 1.5% SDRT charge. The terms and conditions applicable to these arrangements are set out in "Annex C: RBS Custody Account". Holders of ABN AMRO ordinary shares and ABN AMRO ADSs who elect for the custodian arrangements will be deemed to have accepted the applicable terms and conditions.

Holders of ABN AMRO ADSs who satisfy the eligibility criteria and who wish to utilise the U.S. custodian arrangements should elect accordingly in the letter of transmittal. Holders of ABN AMRO ordinary shares who hold their shares through an Admitted Institution and who wish to elect for the U.S. custodian arrangements should notify the Admitted Institution accordingly. Holders of ABN AMRO ordinary shares who hold their shares in registered form and who wish to utilise the U.S. custodian arrangements should elect accordingly in the form of acceptance.

RBS permits its shareholders to elect to receive dividends, if any, in pounds sterling or U.S. dollars and, as at the date of this document, intends to offer its shareholders the option to receive dividends in euros. Holders of RBS ordinary shares who hold their shares through the U.S.

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custodian arrangements will, pursuant to the terms and conditions applicable thereto, receive their dividends in pounds sterling unless they elect otherwise.

Currency of Cash Consideration

Holders of ABN AMRO ordinary shares will receive any consideration paid in euros.

Holders of ABN AMRO ADSs will receive any consideration paid in U.S. dollars. Holders of ABN AMRO ADSs will receive consideration converted into U.S. dollars at the exchange rate obtainable by the U.S. exchange agent, net of fees and expenses, on the spot market in London on the date the cash consideration is received by U.S. exchange agent for delivery in respect of the relevant ABN AMRO ADSs.

The actual amount of U.S. dollars received will depend upon the exchange rate prevailing on the day on which funds are received by the U.S. exchange agent. Holders of ABN AMRO ADSs should be aware that the euro to U.S. dollar exchange rate which is prevailing at the date on which an election is deemed to be made to receive U.S. dollars and on the dates of dispatch and receipt of payment may be different from that prevailing on the day on which funds are received by the U.S. exchange agent. In all cases, fluctuations in the euro to U.S. dollar exchange rate are at the risk of accepting holders of ABN AMRO ADSs who are treated as having elected to receive their consideration in U.S. dollars. None of RFS Holdings, the Banks, the U.S. exchange agent or their advisers or agents shall have any responsibility with respect to the actual amount of cash consideration payable other than in euros.

Currency of Dividends

Existing RBS shareholders receive dividends in pounds sterling unless they validly elect to receive dividends in U.S. dollars. Following completion of the offers, RBS shareholders (including the holders of newly issued RBS ordinary shares) will continue to receive dividends in pounds sterling but will be able to elect to receive dividends in U.S. dollars, or in euros (in the event that RBS offers a euro dividend election to its shareholders).

Fees and Expenses

Except as set forth below, RFS Holdings will not pay any fees or commissions to any broker or other person soliciting tenders of ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the offers.

You will not have to pay any transaction fees or brokerage commissions if (i) you instruct your bank or stockbroker that is an Admitted Institution to tender your ABN AMRO ordinary shares, subject to the policies of such Admitted Institution, (ii) your ABN AMRO ordinary shares are registered in your name and you tender them to the Dutch exchange agent or (iii) you hold ABN AMRO ADSs and you tender them directly to the U.S. exchange agent.

If your ABN AMRO ordinary shares are held through a financial intermediary that does not directly tender and deliver your ABN AMRO ordinary shares to the Dutch exchange agent, you are advised to consult with your financial intermediary as to whether or not they charge any transaction fee or service charge.

If your ABN AMRO ADSs are held through a financial intermediary and your financial intermediary tenders your ABN AMRO ADSs on your behalf, your financial intermediary may charge a fee for doing so. You should consult your financial intermediary to determine whether any charges will apply.

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Admitted Institutions will receive from the Dutch exchange agent on behalf of RFS Holdings a commission in the amount of €0.0029 in respect of each ABN AMRO ordinary share validly tendered and delivered, up to a maximum of €10,000 per tendering holder of ABN AMRO ordinary shares as well as an additional compensation of €2.50 per deposit client for rounding off of fractions of RBS ordinary shares. The commission must be claimed from RFS Holdings through the Dutch exchange agent within 30 days of the settlement of the offers. Fees and expenses may be charged if a foreign institution or other banks or stockbrokers are involved in the delivery of RBS ordinary shares or the settlement of the offers.

In addition, certain fees and expenses may be payable in connection with the cancellation of ABN AMRO ADSs. See "Description of RBS American Depositary Shares".

Merrill Lynch International has, or certain of its affiliates have, provided financial advisory services to Fortis, RBS and Santander in connection with the contemplated acquisition of ABN AMRO. The Banks entered into an engagement letter with Merrill Lynch relating to the provision of these services and each of Fortis, RBS and Santander agreed to pay to Merrill Lynch fees as follows:

€2.5 million upon signing of the relevant fee letter entered into between Merrill Lynch and each bank;

€2.5 million upon public announcement of the intention to make an offer for ABN AMRO; and

€25 million upon completion of such offer.

In addition, the Banks will reimburse Merrill Lynch for its expenses and indemnify it against specified liabilities and expenses in connection with the offers, including liabilities under the U.S. federal securities laws. Subject to applicable laws and regulations, in the ordinary course of business, Merrill Lynch and its affiliates may actively trade or hold the securities of RBS and ABN AMRO for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in those securities.

Fortis Bank SA/NV has, or certain of its affiliates have, provided financial advisory services to Fortis in connection with the contemplated acquisition of ABN AMRO. Fortis will reimburse Fortis Bank SA/NV for its expenses and indemnify it against specified liabilities and expenses in connection with the offers, including liabilities under the U.S. federal securities laws. Subject to applicable laws and regulations, in the ordinary course of business, Fortis SA/NV and certain of its affiliates may actively trade or hold the securities of ABN AMRO for their own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in those securities.

Greenhill & Co. International LLP has, or certain of its affiliates have, provided financial advisory services to Fortis in connection with the contemplated acquisition of ABN AMRO. Under the terms of its engagement letter, Fortis agreed to pay Greenhill & Co. International LLP a customary fee for its services, a significant portion of which is contingent upon completion of the Transaction. Fortis will reimburse Greenhill & Co. International LLP for its expenses and indemnify it against specified liabilities and expenses in connection with the offers.

The Royal Bank of Scotland plc, a subsidiary of RBS, has, or certain of its affiliates have, provided financial advisory services to RBS in connection with the contemplated acquisition of ABN AMRO. We will reimburse The Royal Bank of Scotland plc for its expenses. Subject to applicable laws and regulations, in the ordinary course of business, The Royal Bank of Scotland plc and certain of its affiliates may actively trade or hold the securities of RBS and ABN AMRO for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in those securities.

Santander Investment, S.A. has provided, and continues to provide, financial advisory services to Santander in connection with the contemplated acquisition of ABN AMRO. For undertaking those

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financial advisory services, Santander Investment, S.A. will receive from Santander a fixed professional fee of €300,000, payable within a 15-day period after settlement of the offers. Santander will reimburse Santander Investment, S.A. for its expenses and indemnify it against specified liabilities and expenses in connection with the offers, including liabilities under the U.S. federal securities laws. Santander Investment, S.A. is a wholly-owned subsidiary of Santander and from time to time it provides, and certain of its affiliates provide, advisory and other services to Santander, charging customary fees for such services. Subject to applicable laws and regulations, in the ordinary course of business, Santander Investment, S.A. and its affiliates may actively trade or hold the securities of RBS and ABN AMRO for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in those securities.

NIBC Bank N.V. has, or certain of its affiliates have, provided, and continue to provide, financial advisory services to Santander in connection with the contemplated acquisition of ABN AMRO. Under the terms of its engagement letter Santander agreed to pay NIBC Bank N.V. a customary fee for its services, a significant portion of which is contingent upon completion of the Transaction. Santander will reimburse NIBC Bank N.V. for its expenses and indemnify it against specified liabilities and expenses in connection with the offers, including liabilities under the U.S. federal securities laws. Santander indirectly owns less than 3% of the share capital of NIBC Holding N.V., parent of NIBC Bank N.V. Mr. Juan R. Inciarte, Executive Vice President of Santander, is a member of the Supervisory Board of NIBC Holding N.V. and NIBC Bank N.V. Subject to applicable laws and regulations, in the ordinary course of business, NIBC Bank N.V. and its affiliates may actively trade or hold the securities of RBS and ABN AMRO for its own account and for the accounts of customers and, accordingly, may at any time hold a long or short position in those securities.

RFS Holdings has retained D.F. King & Co., Inc. to act as the global information agent in connection with both the U.S. offer and the Dutch offer. The global information agent may contact holders of ABN AMRO ordinary shares and ABN AMRO ADSs by mail, telephone, telex, fax, e-mail and personal interview and may request brokers, dealers and other nominee shareholders to forward the offer materials to owners of ABN AMRO ordinary shares and ABN AMRO ADSs. The global information agent will receive reasonable and customary fees for these services, plus reimbursement of its out-of-pocket expenses.

RFS Holdings has retained The Bank of New York to act as U.S. exchange agent in connection with the U.S. offer. RFS Holdings will pay the U.S. exchange agent reasonable and customary compensation for its services in connection with the U.S. offer, plus reimbursement of its out-of-pocket expenses. RFS Holdings will also reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding material to their customers.

RFS Holdings has retained Fortis Bank (Nederland) N.V. to act as Dutch exchange agent in connection with the offers. RFS Holdings will pay the Dutch exchange agent reasonable and customary compensation for its services in connection with the offers, plus reimbursement of its out-of-pocket expenses. RFS Holdings will also reimburse brokers, dealers, commercial banks and trust companies for customary mailing and handling expenses incurred by them in forwarding material to their customers. Fortis Bank (Nederland) N.V. is a wholly-owned subsidiary of Fortis Bank (Nederland) Holding N.V., the Fortis subsidiary which holds Fortis's shares in RFS Holdings.

RFS Holdings will indemnify the global information agent, the U.S. exchange agent and the Dutch exchange agent against specified liabilities and expenses in connection with the offers, including liabilities under the U.S. federal securities laws.

Indemnification for liabilities under the U.S. federal securities laws may be unenforceable as against public policy.

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The cash expenses to be incurred in connection with the offers will be paid by RFS Holdings and the Banks, depending on the nature of the expense, and are estimated in the aggregate to be approximately €660 million. Such expenses include, among other, fees, and expenses of the financial advisors, the U.S. exchange agent, the Dutch listing and exchange agent and the global information agent, registration fees, accounting and legal fees, printing costs and certain expenses payable to third parties in relation to the financing of the offer consideration by the Banks among others.

These costs and expenses can be divided into those that are directly attributable to the decision by the Banks to acquire ABN AMRO (approximately €175 million) and those attributable to the financing of the offer consideration as described elsewhere herein (approximately €485 million).

Accounting Treatment

Under IFRS and U.S. GAAP, the acquisition of ABN AMRO will be accounted for by RBS using the purchase method. RBS, (acting through RFS Holdings, which will be its consolidated subsidiary with effect from completion of the offers) will be the acquirer. In RBS's consolidated financial statements, ABN AMRO's assets, liabilities and contingent liabilities will be recognised at fair value; the excess of the cost of the acquisition over the net fair value of the assets, liabilities and contingent liabilities recognised will be recorded as goodwill.

Effect of the Offers on the Market for ABN AMRO Ordinary Shares and ABN AMRO ADSs

For the reasons described below, if the offers are completed, depending on the number of ABN AMRO ordinary shares and ABN AMRO ADSs exchanged in the offers, there may no longer be an active trading market for the ABN AMRO ordinary shares or ABN AMRO ADSs, and their liquidity could be materially adversely affected.

Delisting of ABN AMRO Ordinary Shares and ABN AMRO ADSs

ABN AMRO ordinary shares are listed and traded on Euronext Amsterdam. ABN AMRO ADSs are listed and traded on the NYSE. Depending upon the number of ABN AMRO ordinary shares and ABN AMRO ADSs acquired pursuant to the offers, following the completion of the offers, the ABN AMRO ordinary shares may no longer meet the listing requirements of Euronext Amsterdam and the ABN AMRO ADSs may no longer meet the listing requirements of the NYSE. To the extent permitted under applicable law and stock exchange regulations, RFS Holdings intends to procure the delisting of ABN AMRO ADSs and the ABN AMRO ordinary shares on these exchanges. Further, subject to applicable law and the NYSE listing rules, RFS Holdings intends to cause ABN AMRO to terminate its deposit agreement, and petition, or cause ABN AMRO to petition, the NYSE to delist the ABN AMRO ADSs. If the deposit agreement for the ABN AMRO ADSs is terminated, holders of ABN AMRO ADSs will only have the right to receive the ABN AMRO ordinary shares underlying the ABN AMRO ADSs upon surrender of their ABN AMRO ADSs and payment of applicable fees to the ABN AMRO ADS depositary. There is no U.S. public trading market for the ABN AMRO ordinary shares. If, following the completion of the offers, RFS Holdings owns at least 95% of ABN AMRO's issued share capital and voting rights or if otherwise permitted, RFS Holdings intends to cause ABN AMRO to submit a request for delisting to Euronext Amsterdam. Unless Euronext Amsterdam considers delisting detrimental to the protection of investors or the proper functioning of the market, it will approve the delisting request and publish its decision. Euronext Amsterdam may impose conditions on granting the request to delist. Delisting of the ABN AMRO ordinary shares will occur 20 Euronext Amsterdam trading days after publication of Euronext Amsterdam's decision approving the delisting request.

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If the NYSE or Euronext Amsterdam were to delist the ABN AMRO ADSs and ABN AMRO ordinary shares, the market for ABN AMRO ordinary shares and ABN AMRO ADSs could be adversely affected. Although it is possible that the ABN AMRO ordinary shares (and the ABN AMRO ADSs, if the deposit agreement is not terminated) would be traded on other securities exchanges or in the over-the-counter market, and the price quotations would be reported by such exchanges, or other quotation systems or by other sources, there can be no assurance that any such trading quotations will occur. The extent of the public market for the ABN AMRO ordinary shares and ABN AMRO ADSs and the availability of such quotations would depend upon the number of holders and/or the aggregate market value of the public float of ABN AMRO ordinary shares and ABN AMRO ADSs remaining at such time and the interest in maintaining a market in such securities on the part of securities firms.

To the extent the availability of such listings or quotations depends on steps taken by the Banks, RFS Holdings or by ABN AMRO after completion of the offers, the Banks, RFS Holdings or ABN AMRO may or may not take such steps. Therefore, you should not rely on any such listing or quotation being available following the successful completion of the offers.

Deregistration under the Exchange Act

ABN AMRO ordinary shares and ABN AMRO ADSs currently are required to be registered under Section 12(b) of the Exchange Act. Registration of these securities may be terminated by ABN AMRO upon application to the SEC if (i) they are no longer listed on a national securities exchange and (ii) (a) during a recent 12 month period the U.S. average daily trading volume (the "ADTV") of the securities has not exceeded 5% of the ADTV of those securities worldwide during the same period; or (b) the securities are held of record by less than 300 persons worldwide or less than 300 persons resident in the United States. Termination of the registration of the ABN AMRO ordinary shares and ABN AMRO ADSs under the Exchange Act would substantially reduce the information required to be furnished by ABN AMRO to their holders and to the SEC and would make certain provisions of the Exchange Act no longer applicable to these securities.

To the extent the registration of ABN AMRO ordinary shares and ABN AMRO ADSs under the Exchange Act depends on steps taken by ABN AMRO, RFS Holdings or the Banks after completion of the offers, ABN AMRO, RFS Holdings or the Banks may or may not take such steps. Therefore, if the offers are successful, you should not rely on the continued registration of any ABN AMRO ordinary shares or ABN AMRO ADSs under the Exchange Act.

Margin Securities

ABN AMRO ADSs are currently "margin securities", as defined under the rules of the Board of Governors of the Federal Reserve System, which has the effect, among other things, of allowing brokers to extend credit on the collateral of the ABN AMRO ADSs. If ABN AMRO ADSs were deregistered under the Exchange Act and/or delisted from the NYSE, they would cease to qualify as "margin securities", which would likely have an adverse impact on their value.

Appraisal Rights

Neither holders of ABN AMRO ordinary shares nor holders of ABN AMRO ADSs are entitled under Dutch law or otherwise to appraisal rights with respect to the U.S. offer. However, if RFS Holdings acquires 95% or more of the outstanding issued capital of ABN AMRO or 95% or more of the issued capital and voting rights attached thereto of any class of shares of ABN AMRO after the act implementing the squeeze-out provisions of European Union Takeover Directive 2004/25/EC has come into force, it intends to acquire the remaining outstanding ABN AMRO ordinary shares in accordance with the squeeze-out proceedings prescribed by the Dutch Civil Code. In those

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proceedings, ABN AMRO ordinary shares held by minority ABN AMRO shareholders will be acquired only for cash, and a Dutch court will determine the price to be paid for the ABN AMRO ordinary shares, which may be lower than the cash equivalent of the consideration offered in the U.S. offer.

Shareholder Appovals

Extraordinary general meetings of the shareholders of each of Fortis SA/NV and Fortis N.V. are required to obtain the approval of the Fortis shareholders for (i) the Transaction and (ii) the proposal by the Board of Directors to amend the articles of association of both companies to increase the amount of authorised capital. Such increase is required to enable Fortis to issue new Fortis shares in the rights offering. Since experience in recent years suggests that the quorum of 50% of the issued and outstanding capital—the minimum required to amend the articles of association to allow an increase in the authorised capital—is unlikely to be reached during the first extraordinary general meeting of shareholders, Fortis is also convening a second meeting on 6 August 2007. At such meeting, no quorum requirements will apply and a resolution to increase the authorized capital will require the approval of a majority constituting at least 75% of the voting capital present or represented. The resolution to approve the bid for ABN AMRO will also be voted on at the 6 August 2007 meeting and will require the approval of a majority constituting at least 50% of the voting capital present or represented.

The approval of the resolutions related to the Transaction at the extraordinary general meeting of RBS shareholders on 10 August 2007 will require a simple majority of shareholders present and voting in person or by proxy.

Santander's board of directors has convened for 26 July 2007, on first call, and 27 July 2007, on second call, an extraordinary general meeting of shareholders of Santander to request Santander shareholders to pass the necessary resolutions to enable Santander to proceed with the rights issue and the issuance of mandatorily convertible securities with which it intends to partially finance its portion of the consideration.

A quorum of Santander shareholders representing 50% of Santander's voting capital will be required to be present or represented for such extraordinary general meeting of Santander shareholders to be held on first call (on 26 July 2007). For such extraordinary general meeting of Santander shareholders to be held on second call (on 27 July 2007), a quorum of Santander shareholders representing 25% of the voting capital will be required to be present or represented. The approval of the resolutions at such extraordinary general meeting of Santander shareholders will require a simple majority of the voting capital present or represented at the meeting. However, a two-thirds majority of the voting capital (either present or represented) will be required to approve those resolutions if the extraordinary general meeting of Santander shareholders is held on second call and less than 50% of the voting capital is present or represented.

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SUMMARY OF THE CONSORTIUM AND SHAREHOLDERS' AGREEMENT

The following description of the Consortium and Shareholders' Agreement describes the material terms of the agreement and its schedules but does not purport to describe all the terms of the agreement. This description is qualified in its entirety by the text of the Consortium and Shareholders' Agreement, a copy of which was filed as an exhibit to the registration statement of which this document is a part and is hereby incorporated by reference. See "Additional Information for Securityholders" for information on how you can obtain a copy of the Consortium and Shareholders' Agreement. We urge you to read carefully the entire Consortium and Shareholders' Agreement because it contains important information and it is the legal document that governs the arrangements among Fortis, RBS, Santander and RFS Holdings in relation to the offers and the Transaction.

Overview

The Consortium and Shareholders' Agreement governs the relationships among Fortis, RBS, Santander and RFS Holdings in relation to the offers and was executed by and among them on 28 May 2007 and may be amended or supplemented from time to time.

The arrangements contemplated by the Consortium and Shareholders' Agreement include:

the funding of RFS Holdings in connection with the offers;

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

Fortis's, RBS's and Santander's equity interests in RFS Holdings;

the transfer of certain ABN AMRO Businesses, assets and liabilities to Fortis, RBS and Santander (or their group members) after the acquisition of ABN AMRO by RFS Holdings;

the management and disposal of any businesses, assets and liabilities of ABN AMRO not intended to be transferred to Fortis, RBS or Santander;

allocation of core Tier 1 capital;

further funding obligations of Fortis, RBS and Santander after the acquisition of ABN AMRO where funding is required by regulatory authorities in connection with the ABN AMRO Businesses;

allocation of taxes and conduct of tax affairs; and

certain other matters referred to in the Consortium and Shareholders' Agreement.

Key provisions of the Consortium and Shareholders' Agreement

Funding of RFS Holdings

Fortis, RBS and Santander have agreed to subscribe for shares in RFS Holdings of a sufficient amount to fund the consideration due under the offers. This funding commitment is split among Fortis, RBS and Santander as follows:

Fortis: 33.8%,

RBS: 38.3%, and

Santander: 27.9%.

Approximately 7% of RFS Holdings' commitment will be satisfied by the issue of RBS ordinary shares in connection with the offers.

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Ownership of RFS Holdings

Upon settlement of the offers, Fortis, RBS and Santander will have shareholdings in RFS Holdings that are equal to their proportionate funding commitments. Four classes of shares will be issued by RFS Holdings immediately prior to settlement of the offers in order to fund the consideration due, with one class for each of Fortis, RBS and Santander and a further class issued to all three. The capital and income rights of the three classes of shares that will be issued to Fortis, RBS and Santander, respectively, will be linked to the net assets and income of the ABN AMRO Businesses that each of the Banks or their respective affiliates will acquire following implementation of the restructuring of the ABN AMRO Group. The fourth class, which will be issued to Fortis, RBS and Santander in proportion to their funding commitments, will reflect their pro rata interests in the businesses, assets and liabilities that are not being acquired by any of them individually.

Governance

Conduct of the offers

Whilst the offers are being conducted, RFS Holdings has six directors (two nominated by each of Fortis, RBS and Santander) and all decisions, including those relating to the offers (for example, whether to declare the offers unconditional) will require the agreement of at least one board nominee of each of Fortis, RBS and Santander. Expenses incurred by RFS Holdings in connection with the conduct of the offers will be shared between Fortis, RBS and Santander in proportion to their shareholdings.

Post completion

Upon settlement of the offers, the board of RFS Holdings will be reduced to four directors, two nominated by RBS and one nominated by each of Fortis and Santander. Sir Fred Goodwin of RBS will be one of the RBS nominees and will also be the Chairman of the board, with a casting vote to decide matters on which the board cannot otherwise agree. Board decisions will generally be taken by a simple majority subject to minority protections in the form of reserved matters set out in the Consortium and Shareholders' Agreement that will require the approval of at least one director nominated by each of Fortis, RBS and Santander.

Reorganisation

See "Background to and Reasons for the Offers" for details of which businesses and assets of ABN AMRO each of Fortis, RBS and Santander will acquire following implementation of a post-acquisition reorganisation of ABN AMRO. No changes can be made to this allocation of businesses and assets unless Fortis, RBS and Santander agree otherwise at a later stage. Under the terms of the Consortium and Shareholders' Agreement, each of Fortis, RBS and Santander will bear the costs and liabilities (historic and future) relating to the ABN AMRO assets it will ultimately acquire (with certain exceptions in relation to tax) and indemnities among Fortis, RBS and Santander reflect this position.

Businesses, assets and liabilities that are not to be acquired by any of Fortis, RBS or Santander individually will be disposed of over a period of time with a view to maximising value for the shareholders of RFS Holdings. The terms of the agreement provide for disposal of such of these assets as are to be sold as soon as possible.

The agreement contains provisions for determination of issues relating to the restructuring on which Fortis, RBS and Santander are unable to agree in the context of the restructuring.

If, prior to the implementation of the restructuring, it becomes clear that the necessary approvals for the transfer of assets to Fortis, RBS or Santander, as applicable, will not be obtained (such as due

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to rejection by a financial regulatory authority), the shareholder of RFS Holdings that was the intended acquirer of such assets will arrange for the sale of such assets and will be entitled to the proceeds of such sale.

Allocation of capital on restructuring

The core Tier 1 capital of ABN AMRO will be allocated between businesses in accordance with the allocation in the accounting records underlying the audited financial statements of ABN AMRO for the year ended 31 December 2006. However, if that allocation results in the ABN AMRO Businesses to be acquired by any of Fortis, RBS or Santander having a ratio of core Tier 1 capital to risk weighted assets of below a specified level, the other shareholders of RFS Holdings are obliged to procure the contribution (in proportion to their allocation of capital) of sufficient core Tier 1 capital to the affected shareholder's acquired businesses to increase the ratio (to the extent that certain other intra-ABN AMRO measures do not achieve the same result). The contributing shareholders are entitled to a return on the core Tier 1 capital they contribute to the affected shareholder's acquired businesses. The return will be determined by reference to the return on the underlying investments in which the contributed capital is invested.

Intra-group arrangements

Following settlement of the offers, all shared services will continue on the same terms as applied by ABN AMRO as at 31 December 2006, unless Fortis, RBS and Santander agree otherwise. Following a review to identify anomalous terms or inappropriate pricing, if any party (provider/recipient) wishes to change the basis on which such services are provided, it will be required, following agreement amongst Fortis, RBS and Santander, to make recommendations to the board of RFS Holdings for its approval.

Provision of further capital

Until such time as all ABN AMRO assets have been transferred out of the group of which RFS Holdings will be the parent company, if a regulator requires contribution of further capital to ABN AMRO, the intended owner of the relevant business giving rise to the capital call will be responsible for meeting such a call (by providing further funding or otherwise). If a capital requirement is imposed in relation to assets that are not to be acquired by any shareholder of RFS Holdings, the shareholders will meet such requirement in proportion to their shareholdings. In the event that the FSA increases the capital requirements of RBS and that obligation arises in relation to one of the ABN AMRO Businesses to be acquired by Fortis or Santander, the Banks will agree in good faith and acting reasonably how to satisfy the imposed requirements or otherwise alleviate the issue.

Information technology and operations

There will be a specially constituted Central Service Governance Committee (comprising three members, one from each of Fortis, RBS and Santander) tasked with overseeing and agreeing on information technology and operational matters, including the separation of all information technology and operations assets used by or relating to businesses owned by more than one of Fortis, RBS and Santander. Fortis, RBS and Santander have agreed that as soon as reasonably possible after the offers have been declared unconditional a reasonable and appropriate methodology will be discussed and agreed for remunerating each of the Banks that provides services to the other parties or that contributes to the planning and/or implementation of the separation and migration of information technology and operations assets. In the absence of unanimous agreement on any issue by the committee, that matter will be referred to the board of

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RFS Holdings for decision (together with any expert opinion obtained by the committee in the course of its discussions).

Intra-group debt

The agreement provides that there will be no repayment of intra-group debt when assets are transferred to Fortis, RBS and Santander. Accordingly, unless otherwise agreed, such debt will continue to maturity according to its terms.

Regulatory compliance

Fortis, RBS and Santander have each undertaken to co-operate fully to ensure that ABN AMRO continues to meet its regulatory obligations following completion of the offers. The agreement provides that RBS will take the lead in ensuring such compliance.

Provision of information

RFS Holdings is required to provide appropriate information to its shareholders subject to competition law and regulatory requirements.

Termination and conditionality

The agreement terminates if (i) the offers terminate, (ii) necessary shareholder approvals by the shareholders of Fortis, RBS and Santander, respectively, are not obtained or (iii) Fortis, RBS and Santander unanimously agree such a termination. The funding obligations of the shareholders of RFS Holdings are conditional on the receipt of all necessary approvals required for the offers to complete.

Transfer of shares

Transfers of shareholdings in RFS Holdings to third parties are restricted although intra-group transfers are permitted subject to Fortis, RBS and Santander retaining responsibility for their contractual obligations.

Governing law/arbitration

The agreement is governed by English law. Subject to the expert determination provisions referred to above, disputes will be resolved by arbitration in Paris under the rules of the International Chamber of Commerce.

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MATERIAL U.S. FEDERAL INCOME TAX, DUTCH TAX AND U.K. TAX CONSEQUENCES

Material U.S. Federal Tax Considerations

The following summarises the material U.S. federal income tax considerations generally applicable to (i) the exchange of ABN AMRO ordinary shares or ABN AMRO ADSs for a mixture of cash and RBS ordinary shares pursuant to the U.S. offer and (ii) the ownership and disposition of RBS ordinary shares by a U.S. Holder (as defined below). This discussion represents the opinion of Linklaters, as special counsel to RBS, subject to the assumptions and limitations herein, insofar as it constitutes statements of United States federal income tax law or legal conclusions. This discussion deals only with U.S. Holders that hold ABN AMRO ordinary shares or ABN AMRO ADSs and will hold RBS ordinary shares as capital assets. The discussion does not cover all aspects of U.S. federal income taxation that may be relevant to, or the actual tax effect that any of the matters described herein will have on, the exchange of ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the U.S. offer, or the acquisition, ownership or disposition of RBS ordinary shares by particular investors, and does not address state, local, foreign or other tax laws. In particular, this summary does not address tax considerations applicable to investors that own or will own directly, or indirectly by attribution, 10% or more of the voting stock of either ABN AMRO or RBS, nor does this summary discuss all of the tax considerations that may be relevant to certain types of investors subject to special treatment under the U.S. federal income tax laws (such as financial institutions, insurance companies, investors liable for the alternative minimum tax, individual retirement accounts and other tax-deferred accounts, tax-exempt organisations, dealers in securities or currencies, investors that own the ABN AMRO ordinary shares or ABN AMRO ADSs, or that will own the RBS ordinary shares, as part of straddles, hedging transactions or conversion transactions for U.S. federal income tax purposes or investors whose functional currency is not the U.S. dollar).

As used herein, the term "U.S. Holder" means a beneficial owner of ABN AMRO ordinary shares or ABN AMRO ADSs that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation created or organised under the laws of the United States, any state thereof, or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income tax without regard to its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or the trust has elected to be treated as a domestic trust for U.S. federal income tax purposes.

The U.S. federal income tax treatment of a partner in a partnership that holds ABN AMRO ordinary shares or ABN AMRO ADSs will depend on the status of the partner and the activities of the partnership. Prospective purchasers that are partnerships should consult their own tax advisers concerning the U.S. federal income tax consequences to their partners of (i) the exchange of ABN AMRO ordinary shares or ABN AMRO ADSs for a mixture of cash and RBS ordinary shares pursuant to the U.S. offer and (ii) the ownership and disposition of RBS ordinary shares by the partnership.

This discussion assumes that ABN AMRO is not, and has not been at any time during a U.S. Holder's holding period for its ABN AMRO ordinary shares or ABN AMRO ADSs, and, subject to the discussion below, that RBS is not, a passive foreign investment company (a "PFIC") for U.S. federal income tax purposes. A foreign corporation's possible status as a PFIC must be determined annually and therefore may be subject to change. If ABN AMRO has been a PFIC at any time during a U.S. Holder's holding period, or if RBS were to be a PFIC in any year, materially adverse U.S. federal income tax consequences would result to U.S. Holders.

The summary is based on the tax laws of the United States, including the Internal Revenue Code of 1986, as amended (the "Code"), its legislative history, existing and proposed regulations

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thereunder, published rulings and court decisions, all as currently in effect and all subject to change at any time, possibly with retroactive effect. No advance income tax ruling has been or will be sought or obtained from the Internal Revenue Service (the "IRS") regarding the U.S. federal income tax consequences of the U.S. offer to U.S. Holders.

The discussion of U.S. federal income tax consequences set forth below is not tax advice. All prospective purchasers should consult their own tax advisers as to the particular tax consequences to them of exchanging their ABN AMRO ordinary shares or ABN AMRO ADSs for cash and RBS ordinary shares pursuant to the U.S. offer and owning and disposing of the RBS ordinary shares, including the applicability and effect of state, local, foreign and other tax laws and possible changes in tax law.

U.S. Holders of ADSs

Under general U.S. federal income tax principles, a U.S. Holder of ABN AMRO ADSs should be treated as the beneficial owner of the corresponding number of ABN AMRO ordinary shares held by the ABN AMRO ADS depositary, and references herein to ABN AMRO ordinary shares refer also to ABN AMRO ADSs representing the ABN AMRO ordinary shares. Similarly, a U.S. Holder of RBS ADSs should be treated as the beneficial owner of the corresponding number of RBS ordinary shares held by the RBS ADS depositary, and references herein to RBS ordinary shares also refer to the RBS ADSs representing the RBS ordinary shares.

U.S. Tax Consequences of the U.S. Offer

The exchange of ABN AMRO ordinary shares for a mixture of cash and RBS ordinary shares will be a taxable exchange for U.S. federal income tax purposes.

U.S. Holders of ABN AMRO ordinary shares participating in the U.S. offer will generally recognise gain or loss on the exchange of ABN AMRO ordinary shares for cash and RBS ordinary shares equal to the difference between (x) the sum of the fair market value of the RBS ordinary shares received pursuant to the U.S. offer (including cash received in lieu of fractional entitlements of RBS ordinary shares) and any cash consideration received (valued as described below in "Foreign Currency Considerations"), and (y) the U.S. Holder's adjusted tax basis in the ABN AMRO ordinary shares.

This gain or loss will be long-term capital gain or loss if the U.S. Holder has owned the ABN AMRO ordinary shares for more than one year. Certain non-corporate U.S. Holders, including individuals, are eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. A U.S. Holder's ability to deduct capital losses may be limited. Any gain or loss will generally be U.S. source.

U.S. Holders will have an adjusted basis in their RBS ordinary shares equal to the U.S. dollar value of the RBS ordinary shares as of the date of exchange. A U.S. Holder's holding period in the RBS ordinary shares will begin on the day after the date of the exchange.

Foreign Currency Considerations

For purposes of determining the amount of gain or loss recognised on the exchange, the amount of any cash consideration denominated in euros must be translated into U.S. dollars at the spot rate in effect on the exchange date. On the settlement date, the U.S. Holder will recognise U.S. source foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the U.S. dollar value of the amount received based on the exchange rates in effect on the exchange date and the settlement date.

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U.S. Tax Consequences of Owning and Holding RBS Ordinary Shares

Dividends

General

Distributions paid by RBS out of current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) will generally be taxable to a U.S. Holder as foreign source dividend income, and will not be eligible for the dividends received deduction allowed to corporations. Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of the U.S. Holder's basis in the RBS ordinary shares and thereafter as capital gain. However, RBS does not maintain calculations of its earnings and profits in accordance with U.S. federal income tax accounting principles. U.S. Holders should therefore assume that any distribution by RBS with respect to RBS ordinary shares will constitute ordinary dividend income. U.S. Holders should consult their own tax advisers with respect to the appropriate U.S. federal income tax treatment of any distribution received from RBS.

For taxable years that begin before 2011, dividends paid by RBS will be taxable to a non-corporate U.S. Holder at the special reduced rate normally applicable to capital gains, provided RBS qualifies for the benefits of the income tax treaty between the United States and the United Kingdom and is not a PFIC. A U.S. Holder will be eligible for this reduced rate only if it has held the RBS ordinary shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date.

Prospective purchasers should consult their own tax advisers concerning the applicability of the foreign tax credit and source of income rules to dividends on the RBS ordinary shares.

Foreign Currency Dividends

Dividends paid in pounds sterling will be included in income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day the dividends are received by the U.S. Holder, regardless of whether the pounds sterling is converted into U.S. dollars at that time. If dividends received in pounds sterling are converted into U.S. dollars on the day they are received, the U.S. Holder generally will not be required to recognise foreign currency gain or loss in respect of the dividend income.

Sale or Other Disposition

Upon a sale or other disposition of RBS ordinary shares, a U.S. Holder generally will recognise capital gain or loss for U.S. federal income tax purposes equal to the difference, if any, between the U.S. dollar value of the amount realised on the sale or other disposition and the U.S. Holder's adjusted tax basis in the RBS ordinary shares. This capital gain or loss will be long-term capital gain or loss if the U.S. Holder's holding period in the RBS ordinary shares exceeds one year. However, regardless of a U.S. Holder's actual holding period, any loss may be long-term capital loss to the extent the U.S. Holder receives a dividend that qualifies for the reduced rate described above under "Dividends—General", and exceeds 10% of the U.S. Holder's basis in its RBS ordinary shares. Certain non-corporate U.S. Holders, including individuals, are eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. A U.S. Holder's ability to deduct capital losses may be limited. Any gain or loss will generally be U.S. source.

The amount realised on a sale or other disposition of RBS ordinary shares for an amount in foreign currency will be the U.S. dollar value of this amount on the date of sale or disposition. On the settlement date, the U.S. Holder will recognise U.S. source foreign currency gain or loss (taxable as ordinary income or loss) equal to the difference (if any) between the U.S. dollar value of the amount received based on the exchange rates in effect on the date of sale or other disposition and the

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settlement date. However, in the case of RBS ordinary shares traded on an established securities market that are sold by a cash basis U.S. Holder (or an accrual basis U.S. Holder that so elects), the amount realised will be based on the exchange rate in effect on the settlement date for the sale, and no exchange gain or loss will be recognised at that time.

Passive Foreign Investment Company Considerations

A foreign corporation will be a PFIC in any taxable year in which, after taking into account the income and assets of the corporation and certain subsidiaries pursuant to applicable "look-through rules," either (i) at least 75% of its gross income is "passive income" or (ii) at least 50% of the average value of its assets is attributable to assets which produce passive income or are held for the production of passive income. RBS does not believe that it should be treated as a PFIC. Although interest income is generally passive income, a special rule allows banks to treat their banking business income as non-passive. To qualify for this rule, a bank must satisfy certain requirements regarding its licensing and activities. RBS believes that it currently meets these requirements. RBS's possible status as a PFIC must be determined annually, however, and may be subject to change if RBS fails to qualify under this special rule for any year in which a U.S. Holder holds RBS ordinary shares. If RBS were to be treated as a PFIC in any year during which a U.S. Holder holds RBS ordinary shares, U.S. Holders would generally be subject to adverse U.S. federal income tax consequences. Holders should consult their own tax advisers as to the potential application of the PFIC rules to the ownership and disposition of RBS ordinary shares.

Backup Withholding and Information Reporting

Payments of the proceeds of the exchange of ABN AMRO ordinary shares or the sale or other disposition of RBS ordinary shares, as well as dividends and other proceeds with respect to the RBS ordinary shares, by a U.S. paying agent or other U.S. intermediary will be reported to the IRS and to the U.S. Holder as may be required under applicable regulations. Backup withholding may apply to these payments if the holder fails to provide an accurate taxpayer identification number or certification of exempt status, certified under penalties of perjury. A U.S. Holder participating in the U.S. offer (other than certain exempt holders, including corporations) may be subject to backup withholding tax unless such U.S. Holder provides its taxpayer identification number and related certification on a Form W-9, or substitute Form W-9.

Certain Dutch Tax Considerations

General

The following describes certain material Dutch tax consequences for a U.S. holder of ABN AMRO ordinary shares or ABN AMRO ADSs who is neither resident nor deemed to be resident in The Netherlands for Dutch tax purposes and, if the U.S. holder is an individual, has not opted to be treated as a resident in The Netherlands for the purposes of the Dutch Income Tax Act 2001, in respect of the offers and of the ownership and disposal of RBS ordinary shares received pursuant to the offers. This description is not intended to be applicable in all respects to all categories of U.S. holders. This section does not purport to describe all possible Dutch tax considerations or consequences that may be relevant to a U.S. holder. All U.S. holders of ABN AMRO ordinary shares or ABN AMRO ADSs are advised to consult with their tax advisers with regard to the tax consequences of the offers and of the ownership and disposal of RBS ordinary shares received pursuant to the offers in their particular circumstances.

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This section does not describe the possible Dutch tax considerations or consequences that may be relevant to a U.S. holder of ABN AMRO ordinary shares or ABN AMRO ADSs who:

(i)
receives or has received any benefits from these shares or ADSs as employment income, deemed employment income or otherwise as compensation;

(ii)
has a (fictitious) substantial interest (aanmerkelijk belang) in ABN AMRO; or

(iii)
is entitled to the participation exemption (deelnemingsvrijstelling) with respect to benefits derived from ABN AMRO ordinary shares, ABN AMRO ADSs or RBS ordinary shares (as applicable).

Generally, a shareholder has a substantial interest (aanmerkelijk belang) in a company (regardless of the jurisdiction in which that company is resident for tax purposes) if such shareholder, alone or together with his partner, directly or indirectly:

(i)
owns, or holds certain rights on, shares representing 5% or more of the total issued and outstanding capital of the company, or of the issued and outstanding capital of any class of shares of the company;

(ii)
holds rights to acquire shares, whether or not already issued, representing 5% or more of the total issued and outstanding capital of the company, or of the issued and outstanding capital of any class of shares of the company; or

(iii)
owns, or holds certain rights on, profit participating certificates that relate to 5% or more of the annual profit of the company or to 5% or more of the liquidation proceeds of the company.

A shareholder who owns, or holds, less than 5% shareholding as described above, will also have a substantial interest if his partner or one of certain relatives of the shareholder or of his partner has a (fictitious) substantial interest. Generally, a shareholder has a fictitious substantial interest (fictief aanmerkelijk belang) in a company, if (a) he has disposed of, or is deemed to have disposed of, all or part of a substantial interest or (b) he is an individual and has transferred an enterprise in exchange for shares in the company, on a non-recognition basis.

This section does not discuss whether a U.S. holder can claim a roll-over for Dutch tax purposes pursuant to case law, such as the so-called Exchange Judgments (ruilarresten), for capital gains realised on the exchange of ABN AMRO ordinary shares or ABN AMRO ADSs for RBS ordinary shares.

Except as otherwise indicated, this section only addresses Dutch tax law as applied and interpreted by Dutch tax courts and as published and in effect on the date hereof, without prejudice to any amendments introduced at a later date and implemented with or without retroactive effect. Unless otherwise specifically stated herein, this section does not express any opinion on Dutch international tax law or on the rules promulgated under or by any treaty or treaty organisation and does not express any opinion on any Dutch legal matter other than Dutch tax law.

For the purpose of this section, "Dutch Taxes" shall mean taxes of whatever nature levied by or on behalf of the Netherlands or any of its subdivisions or taxing authorities.

Withholding tax

Any payments made under the offers will not be subject to withholding or deduction for, or on account of, any Dutch Taxes.

Any payments made by us on RBS ordinary shares will not be subject to withholding or deduction for, or on account of, any Dutch Taxes.

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Taxes on income or capital gains

A U.S. holder of ABN AMRO ordinary shares, ABN AMRO ADSs or RBS ordinary shares (as applicable) will not be subject to any Dutch Taxes on income or capital gains (a) in respect of the disposal of ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the offers and (b) in respect of the ownership and disposal of RBS ordinary shares, except if the U.S. holder:

(i)
derives profits from an enterprise, whether as an entrepreneur or pursuant to a co-entitlement to the net worth of such enterprise other than as an entrepreneur or a shareholder, which enterprise is, in whole or in part, carried on through a permanent establishment (vaste inrichting) or a permanent representative (vaste vertegenwoordiger) in the Netherlands, to which his ABN AMRO ordinary shares, ABN AMRO ADSs or RBS ordinary shares (as applicable) are attributable;

(ii)
is an individual and derives benefits from miscellaneous activities (resultaat uit overige werkzaamheden) carried out in the Netherlands in respect of his ABN AMRO ordinary shares, ABN AMRO ADSs or RBS ordinary shares (as applicable), including, without limitation, activities which are beyond the scope of active portfolio investment activities; or

(iii)
is entitled to a share in the profits of an enterprise effectively managed in the Netherlands, other than by way of the holding of securities, to which the ABN AMRO ordinary shares, ABN AMRO ADSs or RBS ordinary shares (as applicable) are attributable.

Dutch Gift and Inheritance Tax

No Dutch gift tax or inheritance tax is due in respect of the disposal of ABN AMRO ordinary shares or ABN AMRO ADSs or the acquisition of RBS ordinary shares pursuant to the offers.

No Dutch gift tax or inheritance tax is due in respect of any gift of RBS ordinary shares by, or inheritance of RBS ordinary shares on the death of, a U.S. holder, except if:

(i)
the U.S. holder is resident or is deemed to be resident in the Netherlands;

(ii)
at the time of the gift or the death of the U.S. holder, his RBS ordinary shares are attributable to an enterprise (or an interest in an enterprise) which is, in whole or in part, carried on through a permanent establishment or permanent representative in the Netherlands;

(iii)
the RBS ordinary shares are acquired by way of a gift from a U.S. holder who passes away within 180 days after the date of the gift and who is not and is not deemed to be at the time of the gift, but is, or is deemed to be at the time of his death, resident in the Netherlands; or

(iv)
the U.S. holder is entitled to a share in the profits of an enterprise effectively managed in the Netherlands, other than by way of the holding of securities or through an employment contract, to which enterprise his RBS ordinary shares are attributable.

For purposes of Dutch gift or inheritance tax, an individual who is of Dutch nationality will be deemed to be resident in the Netherlands if he has been resident in the Netherlands at any time during the ten years preceding the date of the gift or his death. For purposes of Dutch gift tax, an individual, irrespective of his nationality, will be deemed to be resident in the Netherlands if he has been resident in the Netherlands at any time during the 12 months preceding the date of the gift.

Other Dutch Taxes

No other Dutch Taxes (including capital tax and stamp duty) are due by or on behalf of a U.S. holder of ABN AMRO ordinary shares, ABN AMRO ADSs or RBS ordinary shares by reason only of (a) the disposal of the ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the offers, or (b) the acquisition, ownership or disposal of RBS ordinary shares.

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Certain U.K. Tax Considerations

General

The following paragraphs, which are intended as a general guide only, are based on current U.K. tax legislation and what is understood to be current HM Revenue & Customs ("HMRC") practice. They summarise certain limited aspects of the U.K. tax treatment of acceptance of the U.S. offer and (apart from the comments in paragraph (c) below) they relate only to the position of U.S. holders of ABN AMRO ordinary shares and holders of ABN AMRO ADSs who are beneficial owners of their ABN AMRO ordinary shares or ABN AMRO ADSs, who hold their ABN AMRO ordinary shares as an investment (and who are not and have not been an employee of ABN AMRO or any person connected with ABN AMRO). They assume that a holder of ABN AMRO ADSs or RBS ADSs (or ADRs representing such ADSs) will be treated for U.K. tax purposes as the beneficial owner of the corresponding number of ABN AMRO ordinary shares or RBS ordinary shares held by the depositary. If you are in any doubt as to your taxation position you should consult an appropriate professional adviser immediately.

(a)       Taxation on Disposal

      U.S. holders who are not resident or ordinarily resident in the U.K. will not normally be liable to U.K. tax on gains on the disposal of ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the U.S. offer, or on a subsequent disposal of RBS ordinary shares or RBS ADSs, unless the relevant shares or ADSs are used, held or acquired for the purposes of a trade, profession or vocation carried on in the U.K. through a branch or agency or, in the case of a corporate shareholder, through a permanent establishment.

      There is, however, an exception to this rule in the case of a U.S. holder who is an individual who has ceased to be either resident or ordinarily resident for tax purposes in the U.K. (or is regarded as Non-resident for the purposes of a relevant double tax treaty ("Treaty Non-resident") but then resumes residence or ordinary residence (or as the case may be ceases to be a Treaty Non-resident) before five complete tax years have passed. Such a holder may be liable to U.K. tax on capital gains (subject to any available exemption, relief or allowable loss) if he or she has made a disposal of the relevant ABN AMRO ordinary shares, ABN AMRO ADSs, RBS ordinary shares or RBS ADSs (as the case may be) while non-resident (or a Treaty Non-resident).

      U.S. holders who are resident or ordinarily resident in the U.K. or who use, hold or acquired the relevant shares or ADSs for the purposes of a trade, profession or vocation carried on in the U.K. through a branch, agency or permanent establishment, may be subject to U.K. tax in respect of any capital gain arising on the disposal of ABN AMRO ordinary shares or ABN AMRO ADSs pursuant to the offer, or a subsequent disposal of RBS ordinary shares or RBS ADSs, subject to any exemption or relief. We encourage any such U.S. holder to consult appropriate professional advisers.

(b)       Taxation on Dividends

      RBS is not required to make any withholding or deduction for or on account of U.K. tax on paying dividends on its ordinary shares.

      U.S. holders who are not resident or ordinarily resident in the U.K. and who do not carry on a trade, profession or vocation in the U.K. through a branch, agency or permanent establishment in connection with which their RBS ordinary shares or RBS ADSs (as the case may be) are held, used or acquired will not be subject to U.K. tax in respect of any dividends received on the RBS ordinary shares or RBS ADSs (as the case may be). U.S. holders who

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      are resident or ordinarily resident in the U.K. or who carry on a trade, profession or vocation carried on in the U.K. through a branch, agency or permanent establishment in the U.K. are encouraged to consult appropriate professional advisers.

(c)       Stamp Duty and SDRT

    (i)
    General (including RBS ordinary shares held in certificated form)

        Generally, subject to as set forth below (in particular, in paragraphs (iii) and (iv)), no stamp duty or SDRT will be payable on the delivery of the newly issued RBS ordinary shares to holders of ABN AMRO ordinary shares and ABN AMRO ADSs pursuant to the U.S. offer. Subject to applicable exemptions and reliefs, and subject as set forth below, in particular in paragraphs (iii) and (iv), a subsequent transfer for value of RBS ordinary shares will generally be subject to ad valorem stamp duty or SDRT. Stamp duty will arise on the execution of an instrument to transfer RBS ordinary shares and SDRT will arise on the entry into an agreement to transfer RBS ordinary shares. Stamp duty and SDRT are normally a liability of the purchaser. The amount of stamp duty or SDRT payable is generally calculated at the rate of 0.5% of the amount or value of the consideration payable for the transfer of RBS ordinary shares.

        Where RBS ordinary shares are issued or transferred (a) to, or to a nominee for, a person whose business is or includes the provision of clearance services (a "Clearance System") or (b) to, or to a nominee or agent for, a person whose business is or includes issuing depositary receipts (a "Depositary Receipt System"), stamp duty or SDRT will generally be payable at the higher rate of 1.5% of the amount or value of the consideration payable or, in certain circumstances, the value of the RBS ordinary shares. This liability for stamp duty or SDRT will strictly be accountable by the Depositary Receipt System or Clearance System, as the case may be, but will, in practice, generally be reimbursed by participants in the Clearance System or Depositary Receipt System as applicable. Clearance Systems may opt under Section 97A of the Finance Act 1986, provided certain conditions are satisfied, for the normal rate of stamp duty or SDRT (0.5% of the consideration paid) to apply to issues or transfers of RBS ordinary shares into, and to transactions within, such services instead of the higher rate of 1.5% generally applying to an issue or transfer of RBS ordinary shares into the Clearance System and the exemption from stamp duty and SDRT on transfer of RBS ordinary shares while in the Clearance System.

    (ii)
    RBS ordinary shares held through CREST

        No stamp duty or SDRT will generally arise on the issue of RBS ordinary shares into CREST save to the extent that the RBS ordinary shares are issued to, or into the CREST account of a Depositary Receipt System or nominee or to, or into the CREST account of, a Clearance System or nominee which has not made an election under Section 97A Finance Act 1986. Paperless transfers of RBS ordinary shares within CREST are generally liable to SDRT, rather than stamp duty, at the rate of 0.5% of the amount or value of the consideration payable. CREST is obliged to collect SDRT on relevant transactions settled within the system.

    (iii)
    RBS ordinary shares held through Euroclear Nederland

        It is understood that Euroclear Nederland is a Clearance System for stamp duty and SDRT purposes and that Euroclear Nederland has not made an election under Section 97A of the Finance Act 1986. If a U.S. holder of ABN AMRO ordinary shares who receives RBS ordinary shares pursuant to the U.S. offer chooses to deliver their

129


        newly issued RBS ordinary shares into Euroclear Nederland (including Euroclear Netherland's CREST account), SDRT will be generally payable at the rate of 1.5% of the value of the RBS ordinary shares. The holder of such RBS ordinary shares will bear the cost of this SDRT charge in practice.

        No U.K. stamp duty or SDRT should be payable on any transfers or agreements to transfer newly issued RBS ordinary shares within Euroclear Nederland.

    (iv)
    RBS ADSs

        If a U.S. holder chooses to deposit their newly issued RBS ordinary shares with the depositary for the RBS ADSs in exchange for certificated RBS ADRs or uncertificated RBS ADSs, it is expected that 1.5% SDRT will be payable on the value of the RBS ordinary shares so deposited. This cost will be required to be borne by the U.S. holder.

        Subsequent transfers of certificated and uncertificated RBS ADRs will not be subject to SDRT or, in practice, stamp duty. It is expected that subsequent transfers of uncertificated RBS ADSs should not be subject to SDRT or, in practice, stamp duty.

(d)       Inheritance, Estate and Gift Tax

      A U.S. holder who is an individual domiciled in the U.S. for the purposes of the U.K./U.S. Estate and Gift Tax Treaty and who is not a national of the U.K. for the purposes of the U.K./U.S. Estate and Gift Tax Treaty will not be subject to U.K. inheritance tax in respect of the RBS Shares and RBS ADSs on the individual's death or on a gift of such RBS Shares or RBS ADSs made during the individual's lifetime unless, inter alia, they are part of the business property of the individual's permanent establishment situated in the U.K. or pertain to the individual's U.K. fixed base used for the performance of independent personal services. In the exceptional case where RBS Shares or RBS ADSs are subject to both U.K. inheritance tax and U.S. federal estate or gift tax, the U.K./U.S. Estate and Gift Tax Treaty generally provides for tax paid in the U.K. to be credited against tax payable in the U.S., based on priority rules set out in that treaty.

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EFFECTS OF THE OFFERS AND POST-CLOSING RESTRUCTURING

General

Following the completion of the offers, if you have not tendered your ABN AMRO ordinary shares or ABN AMRO ADSs, until such time as RFS Holdings acquires 100% of the issued share capital and voting rights, you will be a minority shareholder in ABN AMRO with a limited (if any) ability to influence the outcome on any matters that are or can be subject to shareholder approval, including the appointment of directors, the acquisition or disposition of substantial assets, the issuance of ordinary shares or other equity securities and the payment of dividends on ABN AMRO securities. As a result, it is unlikely that you will be able to realise significant proceeds from the sale, transfer or other disposition of your ABN AMRO ordinary shares or ABN AMRO ADSs.

Controlling Shareholder

Following the completion of the offers, RFS Holdings expects to hold at least a majority of the issued share capital and voting rights of ABN AMRO and, as a result, expects to have the authority to and may replace any or all of, and/or appoint additional members of, the Managing Board and Supervisory Board of ABN AMRO, subject to legal and regulatory requirements.

Post-Offer Restructuring of ABN AMRO

Following completion of the offers, the Banks, together with RFS Holdings, intend to restructure ABN AMRO and its group companies and businesses for the purpose of implementing the allocation of ABN AMRO's businesses to Fortis, RBS and Santander as set out under "Background to and Reasons for the Offers—Reasons for the Offers—Businesses to be acquired." The Banks may restructure ABN AMRO and its group companies and businesses to align ABN AMRO and its group companies and businesses with the holding and financing, business and operational structures of each of Fortis, RBS and Santander, respectively. In addition, the Banks, together with RFS Holdings, intend to use any legally permitted method to acquire 100% of ABN AMRO's issued and outstanding share capital, to restructure ABN AMRO and its group companies and to have each of the Banks acquire certain specific ABN AMRO business units. For all of the aforementioned purposes, RFS Holdings and the Banks will consider, depending, among other things, on the number of ABN AMRO ordinary shares and ABN AMRO ADSs accepted for exchange in the offers or otherwise held by the Banks or RFS Holdings, a number of processes, including without limitation, a compulsory acquisition procedure or "squeeze-out" (uitkoopprocedure); a legal merger (juridische fusie) between ABN AMRO and RFS Holdings or an affiliate of RFS Holdings (a "legal merger"); a demerger (zuivere splitsing) or a split-off (afsplitsing), in each case under Dutch law; a contribution or other transfer by RFS Holdings of its shares in ABN AMRO to one or more of its group companies; or a contribution of assets or cash to ABN AMRO in exchange for new shares issued with the exclusion of pre-emptive rights (voorkeursrechten), if any, of minority shareholders; or a transfer of all or part of ABN AMRO's assets, which may or may not be followed by a distribution of the proceeds of such a transaction to ABN AMRO's shareholders. Separately, RFS Holdings may cause amendments of ABN AMRO's articles of association, or of any of its group companies, to be made and/or may cause ABN AMRO to be converted into a private limited company (besloten vennootschap met beperkte aansprakelijkheid) or an entity with another legal form.

It is possible that RFS Holdings and the Banks may not be able to effect an acquisition by RFS Holdings of 100% of ABN AMRO's issued share capital and the restructuring of the ABN AMRO Group promptly after the completion of the offers, or at all. In addition, any post-completion acquisition and restructuring may be the subject of litigation, and a court may delay the post-completion acquisition and/or restructuring or prohibit the post-completion acquisition and/or

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restructuring from occurring on the terms described in this document, or at all. Accordingly, if you do not tender your ABN AMRO ordinary shares or ABN AMRO ADSs in the offers, you may not receive any consideration for such ABN AMRO ordinary shares and ABN AMRO ADSs promptly after the completion of the offers, or at all, and the liquidity and value of any ABN AMRO ordinary shares and ABN AMRO ADSs that remain outstanding could be negatively affected. In addition, even if RFS Holdings and the Banks are able to effect the post-completion acquisition by RFS Holdings of 100% of ABN AMRO's issued share capital and/or restructuring of the ABN AMRO Group, the consideration minority holders of ABN AMRO ordinary shares or ABN AMRO ADSs receive in such post-completion acquisition or restructuring may be (substantially) different in form and/or value from the consideration that they would have received had they tendered their ABN AMRO ordinary shares and ABN AMRO ADSs in the offers, amongst others because:

any post-completion acquisition and restructuring may provide for or require the payment of consideration in cash or in kind only or in a different proportion than in the offers;

the consideration to be paid in the event of a squeeze-out will be determined by a Dutch court;

the tax consequences to holders of ABN AMRO ordinary shares or ABN AMRO ADSs of receiving consideration in any post-completion acquisition and restructuring may be different than they would be if such holders had tendered their ABN AMRO ordinary shares or ABN AMRO ADSs, as the case may be, in the offers; and

any RBS ordinary shares received as part of the consideration in any post-completion acquisition and restructuring, if any, may have a different value at the time of completion of any such post-completion acquisition and restructuring than at the time of the completion of the offers.

Squeeze-Out Proceedings

If and when RFS Holdings, acting alone or with one or more group companies, has acquired 95% or more of ABN AMRO's issued capital (or, after implementation of the European Union Takeover Directive 2004/25/EC, 95% or more of the issued capital of, and voting rights attached to the outstanding shares of, a class of shares of ABN AMRO) at or following the completion of the offers, RFS Holdings may initiate a squeeze-out in order to acquire the remaining shares or shares of that class not tendered and not otherwise held by RFS Holdings or ABN AMRO. RFS Holdings may also initiate a squeeze-out at any time after the completion of the offers, if and when it is entitled to do so, with respect to the shares in any successor entity of ABN AMRO, created through a legal merger or otherwise. The consideration that non-tendering ABN AMRO shareholders will receive in a squeeze-out will be determined by a Dutch court and may or may not be different from the consideration offered in the offers, provided that it is anticipated that any distributions made to non-tendering ABN AMRO shareholders after the completion of the offers will be deducted in determining such consideration. If the squeeze-out is successful, the minority holders of ABN AMRO ordinary shares and ABN AMRO ADSs will be required to transfer their ABN AMRO ordinary shares or ABN AMRO ADSs against payment of the consideration determined. Upon payment of the amount required to purchase the ABN AMRO ordinary shares or ABN AMRO ADSs into a prescribed bank account, RFS Holdings will become the holder of the ABN AMRO ordinary shares or ABN AMRO ADSs by operation of law. The only remaining right of the ABN AMRO minority shareholders will be the right to receive payment for their ABN AMRO ordinary shares or ABN AMRO ADSs.

Legal Merger

At any time after the U.S. offer has been completed and the Dutch offer has been declared unconditional, and irrespective of whether or not a squeeze-out can, is or will be initiated,

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RFS Holdings and the Banks may take steps to implement a legal merger between RFS Holdings, or an affiliate of RFS Holdings, and ABN AMRO. As a result of such legal merger, ABN AMRO will cease to exist and RFS Holdings or its affiliate will survive and acquire all assets and liabilities of ABN AMRO by operation of law (an "upstream merger"). The acquiring entity may be an entity whose securities are not listed or publicly traded and are subject to transfer restrictions. Alternatively, a legal merger may be implemented whereby RFS Holdings or its affiliate will cease to exist and ABN AMRO will survive and acquire all assets and liabilities of RFS Holdings or its affiliate, by operation of law (a "downstream merger").

If an upstream merger is undertaken, shareholders of ABN AMRO will, by operation of law, either become shareholders in the acquiring entity, alongside the existing shareholders of such acquiring entity, or be cashed out on the basis of the applicable exchange ratio(s) if their total shareholdings in ABN AMRO are of such size, or the newly granted shares are of such high nominal value that such shareholders will not be entitled to any newly issued shares in the acquiring entity. The former ABN AMRO shareholders and ABN AMRO ADS holders will acquire the same economic value in cash or in stock as the ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) they held immediately before the legal merger becomes effective had. Such economic value will be determined on the basis of the relevant price for the ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) set out in this document, deducting any distributions made to the relevant shareholders after the completion of the offers. The identity of the acquiring entity, the composition of its share capital, the economic and other rights attaching to (each class of) its shares, including any shares assigned to former ABN AMRO shareholders and ABN AMRO ADS holders, and the exchange ratio applicable to each class of ABN AMRO's ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) will be determined if RFS Holdings and the Banks decide to pursue a legal merger.

If a downstream merger is undertaken, the shareholders of ABN AMRO will continue to hold their shares. The shares in ABN AMRO held by the disappearing entity will be cancelled and the parent company of the disappearing entity will receive new ABN AMRO ordinary shares, taking into account any assets and/or liabilities of the disappearing entity as on the effective date of the merger.

A legal merger will be subject to applicable provisions of Dutch law, and will include safeguards to ensure that the exchange ratio or ratios applicable to each class of shares of ABN AMRO is confirmed by independent experts as being fair. In all forms of legal merger, the relative shareholding of the minority holders of ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs), if any remains after effectuation of the legal merger, compared to that of other shareholders may decrease.

Other Possible Restructurings

Following completion of the offers, RFS Holdings and the Banks intend to restructure ABN AMRO, its group companies and businesses for the purpose of implementing the transfer of ABN AMRO's businesses to Fortis, RBS and Santander as set out in "Plans and Proposals for ABN AMRO". RFS Holdings and the Banks may restructure ABN AMRO, its group companies and businesses to align ABN AMRO, its group companies and businesses with the holding and financing, business and operational structures of each of Fortis, RBS and Santander respectively.

At any time after the U.S. offer and the Dutch offer have been declared unconditional, and irrespective of whether or not a squeeze-out can, is or will be initiated, RFS Holdings and the Banks may take steps to cause a transfer by ABN AMRO or one or more of its group companies of all or substantially all of their respective assets to a company directly or indirectly wholly owned by

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RFS Holdings or an affiliate of RFS Holdings or to one or more companies directly or indirectly owned by one of the Banks, as a distribution or in exchange for consideration to be determined, which may include cash and/or shares, debt instruments or other securities. Subsequently, ABN AMRO (or one or more of its successors) may be liquidated, in which case the proceeds of the liquidation will be distributed to ABN AMRO's shareholders in accordance with the provisions of ABN AMRO's articles of association. The Banks, by exercising their powers as shareholders of RFS Holdings, may also cause ABN AMRO or any other acquiring entity pursuant to a legal merger to issue shares to RFS Holdings in consideration for the contribution of assets or cash by RFS Holdings into ABN AMRO or any such acquiring entity, with the exclusion of the pre-emptive rights (voorkeursrechten), if any, of such other shareholders, in which case, existing holders of ABN AMRO ordinary shares will be diluted.

As described in more detail in "Plans and Proposals for ABN AMRO", each of the Banks will ultimately acquire certain business units of ABN AMRO. To achieve this, it may be necessary for RFS Holdings to implement one or more restructurings in addition to the other actions described above. Such restructurings may include a demerger or a split-off of ABN AMRO, ABN AMRO's business enterprise or one or more of ABN AMRO's group companies or other assets and liabilities, whereby one or more of the acquiring entities may be an affiliate of one of the Banks. In the event of a demerger of ABN AMRO, ABN AMRO will cease to exist and shareholders of ABN AMRO will, by operation of law, either become shareholders, together with the existing shareholders of such acquiring entity or one of its affiliates, or be cashed out on the basis of the applicable exchange ratio(s) if their total shareholdings in ABN AMRO are of such size or the newly granted shares are of such high nominal value that such shareholders will not be entitled to any newly issued shares in the acquiring entity (or its affiliate). The former holders of ABN AMRO ordinary shares will acquire the same economic value in cash or in shares as the ABN AMRO ordinary shares they held immediately before the demerger becomes effective had. Such economic value will be determined on the basis of the relevant price of the ABN AMRO ordinary shares set out in this document, deducting any distributions made to the relevant shareholders after the completion of the offers. The identity of the acquiring entity, the composition of its share capital, the economic and other rights attaching to (each class of) its shares and the exchange ratio applicable to each class of ABN AMRO's shares will be determined if RFS Holdings shall undertake the steps described in this paragraph.

If a split-off is undertaken, ABN AMRO will continue to exist and shareholders in ABN AMRO will, by operation of law, either become shareholders of the acquiring entity, together with the existing shareholders of such acquiring entity (or one of its affiliates), or be cashed out on the basis of the applicable exchange ratio(s) if their total shareholdings in ABN AMRO are of such size or the newly granted shares are of such high nominal value that such shareholders will not be entitled to any newly issued shares in the acquiring entity (or its affiliates). The former holders of ABN AMRO ordinary shares will acquire the same economic value in cash or in shares as the ABN AMRO ordinary shares they held immediately before the split-off becomes effective had. Such economic value will be determined on the basis of the relevant price of the ABN AMRO ordinary shares set out in this document, deducting any distributions made to the relevant shareholders after the completion of the offers. The identity of the acquiring entity, the composition of its share capital, the economic and other rights attaching to (each class of) its shares and the exchange ratio applicable to each class of ABN AMRO's shares will be determined if RFS Holdings and the Banks decide to pursue a split-off.

Any demerger or split-off will be subject to applicable provisions of Dutch law, and will include safeguards to ensure that the exchange ratio or ratios applicable to each class of shares of ABN AMRO is confirmed by independent experts as being fair. In all forms of demergers or

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split-offs, the relative shareholding of the ABN AMRO minority shareholders, if any remains after effectuation of the demerger or split-off, compared to that of other shareholders may decrease.

Finally, RFS Holdings and the Banks reserve the right to submit proposals to ABN AMRO's shareholders in order to alter the corporate, governance and capital structure of ABN AMRO, including by cancellation of shares or other capital reductions, distributions of dividends, interim dividends or other distributions from reserves (either in cash or in kind) and amending ABN AMRO's articles of association to, among other things, subject all or certain shares of ABN AMRO to transfer restrictions, convert ABN AMRO into a private limited company (besloten vennootschap met beperkte aansprakelijkheid), which will cause all shares of ABN AMRO to become subject to transfer restrictions, create or convert shares into separate classes of shares with different profit entitlements or otherwise change the rights attached to one or more classes of shares.

Any and all of the measures and processes described above may be undertaken cumulatively, alternatively, or not at all, in RFS Holdings' and the Banks' discretion and subject to applicable law and ABN AMRO's articles of association in effect at the relevant time, and both RFS Holdings and the Banks will observe applicable statutory consultation and approval rights of the relevant supervisory authorities in effect at the relevant time. Any distributions made may take the form of an (interim) distribution out of reserves, a dividend or interim dividend, other form of capital repayment or, if ABN AMRO is liquidated, a liquidation distribution.

"Going-Private" Transactions

It is possible that a second-step transaction may constitute a "going-private" transaction within the meaning of Rule 13e-3 under the Exchange Act, depending on the extent of RFS Holdings' shareholding in ABN AMRO and the timing and nature of steps to be taken with respect to ABN AMRO and its ordinary shares and ADSs.

Dividend Policy and Accounting Policies

RFS Holdings intends to change ABN AMRO's dividend policy if the offers are completed. RFS Holdings intends to cause ABN AMRO to stop paying regular cash dividends after the completion of the offers for the foreseeable future, subject to any applicable legal requirements. The amount and form of any one-time distribution will be determined by RFS Holdings from time to time as appropriate. It is envisaged that any distribution paid in respect of ABN AMRO's shares after the completion of the offers will be deducted for the purposes of establishing the consideration in the event of any legal merger or other corporate transaction described above.

RFS Holdings may also change ABN AMRO's accounting policies and those of its group companies.

Increased Leverage

As a result of measures implemented by RFS Holdings and the Banks after the completion of the offers, ABN AMRO's leverage may be substantially increased. Any incurrence of debt will be at arm's length, or at least not onerous to the business objects of ABN AMRO (niet onzakelijk bezwarend).

Tax Treatment of Distributions

The Banks have no knowledge of, and no responsibility for, the tax treatment of shareholders with respect to any distributions made by ABN AMRO or any successor entity to ABN AMRO, which may include dividends, repayments of capital and liquidation distributions. For example, in the event that there is a sale of all or substantially all of the assets of ABN AMRO, followed by a liquidation and a

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distribution of the liquidation proceeds, this distribution may be subject to Dutch withholding tax or otherwise may raise specific tax issues for holders of ABN AMRO ordinary shares. See also "Material U.S. Federal Income Tax, Dutch Tax and U.K. Tax Consequences".

Amendments to the ABN AMRO Articles of Association

If the offers are completed, RFS Holdings intends to submit proposals to the ABN AMRO extraordinary general meeting to amend the ABN AMRO articles of association, which are incorporated herein by reference. The proposed changes will relate primarily to ABN AMRO's corporate governance, its share capital and the rights attached to shares in the share capital of ABN AMRO. These amendments will require approval from the ABN AMRO general meeting in accordance with the procedures set out in the ABN AMRO articles of association and as prescribed by applicable Dutch law.

Pursuant to the principal proposed amendments to ABN AMRO's articles of associations:

the ABN AMRO articles of association will reflect that the ABN AMRO formerly convertible preference shares are no longer convertible into ABN AMRO ordinary shares;

the ABN AMRO ordinary shares, the ABN AMRO (formerly convertible) preference shares and the ABN AMRO convertible financing preference shares will be in registered form only;

the requirement that the ABN AMRO management board shall consist of at least five members will be removed;

the right of the ABN AMRO supervisory board to make a binding nomination for the appointment of members of the ABN AMRO management board will be removed;

the ABN AMRO supervisory board shall appoint a chairman of the ABN AMRO management board from among the members of the ABN AMRO management board;

the list of management decisions that require the approval of the ABN AMRO supervisory board which is currently included in the ABN AMRO articles of association shall be abolished and replaced by a provision that the ABN AMRO supervisory board may adopt resolutions pursuant to which clearly specified resolutions of the ABN AMRO management board require its approval;

the requirement that the ABN AMRO supervisory board shall consist of at least five members will be removed;

the right of the ABN AMRO supervisory board to make a binding nomination for the appointment of members of the ABN AMRO supervisory board will be removed;

the remuneration of the members of the ABN AMRO supervisory board will be determined by an ABN AMRO General Meeting;

a resolution by an ABN AMRO General Meeting to suspend or dismiss a member of the ABN AMRO supervisory board will require an absolute majority of validly cast votes to be adopted;

the chairman of an ABN AMRO General Meeting will determine the manner of voting; and

the right of the ABN AMRO management board to establish an advisory committee will be removed.

Once the ABN AMRO ordinary shares are no longer admitted to official listing on a securities exchange and the ABN AMRO management board has deposited a statement in that respect at the

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Chamber of Commerce and Industry in Amsterdam, the following amendments to ABN AMRO's articles of associations will come into effect:

any transfer of ABN AMRO ordinary shares, the ABN AMRO (formerly convertible) preference shares and the ABN AMRO convertible financing preference shares will have to be effected by notarial deed;

the transfer of ABN AMRO ordinary shares, the ABN AMRO (formerly convertible) preference shares and the ABN AMRO convertible financing preference shares will require the approval of the ABN AMRO Board of Management;

ABN AMRO ordinary shares, the ABN AMRO (formerly convertible) preference shares and the ABN AMRO convertible financing preference shares will be issued by notarial deed; and

notices calling meetings and other notices to shareholders and depositary receipt holders shall be given by announcements in at least one national daily newspaper.

RFS Holdings also reserves the right to propose any other amendments depending on the circumstances prevailing at the time and the taking into account the contemplated restructuring described in the section "Plans and Proposals for ABN AMRO".

Employees, Works Councils and Trade Unions

The Banks believe that the stronger businesses resulting from the Transaction will also create sustainable platforms for increased job creation and enhanced opportunities for employees. The Banks' track records in this regard are excellent, demonstrating organic growth in employment built on strong business foundations.

The realisation of the expected transaction benefits will entail some initial reduction in staff, not all of which will be in ABN AMRO. The Banks have no plans, however, to increase the number of off-shored jobs significantly.

The Banks intend to retain the best talent through a fair appointment process based on merit and competencies accommodating in the process any legal requirements.

In accordance with the SER Merger Code 2000 (SER-besluit Fusiegedragsregels 2000) consultations have taken place with the representatives of trade unions for ABN AMRO and Fortis in separate and combined meetings. Such consultations will be continued after successful completion of the offers. The Social Economic Council of the Netherlands (Sociaal-Economische Raad) has been informed of the offers and of such consultation in accordance with the SER Merger Code 2000. The consultations with the trade unions have so far resulted in a human resources position paper with regard to the social implications of the Transaction, which has been discussed between the Banks and the trade unions.

In view of the fact that no agreement has been reached with the ABN AMRO boards on the offers, the Dutch Works Councils Act (Wet op de Ondernemingsraden) does not require consultation by Fortis (on behalf of the Banks) with the (central) works council of ABN AMRO in respect of the offer itself. Nevertheless, informal meetings have taken place between the Banks and the central works council and European works council of ABN AMRO, in which the Banks have provided these employee representative bodies with a background on the offers from a human resources perspective. Although at this time, Fortis (on behalf of the Banks) does not need to consult the central works council of ABN AMRO, the Banks are committed to continuing to work constructively with works councils, trade unions and other representative bodies in respect of the contemplated reorganisation of ABN AMRO (see "Plans and proposals for ABN AMRO"). Existing social plans and collective labour agreements will be honoured.

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The Banks also intend to create significant numbers of new positions in the Netherlands through investment in a number of significant businesses. Within the Netherlands and other appropriate territories, an employment office will be created to identify redeployment opportunities for staff across the operations of the Banks. The Banks' firm intention is that any job losses in the Netherlands will be accommodated through natural turnover, redeployment and voluntary redundancy.

In accordance with the Dutch Works Councils Act, positive advice has been obtained from the works council of the Banking Division of Fortis with respect to making and completing the offers.

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SOURCE AND AMOUNT OF FUNDS

Assuming all issued and outstanding ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) are tendered into the offers, RBS would be obliged to issue 556,143,700 RBS ordinary shares (assuming the number of issued and outstanding ABN AMRO ordinary shares is as set out in ABN AMRO's Form 6-K dated 23 April 2007 and exercise of all ABN AMRO options based on information as set out in the ABN AMRO 2006 Annual Report on Form 20-F) to ABN AMRO shareholders in satisfaction of the obligations of RFS Holdings with regard to the share element of the offer consideration, and, in addition, RFS Holdings would be obliged to pay aggregate cash consideration of €66 billion. The Banks propose to finance the cash portion of the consideration payable by RFS Holdings through a combination of rights issues, debt and preferred securities issues and internal resources, as described in greater detail below. The number of RBS ordinary shares issued and the aggregate amount of cash consideration would be less in the event that less than 100% of ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) are tendered into the offers. In addition, the number of RBS ordinary shares issued and the aggregate cash consideration may vary depending on the number of ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) outstanding at the time of settlement of the offers.

Fortis

Fortis intends to finance its portion of the consideration to be paid by RFS Holdings in the offers, which portion Fortis expects to amount to approximately €24 billion, by means of the following sources:

net proceeds of an equity offering by Fortis of up to €13 billion, which offering will be made in the form of a non-statutory rights offering and offering of shares representing unexercised rights in accordance with applicable Belgian and Dutch and other applicable law;

net proceeds of the placement of conditional capital exchangeable notes ("CCENs"), a new contingent core Tier 1 capital instrument issued on 11 July 2007, raising €2 billion; and

the remaining part from the proceeds of a combination of (i) the issuance of various securities; (ii) the sale of specific non-core assets of Fortis that Fortis may complete prior to the completion of the offers; and (iii) other internal financial resources including but not limited to cash on Fortis's balance sheet.

Fortis has received an equity underwriting commitment letter, dated 16 May 2007, from Merrill Lynch under which Merrill Lynch has agreed to underwrite the rights offering for the purposes of financing Fortis's participation in the offers. The aggregate amount of Merrill Lynch's standby underwriting commitment is €17 billion. Pursuant to the equity underwriting commitment letter, the terms and conditions of the underwriting agreement for the rights offering will be customary for international rights offerings of this type. Merrill Lynch's commitment to underwrite these rights is only conditional upon RFS Holdings making the offers. The equity underwriting commitment letters provide that the termination and force majeure provisions of the underwriting agreement will be aligned with the material adverse change condition of the offers and that if there is any inconsistency between such provisions, the terms of the offers shall prevail. Merrill Lynch's obligation to underwrite the securities will terminate if the Dutch offer is not declared unconditional and the U.S. offer lapses or expires, if the Banks announce that the offers will not be made or have been terminated or if all conditions to the offers are not satisfied or waived by 31 December 2007. Pursuant to the terms of the equity underwriting commitment letter, Fortis has agreed to pay certain fees and expenses of Merrill Lynch in consideration for Merrill Lynch's commitment.

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The rights offering will be launched in the second half of 2007 and will be scheduled to close prior to settlement of the offers.

On 15 May 2007 Fortis entered into a €10 billion backstop liquidity facility with several European financial institutions to secure completely the financing of the Transaction to come from internal resources.

Fortis intends that following the offers it will refinance the remaining part of the consideration through a combination of the following sources:

up to €5 billion to be raised by issuing other Tier 1 capital instruments, equity-linked subordinated hybrid capital securities and/or convertible debt securities. On 16 May 2007 Fortis received a standby underwriting commitment from Merrill Lynch to raise an amount of up to €5 billion through such financing transactions, the terms and conditions of which commitment are substantially similar to those of the equity underwriting commitment letter described above; and

up to €8 billion through multiple other transactions, consisting of further sales of non-core assets, securitisation transactions and other similar transactions.

RBS

Upon settlement of the offers, we will issue 0.296 RBS ordinary shares for each ABN AMRO ordinary share tendered. The creation and issuance of RBS ordinary shares must be approved by the affirmative vote of a majority of our shareholders present and voting at an extraordinary general meeting, which is planned to be held on 10 August 2007.

RBS, whose portion of the cash consideration for the offers is €22 billion (assuming the number of issued and outstanding ABN AMRO Ordinary Shares is as set out in ABN AMRO's Form 6-K dated 23 April 2007 and exercise of all ABN AMRO options based on information as set out in the ABN AMRO 2006 Annual Report on Form 20-F) plans to issue preferred securities and debt securities, and to utilise internal resources to finance the remainder of its portion of the cash consideration not covered by the proceeds of the securities it issues.

On 28 May 2007, we entered into a standby underwriting commitment letter with Merrill Lynch, or the Standby Underwriting Commitment Letter, pursuant to which Merrill Lynch undertook to underwrite one or more issues by us of securities eligible to be treated as part of our innovative or non-innovative Tier I capital and/or convertible securities convertible into our ordinary shares, the proceeds of which would be used to finance part of the cash portion of consideration payable to holders of ABN AMRO ordinary shares and ABN AMRO ADSs upon completion of the offers. The aggregate amount of Merrill Lynch's standby underwriting commitment is €6.2 billion. Merrill Lynch's commitment to underwrite these securities is conditional only upon RFS Holdings making the offers. In the event that Merrill Lynch is unsuccessful in procuring subscribers for the securities issued by us, it has agreed to subscribe for these securities itself, up to the amount of its total standby underwriting commitment. Pursuant to the Standby Underwriting Commitment Letter, we have agreed to pay certain fees and expenses to Merrill Lynch in consideration for its standby commitment. Merrill Lynch's obligation to underwrite the securities will terminate if the offers lapse or expire, if the Banks announce that the offers will not be made or have been terminated or if all conditions to the offers are not satisfied or waived by 31 December 2007. RBS expects these issuances to be completed prior to settlement of the offers.

Under the offers, we will contribute our consortium proportion (38.3%) of the consideration paid to ABN AMRO shareholders and ABN AMRO ADS holders, or €27.2 billion. The consideration for the ABN AMRO Businesses net of the sale of LaSalle will be €16 billion. The reduction comprises $21 billion in proceeds from the sale of LaSalle less inter-company balances of $6 billion as set out in the Bank of America Agreement.

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Santander

Santander intends to finance its portion of the consideration, which is approximately €19.9 billion, to be paid in the offers by raising approximately €9.0 billion via a rights issue and the issuance of mandatorily convertible securities (the "Santander contemplated offerings") and funding the remaining amount of approximately €10.9 billion through internal financial resources, including asset disposals.

Santander's Board of Directors has convened for 26 July 2007, on first call, and 27 July 2007, on second call, an extraordinary general meeting of shareholders of Santander to request Santander shareholders to pass the necessary resolutions to enable Santander to proceed with the Santander contemplated offerings. The Santander contemplated offerings are expected to be launched in the second half of 2007 and are expected to close prior to settlement of the offer or shortly thereafter, in which case appropriate bridge financings will be arranged in order to fund payment of the consideration at settlement.

On 5 May 2007, Santander received standby securities underwriting commitment letters from each of Dresdner Bank AG and Calyon Spanish Branch under which each of these banks agreed to underwrite up to €6.0 billion of the Santander contemplated offerings, therefore totalling €12.0 billion. On 14 May 2007, Santander received a standby securities commitment letter from ING Bank N.V. under which ING Bank N.V. agreed to underwrite up to €2.0 billion of the Santander contemplated offerings. On 27 May 2007, Santander received a standby securities commitment letter from Merrill Lynch under which it agreed to underwrite up to €10.0 billion of the Santander contemplated offerings. Pursuant to the standby securities commitment letters, the terms and conditions of the relevant subscription agreements for the Santander contemplated offerings will be customary for offerings of the type of securities to be issued. Pursuant to the standby securities commitment letters, Santander has agreed to pay certain fees and expenses to each of the banks in consideration for its standby commitment. Pursuant to the applicable standby securities commitment letters, Calyon Spanish Branch's, Dresdner Bank AG's, ING Bank N.V.'s and Merrill Lynch's underwriting commitments are conditioned upon RFS Holdings having made a formal offer for the entire issued and outstanding share capital of ABN AMRO no later than 30 September 2007.

Pursuant to their standby securities commitment letters, the underwriting commitment of each of Calyon Spanish Branch, Dresdner Bank A.G., ING Bank N.V. and Merrill Lynch terminates if (i) the offers lapse or expire, (ii) the Banks announce that the offers will not be made or have been terminated or (iii) the conditions to the offers are not satisfied or waived by, respectively, 31 December 2007 (in the case of Merrill Lynch's commitment), 3 May 2008 (in the case of Dresdner Bank AG's commitment) or 4 May 2008 (in the case of Calyon Spanish Branch's and ING Bank N.V.'s commitments).

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TREATMENT OF ABN AMRO OPTIONS, CONVERTIBLE PREFERENCE SHARES AND FORMERLY CONVERTIBLE PREFERENCE SHARES

ABN AMRO Options

The U.S. offer will extend to any ABN AMRO ordinary shares unconditionally allotted or issued pursuant to any ABN AMRO share incentive plans while the U.S. offer remains open for acceptance. RFS Holdings intends to make appropriate proposals to participants in the ABN AMRO share incentive plans in due course.

ABN AMRO Convertible Preference Shares

RFS Holdings intends to make appropriate proposals to the holders of the ABN AMRO Convertible Preference Shares, each as evidenced by a depositary receipt, in due course.

ABN AMRO Formerly Convertible Preference Shares

RFS Holdings is making a public offer to acquire all of the issued and outstanding ABN AMRO formerly convertible preference shares, for €27.65 per share in cash, the closing price of such shares on 20 April 2007, concurrently with the offers. The aggregate consideration payable for the ABN AMRO formerly convertible preference shares will be approximately €1.2 million. The public offer includes any future dividends declared and represents a premium of 10.1% to the closing price on 11 July 2007. If any dividend is declared in respect of the ABN AMRO formerly convertible preference shares and the record date for such dividend precedes the settlement of the offer for the ABN AMRO formerly convertible preference shares, the consideration payable may be reduced by the full amount of such dividend (before deduction of applicable withholding taxes). The public offer for the ABN AMRO formerly convertible preference shares is being made using a separate offer document that may be requested from the Dutch exchange agent by holders of ABN AMRO formerly convertible preference shares subject to certain restrictions and pursuant to applicable law, and is conditional on the completion of the U.S. offer and the Dutch offer.

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INFORMATION ABOUT RFS HOLDINGS

Overview

RFS Holdings was formed by the Banks to make the offers and effect the Transaction.

Each of the Banks will have economic interests in RFS Holdings as described herein.

Upon settlement of the offers, RFS Holdings will be owned by the Banks in proportion to their funding commitments under the Consortium and Shareholders' Agreement. RFS Holdings will be consolidated as a subsidiary by RBS.

Constitution

RFS Holdings was incorporated in the Netherlands on 4 May 2007, as a private company with limited liability under the name RFS Holdings B.V.

The principal object of RFS Holdings is to participate in, to take an interest in any other way in or to conduct the management of other business enterprises of whatever nature, to finance third parties, to provide security or undertake the obligations of third parties and otherwise engage in any activities which are incidental to or which may be conducive to any of the foregoing. RFS Holdings has not traded since incorporation.

RFS Holdings is registered in the Chamber of Commerce Amsterdam under number 34273228. Its registered office is at Strawinskylaan 3105, 1077 ZX Amsterdam, the Netherlands. Both for purposes of domestic Dutch and U.K. tax law and for purposes of the Netherlands U.K. double tax treaty, RFS Holdings will be a resident of the Netherlands only.

Share Capital

The authorised share capital of RFS Holdings amounts to €90,000 and consists of 90,000 ordinary shares with a nominal value of €1 each. All shares of RFS Holdings are registered shares. As at the date of this document, 18,000 ordinary shares in the capital of RFS Holdings have been issued and fully paid-up, which are held either directly or indirectly by the Banks.

Each of the Banks currently holds, directly or indirectly, one-third of the issued shares in the capital of RFS Holdings and will continue to do so until funding of RFS Holdings immediately prior to and for the purpose of settlement of the offers. Upon funding of RFS Holdings by the Banks for the purpose of the settlement of the offers the Banks will be issued new shares in the capital of RFS Holdings so that their aggregate shareholdings will be equal to their proportionate funding commitments: RBS will hold 38.3%, Fortis will hold 33.8% and Santander will hold 27.9% of the issued shares in the capital of RFS Holdings.

Governance

The RFS Holdings managing board comprises the following six members: Karel August Maria De Boeck (representative of Fortis), Alexander Maria Kloosterman (representative of Fortis), Miller Roy McLean (representative of RBS), Mark Andrew Fisher (representative of RBS), José A. Álvarez (representative of Santander) and Ignacio Benjumea (representative of Santander).

RFS Holdings does not have a supervisory board.

On or about the date of the settlement of the offers, the articles of association of RFS Holdings will be amended and the composition of its managing board changed. RBS will then control the managing board of RFS Holdings, subject to minority protections in the form of reserved matters set out in the Consortium and Shareholders' Agreement, which will require the approval of at least

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one managing director nominated by each of Fortis, RBS and Santander. RFS Holdings will become a subsidiary of RBS and consolidated by it.

For a further description of the governance of RFS Holdings, see "Summary of the Consortium and Shareholders' Agreement".

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INFORMATION ABOUT FORTIS

Overview

Fortis N.V. is incorporated as a public limited liability company (naamloze vennootschap) under Dutch law. Fortis N.V. has its corporate seat in Utrecht, The Netherlands, with its head office at Archimedeslaan 6, 3584 BA Utrecht, The Netherlands, and is registered under number 30072145 with the Trade Register at the Chamber of Commerce of Utrecht, The Netherlands. The telephone number of the registered office of Fortis N.V. is 011 31 30 226 62 22.

Fortis SA/NV is a public company with limited liability incorporated in the form of a société anonyme/naamloze vennootschap under Belgian law. Fortis SA/NV has its registered office at Rue Royale/Koningsstraat 20, 1000 Brussels, Belgium. The company is registered in the register of legal entities (registre des personnes morales/rechtspersonenregister) under number 0451 406 524. The telephone number of the registered office of Fortis SA/NV is 011 32 2 565 1141.

In this document, Fortis refers to Fortis SA/NV and Fortis N.V.

Fortis is an international provider of banking and insurance products and services to personal, business and institutional customers. The company delivers a comprehensive package of financial products and services through its own distribution channels and via intermediaries and other partners.

Fortis ranks among the 20 largest financial institutions in Europe based on market capitalisation of €43.3 billion as at 31 December 2006, with total assets of €775 billion and shareholders' equity of €20.6 billion. With its sound solvency position, broad risk spread, a presence in over 50 countries and the extensive expertise of its approximately 57,000 employees (full time equivalents) as of the end of 2006, Fortis combines an international presence with local flexibility to provide strong support to its customers. As at that date, Fortis had a total capital ratio of 11.1% and a Tier 1 capital ratio of 7.1%.

In its home market, the Benelux countries, Fortis occupies a leading position in each of its principal business segments, banking and insurance. Fortis's retail banking operations are a market leader in the Benelux region—one of Europe's wealthiest regions. Building on that leadership, Fortis has developed an integrated, European-wide network to serve its international client base. The same expertise it has developed in its home market is used to provide high net worth individuals, enterprises and entrepreneurs with advanced financial services tailored to their specific needs. Fortis also operates worldwide in selected activities, such as fund administration, trade finance, shipping finance, export and project finance and global markets. In specific countries in Europe and Asia it exploits its know-how and experience in banking and insurance, and is a market leader in banc-assurance in Portugal.

Fortis Operating Structure

As of 1 January 2007, Fortis has reorganised its activities into three core businesses: Retail Banking, Merchant & Private Banking, and Insurance.

Retail Banking

Fortis Retail Banking provides a wide range of integrated financial and insurance solutions to individuals, professionals and small businesses.

More than six million active customers are served via an array of proprietary and third-party distribution channels. The proprietary channels include 1,600 branches, 60 credit shops, more than 2,500 Selfbank terminals and ATMs, online banking, telephone banking and call centres. Third party

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distribution covers independent brokers (in Poland and the Netherlands) and non-financial outlets such as post offices (Belgium, Ireland) and car dealers (Poland).

With more than 17,000 employees active in nine countries, Fortis Retail Banking has an extensive European footprint. By pursuing a segmented customer approach towards mass retail clients, affluent individuals, professionals and small businesses, it aims to grow in both mature and developing markets.

Different models for growth based on its key strengths will be adapted to each specific market and customer segment:

in mature markets where Fortis Retail Banking is market leader, like Belgium and Luxembourg, it will continue to focus on its customer by differentiating between segments, selectively deepening relationships, enhancing its service culture and offering integrated, multi-channel accessibility; and

in fast-growing segments and developing markets, Fortis Retail Banking needs to rapidly exploit its existing and new positions. Retail Banking entered the German market in 2006, where it is swiftly rolling out consumer finance activities. In Poland, it is focusing on the SME market and upscale individual customers while expanding its consumer finance operations. In Turkey, meanwhile, Retail Banking is building a full-fledged mass retail franchise. And it is drawing on its expertise in Belgium to develop a postal banking franchise in Ireland through a joint venture with An Post.

Merchant & Private Banking

Fortis Merchant & Private Banking offers tailored financial products and skill-oriented services to large international companies and institutions, to Europe-oriented medium-sized enterprises and entrepreneurs, and to private banking clients.

Fortis Bank supports its clients in their international growth by advising them and structuring and arranging financial solutions to meet their often complex financial needs. The solutions Fortis offers its customers are based on a variety of activities, including foreign exchange (forex) trading and derivatives, money and capital markets, cash management, equity and fixed-income investments, business and asset financing, private equity, project finance, structuring, clearing and custody. In Europe, Merchant & Private Banking is investing in the expansion of its operations in several European countries, including the UK, France, Italy, Germany, Spain, Poland and Turkey. It is also developing its dealing room coverage and selected niche activities, such as shipping finance, export and project finance, trade and commodity finance, and clearing services on a more global scale, into areas such as the United States and Asia.

Insurance

Fortis Insurance provides life and non-life products in its home markets of Belgium and The Netherlands and in selected European and Asian markets.

Fortis is a prominent player in Europe's insurance market, and is among the top ten European insurers. Fortis benefits from market leadership in the Benelux countries where it offers a comprehensive range of life products, such as individual/group contracts and investment-linked policies, and non-life insurance products, such as property & casualty and accident & health. Fortis also benefits from strong positions in the banc-assurance and broker channels. Fortis Insurance leverages its existing skills in distribution, operations and products from its home markets in the Benelux region and has established leading positions in selected European and Asian markets.

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Fortis's businesses are supported by the following support functions:

Group Resources

        This function includes Technology, Operations & Process Services (TOPS), Human Resources, Facilities and Purchasing.

Finance

        This function includes Performance Management, Consolidation & Accounting, Group Development & Acquisitions, Tax and Reporting, Ratings, Structuring & Capital Management.

Strategy

        This function includes Strategy, Investor Relations, Global Branding & Communications, Public Affairs, CSR and Fortis Investments.

Risk

        This function includes Risk, Legal, Compliance, Investigations and Customer & Management Processes. A key objective is to enhance risk strategies and further develop the risk function across Fortis. It will also drive the businesses and support functions to improve quality of processes.

Investment

        This function includes Asset & Liability Management (ALM) which has been established to enhance Fortis-wide synergies in this area and to optimise return on assets.

Each core business and support function is managed by a member of the Executive Committee.

Taking into account Belgian disclosure rules requiring disclosure of major shareholdings exceeding 3%, Stichting VSB has reported shareholdings of 4.99% in the share capital of Fortis.

The shares in RFS Holdings owned by the Fortis group are held by Fortis Bank Nederland (Holding) N.V., a wholly owned subsidiary of Fortis Bank SA/NV. The registered office of Fortis Bank Nederland (Holding) N.V. is located at Archimedeslaan 6, 3584 BA Utrecht, The Netherlands, and its business telephone number is 011 31 30 226 3655.

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INFORMATION ABOUT RBS

Overview

RBS is the holding company of one of the world's largest banking and financial services groups, with a market capitalisation of £62.8 billion at the end of 2006. Listed on the London Stock Exchange and headquartered in Edinburgh, RBS operates in the United Kingdom, the United States and internationally through its two principal subsidiaries, the Royal Bank and NatWest. Both the Royal Bank and NatWest are major U.K. clearing banks whose origins go back over 275 years. In the United States, RBS's subsidiary Citizens Financial Group, Inc. was ranked the 10th largest (based on 31 December 2006 data) commercial banking organisation by deposits as at 31 December 2006. RBS has a large and diversified customer base and provides a wide range of products and services to personal, commercial and large corporate and institutional customers.

RBS had total assets of £871.4 billion and shareholders' equity of £40.2 billion at 31 December 2006. It is strongly capitalised with a total capital ratio of 11.7% and Tier 1 capital ratio of 7.5% as at 31 December 2006.

Our registered office is at 36 St Andrew Square, Edinburgh EH2 2YB, Scotland and our head office is RBS Gogarburn, PO Box 1000, Edinburgh EH12 1HQ, Scotland, telephone 011 44 131 556 8555.

Principal Activities

RBS's activities are organised in the following business divisions: Corporate Markets (comprising GBM and U.K. Corporate Banking), Retail Markets (comprising Retail and Wealth Management), Ulster Bank, Citizens, RBS Insurance and Manufacturing. A description of each of the divisions is given herein.

Corporate Markets

Corporate Markets is focused on the provision of banking, investment and risk management services to medium and large businesses and financial institutions in the United Kingdom and around the world. Corporate Banking and Financial Markets was renamed Corporate Markets on 1 January 2006 when we reorganised our activities into two businesses, GBM and U.K. Corporate Banking, in order to enhance the service provided to these two customer segments.

GBM

GBM is a leading banking partner to major corporations and financial institutions around the world, providing an extensive range of debt financing, risk management and investment services to its customers. GBM has a wide range of clients across its chosen markets. It has relationships with an overwhelming majority of the largest U.K., European and U.S. corporations and institutions. GBM's principal activity in the United States is conducted through RBS Greenwich Capital.

U.K. Corporate Banking

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

Retail Markets

Retail Markets was established in June 2005 to lead coordination and delivery of our multi-brand retail strategy across our product range and is comprised of Retail (including our direct channels businesses) and Wealth Management.

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Retail

Retail comprises both the Royal Bank and NatWest retail brands, and a number of direct providers offering a full range of banking products and related financial services to the personal, premium and small business markets across several distribution channels.

In core retail banking, Retail offers a comprehensive product range across the personal and small business market—money transmission, savings, loans, mortgages and insurance. Customer choice and product flexibility are central to the retail banking proposition and customers are able to access services through a full range of channels, including the largest network of branches and automated teller machines in the United Kingdom, the internet and the telephone.

Retail also includes our non-branch based retail businesses that issue a comprehensive range of credit and charge cards to personal and corporate customers and provides card processing services for retail businesses. Retail is the leading merchant acquirer in Europe and ranks fourth globally.

It also includes Tesco Personal Finance, The One account, First Active U.K., Direct Line Financial Services and Lombard Direct, all of which offer products to customers through direct channels principally in the United Kingdom.

Wealth Management

Wealth Management provides private banking and investment services to its clients through a number of leading U.K. and overseas private banking subsidiaries and offshore banking businesses. Coutts is one of the world's leading international wealth managers with offices in Switzerland, Dubai, Monaco, Hong Kong and Singapore, as well as its premier position in the U.K. Adam & Company is one of the major private banks in Scotland. The offshore banking businesses—The Royal Bank of Scotland International and NatWest Offshore—deliver retail banking services to local and expatriate customers, principally in the Channel Islands, the Isle of Man and Gibraltar.

Ulster Bank Group

Ulster Bank Group brings together the Ulster Bank and First Active businesses to provide a comprehensive range of products and services to retail and corporate customers in the island of Ireland.

Ulster Bank Retail Markets serves personal customers through both the Ulster Bank and First Active brands. Ulster Bank provides branch banking and direct banking services throughout the island of Ireland. First Active, through its branch network, serves personal customers in the Republic of Ireland with its separately branded product offerings, including mortgages and savings.

Ulster Bank Corporate Markets caters for the banking needs of business and corporate customers, including treasury and money market activities, asset finance, e-banking, wealth management and international services. Business and corporate banking services are provided via centrally-based relationship management teams and dedicated Business Centres located across both Northern Ireland and the Republic of Ireland.

Citizens

Citizens is the second largest commercial banking organisation in New England and the 10th largest (based on 31 December 2006 data) commercial banking organisation in the United States measured by deposits. Citizens provides retail and corporate banking services under the Citizens brand in Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey, New York state, Pennsylvania, Rhode Island and Vermont and the Charter One brand in Illinois, Indiana, Michigan

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and Ohio. Through its branch network Citizens provides a full range of retail and corporate banking services, including personal banking, residential mortgages and cash management.

In addition, Citizens engages in a wide variety of commercial lending, consumer lending, commercial and consumer deposit products, merchant credit card services, trust services and retail investment services. Citizens includes RBS National Bank, our U.S. credit card business, RBS Lynk, our merchant acquiring business, and Kroger Personal Finance, our credit card joint venture with the second largest U.S. supermarket group.

RBS Insurance

RBS Insurance is the second largest general insurer in the United Kingdom, by gross written premiums. It sells and underwrites retail, SME and wholesale insurance over the telephone and internet, as well as through brokers and partnerships. The Retail Division sells general insurance products direct to the customer utilising the brands of Direct Line, Churchill and Privilege. Through its International Division, RBS Insurance sells motor insurance in Spain, Germany and Italy. The Intermediary and Broker Division sells general insurance products through its network of independent brokers and selected retail partners.

Manufacturing

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

Manufacturing drives optimum efficiencies and supports income growth across multiple brands and channels by using a single, scalable platform and common processes wherever possible. It also leverages our purchasing power and has become the centre of excellence for managing large-scale and complex change.

The expenditure incurred by Manufacturing relates to costs principally in respect of the Group's banking and insurance operations in the United Kingdom and Ireland. These costs reflect activities that are shared between the various customer-facing divisions and consequently cannot be directly attributed to individual divisions. Instead, the Group monitors and controls each of its customer-facing divisions on revenue generation and direct costs whilst in Manufacturing such control is exercised through appropriate efficiency measures and targets. For financial reporting purposes the Manufacturing costs have been allocated to the relevant customer-facing divisions on a basis management considers to be reasonable.

The Centre

The Centre comprises group and corporate functions, such as capital raising, finance, risk management, legal, communications and human resources. The Centre manages the Group's capital requirements and Group-wide regulatory projects and provides services to the operating divisions.

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INFORMATION ABOUT SANTANDER

Overview

Banco Santander, S.A. is the parent bank of the Santander Group, one of the world's largest banking groups by market value, with a market capitalisation of €88.4 billion at the end of 2006. Santander's current legal name is Banco Santander Central Hispano, S.A. On 23 June 2007, the general meeting of shareholders of Santander approved the change of Santander's legal name to Banco Santander, S.A., which will become effective when regulatory approval has been obtained. Headquartered in Madrid, Spain, the Santander Group operates in three geographic areas: (i) Continental Europe; (ii) the United Kingdom; and (iii) Latin America, mainly Brazil, Mexico, Chile, Argentina, Puerto Rico, Venezuela and Colombia.

The Santander Group's main business areas are retail banking, wholesale banking and asset management and insurance. As at 31 December 2006, Santander had, on a consolidated basis, total assets of €833.9 billion and shareholders' equity of €40.1 billion. As at that date, Santander had, on a consolidated basis, a total capital ratio of 12.5% and Tier 1 capital ratio of 7.4%.

Santander is incorporated under, and governed by, the laws of, the Kingdom of Spain. Its registered office is located at Paseo de Pereda 9-12, Santander and its principal place of business is located at Ciudad Grupo Santander, Avda. de Cantabria s/n, 28660 Boadilla del Monte (Madrid), Spain. Telephone: 011 34 91 259 6520.

Geographic Areas

The activity of the Santander Group's operating units is managed on a geographic basis, which reflects the Santander Group's positioning in the world's three main currency areas:

Continental Europe.    This covers all retail banking business (including Banco Banif ("Banif"), the Santander Group's specialised private bank), wholesale banking and asset management and insurance conducted in Europe, with the exception of Abbey National plc ("Abbey"). This segment includes the following units: Santander Network, Banco Español de Crédito ("Banesto"), Santander Consumer Finance and Portugal. Continental Europe is the largest business area of the Santander Group.

United Kingdom (Abbey).    This covers only Abbey's business, mainly focused on retail banking in the United Kingdom.

Latin America.    The Santander Group maintains a significant position in Latin America, mainly in Brazil, Mexico, Chile, Argentina, Puerto Rico, Venezuela and Colombia, in light of its financial strength, high degree of diversification (by countries, businesses, products, etc.), and breadth and depth of its franchise.

Business Area

The activity of the Santander Group's operating units is also managed by business area:

Retail Banking

Retail Banking encompasses the Santander Group's entire retail banking business (except for the Corporate Banking business managed globally, as described below).

The retail banking activity in Continental Europe is carried out through the branch network of the Santander Group, with support from an increasing number of automated cash dispensers, savings books updaters, telephone banking services, electronic and internet banking.

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The Santander Group's consumer financing activities are conducted through its subsidiary Santander Consumer Finance and its group of companies. Most of the activity is in the business of auto financing, personal loans, credit cards, insurance and customer deposits. These consumer financing activities are mainly focused on Spain, Portugal, Germany and Italy (through Santander Consumer Bank). The Santander Group also conducts this business in the United Kingdom, Hungary, the Czech Republic, the Netherlands, Norway, Poland and Sweden.

Abbey became part of the Santander Group on 12 November 2004. Abbey is a significant financial services provider in the United Kingdom, being the second largest residential mortgage lender measured by outstanding balances. Abbey also provides a wide range of retail savings accounts, and operates across the full range of personal financial services.

The Santander Group engages in a full range of retail banking activities in Latin America, although the range of its activities varies from country to country. The Santander Group seeks to take advantage of whatever particular business opportunities local conditions present. The Santander Group engages in a wide array of deposit taking activities throughout Latin America, and other retail banking activities in Argentina, Brazil, Chile and Mexico. Its primary lending operations are in Chile, Mexico, Brazil and Puerto Rico.

Wholesale Banking

Wholesale Banking encompasses the Santander Group's Global Corporate Banking and Investment Banking and Markets businesses.

The Global Corporate Banking business covers transactional banking, trade finance, custody and basic financing. The Investment Banking business embraces financing solutions and corporate finance. The Markets business includes all the globally managed treasury departments and equities businesses. The Santander Group's treasury operations manage money, foreign exchange and fixed-income trading, using conventional instruments and derivatives, for its own account and for the accounts of its customers. The Santander Group also participates in fixed income capital market activities.

Asset Management and Insurance

Asset Management and Insurance encompasses the Santander Group's units that design and manage mutual and pension funds and insurance businesses.

The Santander Group's principal mutual fund operations are in Brazil, Mexico, Chile and Puerto Rico, and the Santander Group's main pension fund operations are in Chile, Mexico, Argentina, Peru and Colombia.

Financial Investments

In addition to the foregoing, the Santander Group has financial investments in a number of banking companies, principally in Europe. The following summarises the Santander Group's most important financial investments:

Sovereign Bancorp.    At 31 December 2006, the Santander Group had a 24.8% stake in Sovereign.

Attijariwafa Bank.    At 31 December 2006, the Santander Group had a 14.5% interest in Attijariwafa Bank, which engages mainly in trade finance and foreign investment activities. Together with Attijariwafa Bank, at 31 December 2006, the Santander Group had a 50% joint venture in Attijari International Bank Société Anonyme, which specialises in trade finance in Tangier's free trade zone.

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Industrial Portfolio

The majority of the Santander Group's industrial holdings portfolio consists of investments in strategic sectors related to the growth of the Spanish economy. Through its investments in these areas, the Santander Group aims to contribute to the Santander Group's consolidated results. The following table summarises the Santander Group's main industrial holdings at 31 December 2006:

Company

  Business

  Percentage Held

 

 

 

 

 
France Telecom España, S.A   Telecommunications   5.01
Cepsa   Oil and Petrochemicals   29.99
Grupo Corporativo ONO, S.A.   Telecommunications   4.47

The shares in RFS Holdings owned by the Santander Group are held by Santander Holanda B.V., a wholly owned subsidiary of Banco Santander S.A. The registered office of Santander Holanda B.V. is located at Martinus Nijhofflaan 2, 2624 EF Delft, the Netherlands, and its business telephone number is 011 31 15 789 0100.

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RECENT DEVELOPMENTS OF RBS AND ABN AMRO

RBS

Recent Trading Update

On 5 June 2007, we released the following trading update:

      "The Group continues to perform well in 2007 and we expect the rate of underlying earnings growth in the first six months of the year to be slightly higher than that implied by the consensus earnings forecast for the full year*. Highlights of our interim results for 2007 are expected to include good organic growth in income, disciplined expense control, measured investment in faster-growing businesses and continued strong credit metrics.

      * The market consensus forecast for 2007 adjusted earnings per RBS ordinary share is 72.1p.

      Group

      The Group is delivering good growth in total income in 2007, with non-interest income continuing to grow faster than net interest income. Loan volumes remain strong, though we have maintained our conservative approach towards unsecured personal lending, while deposit volumes also continue to grow strongly. Margin trends remain in line with previous guidance. As expected, reported income growth will be slightly affected by the weakness of the U.S. dollar.

      The Group expects to report a cost:income ratio slightly lower than for the full year 2006. Expenses continue to be tightly managed, and we have achieved further productivity gains from our manufacturing platform while investing in a number of high growth business opportunities.

      Overall credit metrics remain strong, with a benign corporate credit environment and a modest reduction in U.K. retail impairment losses. Total impairment losses are expected to represent a slightly lower proportion of total loans and advances.

      Returns on equity, and capital generation, remain strong. The Tier 1 capital ratio is expected to be stable in the middle of the 7% to 8% range.

      Divisions

      Divisional performances remain consistent with the trends displayed in 2006. Particular features are highlighted below.

      Corporate Markets continues to perform well across its activities, with continuing strength in Global Banking and Markets and sustained good growth in U.K. Corporate Banking. We are continuing to invest in expanding our geographical footprint, product range and customer relationships. Our risk profile remains conservative and the corporate credit environment is stable.

      Retail Markets is expected to show Wealth Management growing strongly and good growth in business banking, mortgages, savings and investment products. We have maintained our cautious approach to unsecured personal lending. Credit quality is improving, and we expect a modest reduction in impairment losses. Costs remain tightly controlled.

      Ulster Bank continues to deliver good growth across the island of Ireland in both business and personal lending. We continue to invest in the expansion of our footprint and in the broadening of our product range.

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      Citizens continues to diversify its sources of income and has achieved good growth in its corporate and commercial activities, as well as in home equity lending. U.S. retail deposit and lending volumes remain subdued but margins have stabilised. Costs are under tight control and underlying credit metrics remain strong, reflecting the high quality of our portfolio.

      RBS Insurance continues to focus on more profitable customers acquired mainly through its direct brands. Selective price increases have been introduced and RBS Insurance maintains its disciplined approach to risk selection. International and commercial activities continue to grow strongly. Expenses and claims remain rigorously managed.

      Sir Fred Goodwin, Group Chief Executive, commented: "We expect that our first half results will again demonstrate the Group's ability to deliver profitable organic growth, building on the many opportunities with attractive risk and reward characteristics that we have established in the UK and internationally. I am confident that the Group will continue to capitalise on these opportunities and deliver another strong performance in 2007."

Current Trading and Prospects

RBS's interim results for the six months to 30 June 2007 are expected to reflect good organic growth in income, disciplined expense control, measured investment in faster-growing businesses and continued strong credit metrics.

Profit before tax, intangibles amortisation and integration costs for the six months to 30 June 2007 is expected to be not less than £5,000 million. Adjusted earnings per share before intangibles amortisation and integration costs is expected to exceed 37 pence per RBS ordinary share based on an effective tax rate of 26%. The effective tax rate reflects an underlying rate of 29% adjusted to record the full effect (£160 million) on deferred tax of the change in the UK corporation tax rate in the first half of 2007.

The profit estimate has been made in respect of profit before tax, intangibles amortisation and integration costs rather than in respect of profit before tax, as RBS considers this measure provides more meaningful information to shareholders and allows for greater comparability with prior years. The profit estimate is based on the management accounts for the five months to 31 May 2007 and the preliminary results for the month of June 2007.

Bonus Issue

At our Annual General Meeting on 25 April 2007, RBS shareholders approved a bonus issue of two new RBS ordinary shares of 25p each for each existing RBS ordinary share held by each shareholder on the register on 4 May 2007. The newly issued RBS ordinary shares rank pari passu with the existing issued RBS ordinary shares and are not entitled to receive the final dividend for the financial year ended 31 December 2006. The purpose of the bonus issue was to lower the price per share, aligning RBS ordinary share prices closer with the average share prices for FTSE 100 companies and other banking stocks.

ABN AMRO

Recent Litigation

On 26 April 2007, Halpert Enterprises, an investor in ABN AMRO, filed a class action suit against ABN AMRO, individual ABN AMRO directors and Bank of America. Halpert Enterprises demanded, among other things, that ABN AMRO's management withdraw its consent to the sale of ABN AMRO North America and LaSalle, and that the court declare the U.S.$200 million termination fee agreed with Bank of America to be unenforceable. The suit, originally filed in a New York state court, has

155



been moved to the United States District Court for the Southern District of New York where it is currently pending.

On 27 April 2007, the VEB, P. Schoenfeld Asset Management Limited Liability Company and certain individuals filed a request before the Enterprise Chamber of the Court of Appeal at Amsterdam for an inquiry into the policy of ABN AMRO as from 1 January 2006 as well as for injunctions to stay the execution of the Bank of America Agreement. On 3 May 2007 the Enterprise Chamber of the Court of Appeal at Amsterdam issued a judgement in which ABN AMRO was prohibited to take any further steps in the execution of the Bank of America Agreement unless the ABN AMRO shareholders approved that agreement. On 15 May 2007, ABN AMRO filed an appeal with the Dutch Supreme Court against the judgement of the Enterprise Chamber of the Court of Appeal at Amsterdam.

On 4 May 2007, Bank of America filed a complaint against ABN AMRO in the United States District Court for the Southern District of New York for breach of the Bank of America Agreement for U.S.$21 billion. The initial pre-trial conference, originally scheduled for 15 June 2007, has been adjourned to 27 July 2007. Both ABN AMRO and Bank of America agreed to postpone proceedings in New York until the Dutch Supreme Court ruled on whether or not the LaSalle sale was to be put to a shareholder vote.

On 13 July 2007, the Dutch Supreme Court issued its ruling on the ABN AMRO appeal of 15 May 2007. That ruling was to the effect that the Board of Directors of ABN AMRO was entitled to sell LaSalle without the prior approval of ABN AMRO shareholders. As a result of the decision, the injunction granted by the Dutch Enterprise Chamber ceased to exist. Consequently, the Banks expect that the sale of LaSalle to Bank of America pursuant to the Bank of America Agreement will be effected. The Dutch Supreme Court decision did not deal with VEB's request to the Enterprise Chamber for an investigation into the policy of ABN AMRO as from 1 January 2006; this request is still pending before the Enterprise Chamber.

156



UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

The proposed acquisition of ABN AMRO is to be made by RFS Holdings, a company owned jointly by RBS, Fortis and Santander. RFS Holdings will be owned 38.3% by RBS, 33.8% by Fortis and 27.9% by Santander. RFS Holdings will be accounted for as a subsidiary of RBS as, although it does not have a majority of the voting rights, it will control the Board of Directors.

The unaudited pro forma condensed combined financial information (the "pro forma financial information") comprising a balance sheet as at 31 December 2006 (the "pro forma balance sheet") and an income statement for the year ended 31 December 2006 (the "pro forma income statement") and the related notes is based on the published audited financial statements of RBS and ABN AMRO prepared in accordance with IFRS, after giving effect to the proposed sale of LaSalle by ABN AMRO to Bank of America as announced by ABN AMRO on 23 April 2007 and filed with the SEC in a Form 6-K, incorporated herein by reference.

The pro forma balance sheet has been prepared after giving effect to the proposed acquisition of ABN AMRO by RFS Holdings using the purchase method of accounting and applying the estimates, assumptions and adjustments described in the accompanying notes. The pro forma income statement has been prepared after giving effect to the proposed acquisition of ABN AMRO by RFS Holdings and the reorganisation of businesses that will be carried out subsequent to the acquisition (the "Reorganisation"). The Reorganisation will comprise the agreed sale of certain businesses to Fortis and Santander and also the probable sale of the non-strategic businesses to third parties (see "Plans and Proposals for ABN AMRO").

Due to the limited information publicly available regarding the allocation of assets and liabilities to each of ABN AMRO's business segments that will be included in the reorganisation, a pro forma balance sheet cannot be prepared on a basis consistent with the pro forma income statement.

IFRS vary in certain significant respects from U.S. GAAP. Information relating to the nature and the effect of such differences is presented in Note 6 to the pro forma financial information. As no information is publicly available regarding the allocation of the existing differences between IFRS and U.S. GAAP related to ABN AMRO to each of its business segments that will be included in the reorganisation, a pro forma reconciliation to U.S. GAAP cannot be prepared on a basis consistent with the pro forma income statement.

The pro forma financial information has been prepared on the following basis:

Only publicly available information for ABN AMRO has been used.

The purchase consideration has been calculated assuming that 100% of the existing holders of ABN AMRO ordinary shares (including ABN AMRO ordinary shares represented by ABN AMRO ADSs) will accept the offer made by RFS Holdings.

The proposed sale of LaSalle to Bank of America is completed prior to the acquisition of ABN AMRO by RFS Holdings.

The balance sheet—the audited consolidated balance sheets of RBS and ABN AMRO at 31 December 2006 prepared in accordance with IFRS have been combined as if the proposed acquisition and the sale of LaSalle had occurred on 31 December 2006. No pro forma adjustments have been recognised for the reorganisation of the businesses to be transferred to Fortis and Santander or the non-strategic businesses to be disposed of, as ABN AMRO does not publish sufficiently detailed segmental balance sheet data to enable such pro forma information to be compiled.

157


The income statement—the audited income statements of RBS and ABN AMRO for the year ended 31 December 2006 prepared in accordance with IFRS have been combined as if the proposed acquisition, the sale of LaSalle and the Reorganisation had occurred on 1 January 2006.

The pro forma financial information reflects appropriate adjustments based solely on publicly available information for ABN AMRO and other estimates to account for the disposal of LaSalle, the proposed acquisition and, in the case of the pro forma income statement, the Reorganisation. If the disposal of LaSalle, the acquisition and the Reorganisation occur, the final determination of these estimates may result in material differences from the pro forma financial information.

        These estimates include:

The cash proceeds receivable from Bank of America in respect of the sale of LaSalle which may be adjusted in accordance with the terms of the Bank of America Agreement.

The costs expected to be incurred as part of the proposed acquisition, including RBS's costs of funding the cash element of its consideration.

The fair value of consideration to be given, including RBS's shares and the settlement of ABN AMRO's share option schemes and the fair values of assets acquired and liabilities assumed, as disclosed in ABN AMRO's published financial statements.

Potential synergy benefits have been excluded.

The presentation currency of the group is pounds sterling. Any changes in the foreign exchange rate prior to the date at which the U.S. offer is declared unconditional may also result in material differences.

The pro forma financial information and accompanying notes should be read in conjunction with the published audited financial statements of RBS included in its Annual Report on Form 20-F for the year ended 31 December 2006 filed with the SEC on 24 April 2007, the ABN AMRO financial statements for the year ended 31 December 2006 included in the ABN AMRO Annual Report on Form 20-F for the year ended 31 December 2006 filed with the SEC on 2 April 2007, and the unaudited consolidated IFRS balance sheet of 31 December 2006 and income statement for the year ended 31 December 2006 of LaSalle published by ABN AMRO within the ABN AMRO Unaudited Pro Forma Condensed Financial Statements furnished to the SEC on a Form 6-K on 25 April 2007, which are incorporated herein by reference.

The pro forma financial information is presented for information purposes only and does not represent what the results of operations would actually have been, had the acquisition occurred on the dates indicated nor does it project the results of operations for any future period.

158


Unaudited Pro Forma Condensed Combined Balance Sheet as at 31 December 2006

IFRS Basis

 
  RBS(1)
  ABN AMRO(2)
  Disposal of LaSalle(3)
  Acquisition
Adjustments(4)

  Notes
  Pro forma
Total

 
  (£m)

  (£m)

  (£m)

  (£m)

   
  (£m)

Assets                        
Cash and balances at central banks   6,121   8,265   9,733         24,119
Loans and advances to banks   82,606   88,385   (3,004 )       167,987
Loans and advances to customers   466,893   290,113   (32,472 ) 2,238   (a)   726,772
Treasury bills and other eligible bills, debt securities and equity shares   146,246   155,177   (17,117 ) 22   (a)   284,328
Intangible assets   18,904   6,313     22,428   (b)   47,645
Property, plant and equipment   18,420   4,207   (632 )       21,995
Derivatives   116,681   72,841           189,522
Other assets   15,561   37,069   (3,846 ) (295 ) (c)   48,489
   
 
 
 
     
Total assets   871,432   662,370   (47,338 ) 24,393       1,510,857
   
 
 
 
     
Liabilities                        
Deposits by banks   132,143   124,281   (8,121 ) (5 ) (a)   248,298
Customer accounts   384,222   241,624   (30,185 ) (54 ) (a)   595,607
Debt securities in issue   85,963   135,583   (11,635 ) 11,406   (d)   221,317
Settlement balances and short positions   49,476   37,863   (142 )       87,197
Derivatives   118,112   69,432           187,544
Subordinated liabilities   27,654   12,893   (3,912 ) (414 ) (e)   36,221
Other liabilities   28,372   23,317   (2,108 ) 911   (f)    50,492
   
 
 
 
     
Total liabilities   825,942   644,993   (56,103 ) 11,844       1,426,676
   
 
 
 
     
Net assets   45,490   17,377   8,765   12,549       84,181
   
 
 
 
     
Equity                        
Minority interests   5,263   1,542   (199 ) 30,247   (g)   36,853
Shareholders' equity   40,227   15,835   8,964   (17,698 ) (h)   47,328
   
 
 
 
     
Total equity   45,490   17,377   8,765   12,549       84,181
   
 
 
 
     

Notes:

(1)
The financial information for RBS has been extracted from the audited financial statements for the year ended 31 December 2006 included in its 2006 Annual Report on Form 20-F.

(2)
The financial information for ABN AMRO has been extracted from the audited financial statements for the year ended 31 December 2006 published by ABN AMRO in its 2006 Annual Report on Form 20-F. ABN AMRO financial statements data have been reformatted, to the extent possible, to RBS's balance sheet line item presentation.

(3)
See Notes to Pro Forma Condensed Combined Financial Information—Note 2 on page 163.

(4)
See Notes to Pro Forma Condensed Combined Financial Information—Note 3 on page 164.

159


Unaudited Pro Forma Condensed Combined Income Statement for the year ended 31 December 2006

IFRS Basis

 
  RBS(1)
  ABN
AMRO(2)

  Disposal of LaSalle(3)
  Acquisition
Adjustments(4)

  Notes
  Pro forma
Total

  Businesses to be transferred
to Fortis and Santander(5)(6)

  Pro
forma
RBS

  Shared Assets to be disposed of(5)(7)
  Pro forma Enlarged RBS(5)(8)
 
  (£m)

  (£m)

  (£m)

  (£m)

   
  (£m)

  (£m)

  (£m)

  (£m)

  (£m)

Continuing operations                                        
Net interest income   10,596   6,654   (1,441 ) (956 ) (i)   14,853   (5,261 ) 9,592   1,592   11,184
   
 
 
 
     
 
 
 
 
Net fee and commission income   5,194   4,132   (428 )       8,898   (2,214 ) 6,684   (62 ) 6,622
Income from trading activities   2,675   2,584   (46 )       5,213   (560 ) 4,653   (615 ) 4,038
Other operating income (excluding insurance premium income)   3,564   1,988   (292 )       5,260   (737 ) 4,523   (774 ) 3,749
Income of consolidated private equity holdings     3,621           3,621     3,621   (3,621 )
Insurance premium income less reinsurers' share   5,973   868           6,841   (868 ) 5,973     5,973
   
 
 
 
     
 
 
 
 
Non-interest income   17,406   13,193   (766 )       29,833   (4,379 ) 25,454   (5,072 ) 20,382
   
 
 
 
     
 
 
 
 
Total income   28,002   19,847   (2,207 ) (956 )     44,686   (9,640 ) 35,046   (3,480 ) 31,566
Operating expenses   12,480   14,118   (1,394 ) (396 ) (j)   24,808   (5,542 ) 19,266   (3,325 ) 15,941
   
 
 
 
     
 
 
 
 
Profit before other operating charges and impairment losses   15,522   5,729   (813 ) (560 )     19,878   (4,098 ) 15,780   (155 ) 15,625
Insurance claims less reinsurers' share   4,458   1,007           5,465   (1,007 ) 4,458     4,458
Impairment losses   1,878   1,264   (42 )       3,100   (1,024 ) 2,076   (74 ) 2,002
   
 
 
 
     
 
 
 
 
Operating profit before tax   9,186   3,458   (771 ) (560 )     11,313   (2,067 ) 9,246   (81 ) 9,165
Tax   2,689   615   (158 ) (165 ) (k)   2,981   (573 ) 2,408   214   2,622
   
 
 
 
     
 
 
 
 
Profit from continuing operations   6,497   2,843   (613 ) (395 )     8,332   (1,494 ) 6,838   (295 ) 6,543
   
 
 
 
     
 
 
 
 
Profit attributable to:                                        
Minority interests   104   44   (14 ) 1,531       1,665   (1,494 ) (171 ) (56 ) 115
Preference shareholders   191       198   (l)   389     389     389
Ordinary shareholders   6,202   2,799   (599 ) (2,124 )     6,278     6,278   (239 ) 6,039
   
 
 
 
     
 
 
 
 
    6,497   2,843   (613 ) (395 )     8,332   (1,494 ) 6,838   (295 ) 6,543
   
 
 
 
     
 
 
 
 
Per 25p ordinary share (pence)                                        
Continuing operations                                        
Basic   64.9                   62.1       62.1       59.7
Fully-diluted   64.4                   61.7       61.7       59.3

Number of shares (million)(m)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Weighted average ordinary shares   9,555                   10,111       10,111       10,111
Weighted average diluted ordinary shares   9,729                   10,285       10,285       10,285

160



Notes:

(1)
The financial information for RBS has been extracted from the audited financial statements for the year ended 31 December 2006 included in its 2006 Annual Report on Form 20-F.

(2)
The financial information for ABN AMRO has been extracted from the audited financial statements for the year ended 31 December 2006 published by ABN AMRO in its 2006 Annual Report on Form 20-F. ABN AMRO financial statements data have been reformatted, to the extent possible, to RBS's income statement line item presentation.

(3)
See Notes to Pro Forma Condensed Combined Financial Information—Note 2 on page 163.

(4)
See Notes to Pro Forma Condensed Combined Financial Information—Note 3 on page 164.

(5)
The pro forma income statement reflects the Reorganisation and has been extracted from the segmental disclosures published in ABN AMRO's 2006 Annual Report on Form 20-F without adjustment except for the disposal of LaSalle.

(6)
Businesses to be transferred to Fortis and Santander include Business Unit Netherlands (excluding wholesale clients), Business Unit Private Clients, Business Unit Asset Management, Business Unit Latin America (excluding wholesale clients businesses other than in Brazil) and Antonveneta. Wholesale clients businesses in the Netherlands and Latin America (excluding Brazil) are to be retained by RBS but the results attributable to these businesses cannot be separately identified from the information disclosed in ABN AMRO's 2006 Annual Report on Form 20-F. Therefore the results of these businesses are included in Businesses to be transferred to Fortis and Santander, solely for the purposes of the pro forma information.

(7)
Shared Assets to be disposed of comprises Business Unit Private Equity and Group Functions.

(8)
Businesses to be retained by RBS and forming part of Pro forma enlarged RBS include Business Unit North America (excluding LaSalle), Business Unit Global Clients, Business Unit Asia (excluding Saudi Hollandi), Business Unit Europe excluding Antonveneta and wholesale clients businesses in the Netherlands and Latin America (excluding Brazil). The results attributable to Saudi Hollandi, a non-strategic business to be disposed of, cannot be separately identified from the information disclosed in ABN AMRO's 2006 Annual Report on Form 20-F and hence are included within Pro forma Enlarged RBS. The results attributable to wholesale clients businesses in the Netherlands and Latin America (excluding Brazil) cannot be separately identified from the information disclosed in ABN AMRO's 2006 Annual Report on Form 20-F and hence are included in Businesses to be transferred to Fortis and Santander. This presentation is solely for the purposes of the pro forma information.

161


Notes to Pro forma Condensed Combined Financial Information

1.         Description of proposed acquisition and estimated pro forma purchase price

The pro forma financial information has been prepared on the basis of preliminary estimates and assumptions. The key assumptions used to prepare the pro forma financial information (excluding those in relation to the sale of LaSalle which are disclosed in Note 2) are:

The total estimated purchase price of the proposed acquisition in the amount of £49,140 million, reflecting the offer price of €35.60 in cash and 0.296 RBS ordinary shares for each ABN AMRO ordinary share and ABN AMRO ADS comprising:

cash consideration paid of €68,171 million (£45,746 million), including transaction costs.

the issue of 556 million RBS ordinary shares. The fair value of the ordinary shares is £3,559 million based on the closing price of RBS ordinary shares of £6.40 as listed in the LSE Daily Official List on 13 July 2007 and stated in the proposed offer for ABN AMRO announced on 16 July 2007.

ABN AMRO outstanding convertible financing preference shares of €767 million purchased for a cash consideration of €783 million (£525 million) and the formerly convertible preference shares purchased for cash at €27.65 per share, the closing price on 20 April 2007, for an aggregate consideration of €1.24 million (£1 million).

ABN AMRO employee share options exercised as part of the acquisition at a weighted average strike price of €19.35 per share, resulting in a cash inflow of €1,030 million (£691 million).

The ABN AMRO income statement has been translated at an average exchange rate for 2006 of 1.46714 (€:£) and the ABN AMRO balance sheet has been translated at the 31 December 2006 closing exchange rate of 1.4902 (€:£) being the exchange rates used by RBS to prepare its financial statements for the year ended 31 December 2006.

Fair value adjustments to financial assets and liabilities acquired are based on information disclosed in ABN AMRO's 2006 Annual Report on Form 20-F and are assumed not to relate to LaSalle. As there is no detailed information available regarding the average lives of these financial instruments, they have been amortised to the income statement on a straight-line basis over an estimated average life of 5 years.

Retirement benefit liabilities have been adjusted to reflect their fair value (the net pension liability at the balance sheet date as disclosed in the ABN AMRO 2006 Annual Report on Form 20-F).

The fair value of property, plant and equipment and other non-financial assets and liabilities is not materially different from the balance sheet carrying values disclosed in the ABN AMRO 2006 Annual Report on Form 20-F.

There is not sufficient publicly available information to split goodwill and other intangible assets arising from the proposed acquisition. Accordingly, the allocation of goodwill is preliminary and may change once a valuation of intangible assets has been carried out and consequently future results may change due to the amortisation of any intangible assets identified.

Tax rates have been applied to individual adjustments as appropriate to the nature and jurisdiction of the adjustment.

162


Estimated pro forma allocation of purchase price of the proposed acquisition

For the purposes of this pro forma financial information, the proposed acquisition has been accounted for using the purchase method of accounting in accordance with IFRS and U.S. GAAP. A preliminary allocation of the purchase price to reflect estimated fair values of certain ABN AMRO assets and liabilities has been reflected in the unaudited pro forma financial information. Based on initial estimates, and subject to changes upon completion of a final valuation, which may be material, the preliminary allocation of the estimated pro forma purchase price is as follows:

 
  (£m)
  (£m)
 
Cash and balances at central banks       17,998  
Loans and advances to banks       85,381  
Loans and advances to customers       259,879  
Treasury bills and other eligible bills, debt securities and equity shares       138,082  
Property, plant and equipment       3,575  
Derivatives       72,841  
Other assets       32,928  
       
 
Total assets       610,684  
       
 
Deposits by banks       116,155  
Customer accounts       211,385  
Debt securities in issue       123,562  
Settlement balances and short positions       37,721  
Derivatives       69,432  
Subordinated liabilities       8,567  
Other liabilities       22,120  
       
 
Total liabilities       588,942  
       
 
Net assets       21,742  
       
 
Estimated purchase consideration       49,140  
Less: Estimated fair value of net assets   21,742      
         Minority interests of ABN AMRO not acquired   (1,343 )    
   
     
        (20,399 )
       
 
Goodwill       28,741  
       
 

If the proposed acquisition occurs, RBS will undertake, after the closing date, a comprehensive assessment of the fair value of assets and liabilities acquired in order to estimate the value of goodwill. Identified intangible assets, upon completion of the fair value assessment, will be amortised over their estimated useful lives.

2.         Disposal of LaSalle

The proposed acquisition is subject to an offer condition that prior to completion of the proposed acquisition, the agreement for the sale of LaSalle to Bank of America has been completed in accordance with its terms. The estimated effects of the disposal of ABN AMRO North America Holding Company ("AANAH"), which principally consists of the retail and commercial banking activities of LaSalle, were based solely on publicly available information published by ABN AMRO within the ABN AMRO Unaudited Pro Forma Condensed Financial Statements furnished to the SEC on a Form 6-K on 25 April 2007.

ABN AMRO will receive cash consideration of U.S.$21,000 billion (£10,686 million) from Bank of America as set out in the Bank of America Agreement, which was furnished to the SEC by

163



ABN AMRO on Form 6-K on 24 April 2007. The cash consideration will be adjusted in accordance with the terms of the Bank of America Agreement if the actual net income of LaSalle for the three months ended 31 March 2007 and the net income of LaSalle, with certain limited adjustments, for the period commencing on 1 April 2007 and concluding on the earlier of the date of the closing of the sale of LaSalle and 31 December 2007 is less than a pre-defined income threshold. No adjustment has been made to the LaSalle purchase price as no information on the performance of LaSalle is available.

The estimated effects of the disposal of LaSalle on the pro forma balance sheet consisted of the following:

The elimination of the historical assets and liabilities presented in the unaudited condensed consolidated IFRS balance sheet at 31 December 2006 of AANAH.

The estimated cash proceeds of U.S.$21,000 billion (£10,686 million) receivable from Bank of America.

The estimated gain on sale of £8,964 million is based on the cash proceeds of £10,686 million and the net assets of AANAH as disclosed in ABN AMRO's Form 6-K referred to above.

The Bank of America Agreement also anticipates the conversion to equity by ABN AMRO, prior to completion, of U.S.$6,148 million (£3,129 million) of loans which it currently extends to AANAH. The impact of the conversion of these loans into equity is not included in the pro forma balance sheet or income statement as there is insufficient publicly available information to conclude whether these loans were included in the AANAH condensed consolidated balance sheet published in ABN AMRO's Form 6-K referred to above.

The estimated effects of the disposal of LaSalle on the pro forma condensed combined income statement consist of the elimination of the historical revenues and expenses presented in the unaudited condensed consolidated IFRS income statement for the year ended 31 December 2006 of AANAH.

No provision for taxation that may become payable on the sale of LaSalle to Bank of America has been included as there is insufficient publicly available information to assess any potential liability that may arise.

The impact of the disposal of LaSalle as disclosed above and included in the pro forma financial information is estimated based on publicly available information in the referred to documents and therefore is subject to change once the transaction is completed. The results related to the disposal of LaSalle should be read in conjunction with ABN AMRO's Form 6-K furnished to the SEC on 25 April 2007.

3.         Acquisition adjustments

The acquisition adjustments included in the pro forma financial information have been prepared as if the proposed acquisition was completed on 31 December 2006 for the balance sheet and on 1 January 2006 for the income statement.

Adjustments to the balance sheet reflect:

(a)
The fair value of ABN AMRO's financial assets and liabilities as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F.

(b)
The recognition of estimated purchased goodwill of £28,741 million arising from the proposed acquisition less the elimination of existing goodwill and other intangibles, £6,313 million, as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F. It is not

164


    possible separately to identify intangible assets from goodwill relating to the proposed acquisition.

(c)
Deferred tax adjustment in respect of the recognition of the present value of ABN AMRO's net post retirement employee benefit liabilities, £115 million, less the elimination of the deferred tax asset in respect of intangible assets including goodwill, as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F, £410 million.

(d)
Cash payable by RBS on the proposed acquisition of ABN AMRO, together with transaction costs, of £12,060 million, financed by the issuance of debt securities, less the fair value of ABN AMRO's debt securities in issue, £654 million, as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F.

(e)
The purchase for cash of the outstanding convertible financing preference shares and the redemption of the outstanding formerly convertible preference shares, £515 million, less the fair value of ABN AMRO's subordinated liabilities, £101 million, as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F.

(f)
The recognition of the present value of ABN AMRO's net post-retirement employee benefit liabilities at the balance sheet date as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F, £413 million and the deferred tax liability relating to the adjustment to fair value of ABN AMRO's financial assets and liabilities, £804 million, less the elimination of the deferred tax liability in respect of intangible assets including goodwill, as disclosed in ABN AMRO's 2006 Annual Report on Form 20-F, £306 million.

(g)
Minority interests of Fortis and Santander in RFS.

(h)
Issuance of RBS ordinary shares for £3,559 million and RBS equity preference shares for £3,542 million less the elimination of ABN AMRO's shareholders' equity upon consolidation of £15,835 million and the estimated gain arising from the disposal of LaSalle of £8,964 million.

No balance sheet adjustments have been made to reflect the businesses to be transferred to Fortis or Santander or the disposal of non-strategic businesses as ABN AMRO does not publish sufficiently detailed segmental balance sheet data in its 2006 Annual Report on Form 20-F to enable information related to these businesses to be identified.

Adjustments to the income statement reflect:

(i)
Amortisation through net interest income of the fair value adjustments to the financial assets and liabilities of ABN AMRO, £583 million and interest payable of £373 million in respect of funding RBS's investment in RFS Holdings.

(j)
Reversal of amortisation of other intangible assets recorded on ABN AMRO's balance sheet but not recognised separately from goodwill in the acquisition accounting, £378 million and the reduction in staff costs on recognition of the present value of ABN AMRO's net post-retirement employee benefit liabilities, £18 million.

(k)
Current and deferred tax charges and credits relating to the adjustments above at tax rates appropriate to the nature and jurisdiction of such adjustments.

(l)
Equity preference share dividends of £198 million relating to the equity preference shares issued by RBS to fund its investment in RFS Holdings.

(m)
Earnings per share and weighted average number of RBS shares adjusted for the two-for-one bonus issue of ordinary shares effected by RBS on 8 May 2007.

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4.         Post-acquisition effects on income statement

As there is not sufficient publicly available information in relation to the average life of financial instruments not recorded at fair value, the fair value adjustments to the financial assets and liabilities of ABN AMRO acquired have been amortised on a straight-line basis over an estimated average life of 5 years. The amortisation of those ABN AMRO other intangible assets not recognised on acquisition has been reversed. The pre-tax impact on the income statement for the years ending 31 December 2006 to 31 December 2010 is as follows:

 
  2006
  2007
  2008
  2009
  2010
 
 
  (£m)

  (£m)

  (£m)

  (£m)

  (£m)

 
Amortisation of fair value adjustments on financial assets and liabilities   (583 ) (584 ) (583 ) (583 ) (584 )
Reversal of amortisation of other intangible assets derecognised as a result of the proposed acquisition   378          
   
 
 
 
 
 
Total   (205 ) (584 ) (583 ) (583 ) (584 )
   
 
 
 
 
 

5.         Unaudited comparative historical and pro forma earnings per share data

Earnings used for the basic pro forma combined earnings per share calculation is the pro forma profit attributable to ordinary shareholders of RBS for the year ended 31 December 2006.

The weighted average number of shares outstanding during the year ended 31 December 2006 for the unaudited pro forma condensed combined income statement is based on the estimated equivalent weighted average number of ordinary shares for RBS following the proposed acquisition. The weighted average number of RBS shares in issue during the year ended 31 December 2006 has been adjusted for the two-for-one bonus issue of ordinary shares effected on 8 May 2007.

For illustrative purposes, earnings per share are calculated as if the ordinary shares issued by RBS as part of the consideration for the proposed acquisition of ABN AMRO had occurred on 1 January 2006. Under the terms of the proposed acquisition, RBS will issue 0.296 RBS ordinary shares for each ABN AMRO share, increasing the weighted average number of shares in issue during 2006 by 556 million shares.

166



Earnings per share data on an IFRS basis

 
  RBS
  Pro forma
Enlarged
RBS

 
  (£m)

  (£m)

Earnings from continuing operations        
Profit attributable to ordinary shareholders   6,202   6,039
Add back dividends on dilutive convertible non-equity shares   64   64
   
 
Diluted earnings attributable to ordinary shareholders   6,266   6,103
   
 
 
  Number of shares
 
  (Millions)

Number of ordinary shares        
Weighted average number of ordinary shares in issue during the year   9,555   9,555
Shares issued under proposed acquisition     556
   
 
Weighted average number of ordinary shares in issue following the proposed acquisition   9,555   10,111
Effect of dilutive share options and convertible non-equity shares   174   174
   
 
Diluted weighted average number of ordinary shares in issue following the proposed acquisition   9,729   10,285
   
 

6.         Reconciliation to U.S. GAAP

A reconciliation of the unaudited pro forma profit attributable to ordinary shareholders under IFRS to the unaudited pro forma net income available for ordinary shareholders under U.S. GAAP for the year ended 31 December 2006 and shareholders' equity under IFRS to shareholders' equity under U.S. GAAP as at 31 December 2006 are set out below. For additional information on these adjustments, refer to Note 47 in the RBS 2006 Annual Report on Form 20-F, to Note 50 in the ABN AMRO 2006 Annual Report on Form 20-F and to the Reconciliation to U.S. GAAP included in the ABN AMRO Unaudited Pro Forma Condensed Financial Statements furnished by ABN AMRO to the SEC on a Form 6-K on 25 April 2007.

No adjustments have been made in the unaudited pro forma IFRS—U.S. GAAP net income or shareholders' equity reconciliations to reflect ABN AMRO's discontinued operations, the businesses to be transferred to Fortis or Santander or the disposal of non-strategic businesses, as ABN AMRO does not publish sufficiently detailed data in its 2006 Annual Report on Form 20-F to enable IFRS—

167



U.S. GAAP differences related to these businesses to be identified. Therefore, the following reconciliation is not prepared on a continuing operations basis.

 
  RBS
  ABN AMRO
  Disposal of LaSalle
  Acquisition(1) and Other(2)(3) Adjustments
  Pro forma
Total

 
 
  (£m)

  (£m)

  (£m)

  (£m)

  (£m)

 
Consolidated statement of income                      
Profit attributable to ordinary shareholders—IFRS   6,202   3,214   (599 ) (2,124 ) 6,693  
Adjustments in respect of:                      
Acquisition accounting and intangibles   (62 ) (583 ) 32   551   (62 )
Property revaluation and depreciation   (470 )       (470 )
Leasehold property and restructuring provisions   46   (109 ) 109     46  
Loan origination   (91 )       (91 )
Allowance for loan losses     (40 ) 40      
Pension costs   (387 ) (162 ) 12   150   (387 )
Sale and leaseback transactions   (84 )       (84 )
Long-term assurance business   (12 )       (12 )
Financial instruments   196   (153 ) 214     257  
Derivatives and hedging   (454 ) 770       316  
Liability and equity   177   25     (25 ) 177  
Other   (31 ) 44   (192 )   (179 )
Taxation   410   35   (53 ) (199 ) 193  
   
 
 
 
 
 
Net income available to ordinary shareholders—U.S. GAAP   5,440   3,041   (437 ) (1,647 ) 6,397  
   
 
 
 
 
 
Earnings per share: Total—U.S. GAAP (pence)                      
Basic   56.9               63.3  
Fully-diluted   56.6               62.8  
                       

168


Consolidated shareholders' equity                      
Shareholders' equity—IFRS   40,227   15,835   8,964   (17,698 ) 47,328  
Adjustments in respect of:                      
Acquisition accounting and intangibles   692   2,983   (1,379 ) (1,604 ) 692  
Property revaluation and depreciation   (873 )       (873 )
Leasehold property and restructuring provisions   84   40   (40 )   84  
Loan origination   520         520  
Allowance for loan losses     (362 ) 362      
Pension costs   (168 ) (442 ) (92 ) 534   (168 )
Sale and leaseback transactions   (84 )       (84 )
Long-term assurance business   (59 )       (59 )
Financial instruments   (2,558 ) 216   (99 ) (117 ) (2,558 )
Derivatives and hedging   55   168     (168 ) 55  
Liability and equity   1,491   515     (515 ) 1,491  
Other   (34 ) 28   65   (93 ) (34 )
Taxation   784   (138 ) (71 ) 209   784  
   
 
 
 
 
 
Shareholders' equity—U.S. GAAP   40,077   18,843   7,710   (19,452 ) 47,178  
   
 
 
 
 
 

Notes:

(1)
Adjustments to the pro forma profit attributable to ordinary shareholders—IFRS of £2,124 million and to the pro forma shareholders' equity—IFRS of £17,698 million reflect fair value and acquisition adjustments under IFRS arising from the proposed acquisition and are explained in Note 3, Acquisition adjustments.

(2)
U.S. GAAP adjustments to net income available to ordinary shareholders previously reported by ABN AMRO relating to acquisition accounting and intangibles, pension costs, liability and equity, and estimated related tax effects are superseded by RBS's acquisition accounting adjustments.

(3)
The fair value of ABN AMRO's shareholders' equity under IFRS is not materially different from U.S. GAAP at 31 December 2006. Consequently, the U.S. GAAP adjustments to shareholders' equity previously reported by ABN AMRO have been reversed. No material GAAP differences are expected in the purchase accounting.

Earnings per share data on a U.S. GAAP basis

 
  RBS
  Pro forma
Total

 
  (£m)

  (£m)

Earnings        
Profit attributable to ordinary shareholders   5,440   6,397
Add back dividends on dilutive convertible non-equity shares   64   64
   
 
Diluted earnings attributable to ordinary shareholders   5,504   6,461
   
 

169


 
  Number of shares
 
  (Millions)

Number of ordinary shares        
Weighted average number of ordinary shares in issue during the year   9,555   9,555
Shares issued under proposed acquisition     556
   
 
Weighted average number of ordinary shares in issue following the proposed acquisition   9,555   10,111
Effect of dilutive share options and convertible non-equity shares   174   174
   
 
Diluted weighted average number of ordinary shares in issue following the proposed acquisition   9,729   10,285
   
 

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

The following table summarises share information for RBS and ABN AMRO on a historical basis, an unaudited pro forma combined basis for the combined RBS group and equivalent information per ABN AMRO ordinary share, based on the exchange ratio of 0.296 RBS ordinary shares for each ABN AMRO ordinary share.

The following information should be read in conjunction with the audited consolidated financial statements of RBS and ABN AMRO incorporated by reference into this document and the Unaudited Pro Forma Condensed Combined Financial Information included elsewhere in this document. The unaudited pro forma financial information below is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial position that would have been achieved if the proposed acquisition occured on the dates indicated nor is it necessarily indicative of the future results of operations or financial position of the combined group.

The historical book value per share is computed by dividing shareholders' equity attributable to ordinary shareholders at 31 December 2006 by the number of ordinary shares outstanding at that date. The unaudited pro forma condensed combined basic earnings per share from continuing operations is computed by dividing the pro forma condensed combined profit from continuing operations attributable to ordinary shareholders of the Pro forma Enlarged RBS group by the pro forma weighted average number of ordinary shares outstanding during the year to 31 December 2006.

Unaudited pro forma ABN AMRO ordinary share equivalents data are calculated by multiplying the unaudited pro forma per share condensed combined amounts by 0.296, the number of RBS ordinary shares that would be exchanged for each ABN AMRO ordinary share in the offers. The historical per share information of RBS and ABN AMRO was extracted from the consolidated financial statements incorporated by reference in this document.

171


 
  For the year ended 31 December 2006
 
  Published
  Adjusted(1)
RBS—Historical(1)