RBS Emerging Markets (BRIC) Growth Plan 1

Transcription

1 Equity Structured Business Retail area RBS Emerging Markets (BRIC) Growth Plan 1

2 Contents Key dates 2 Important terms 3 Introducing the RBS Emerging Markets (BRIC) Growth Plan 1 5 Is the Plan right for me? 6 What are the risks? 7 How is the investment return calculated? 8 RBS VC BRIC Index description 9 Key considerations when investing in products linked to the RBS VC BRIC Index 11 Questions 12 Contacts 17 Terms and Conditions 19 Key dates Plan available for sale 3 October 2011 to 4 November 2011 ISA transfer deadline 21 October 2011 ISA investment deadline 4 November 2011 Direct Account investment deadline 4 November 2011 SIPP/SSAS investment deadline 4 November 2011 Initial Valuation Date 5 December 2011 Start Date 12 December 2011 Final Valuation Date 5 June 2017 Maturity Date 12 June

3 Important terms Here is a short description of some of the important terms used in this Plan brochure. See the Terms and Conditions for the full definition of all terms used. Application Form The application form to invest in the Plan, either via an ISA or Direct Account, and can include a Transfer Application Form. Business Day Any day (other than Saturday or Sunday) on which banks are open for business in the UK. Client Money Money held in accordance with the provisions of the FSA s Client Assets Sourcebook relating to client money. Direct Account Any part of your investment that is not part of an ISA. Final Index Level The average of the closing levels of the Index on the 5th of each month in the last year of the Plan (13 monthly observations in total), or the next Business Day when not a Business Day. Final Valuation Date The date when we calculate the Final Index Level and the Maturity Value. FSA The Financial Services Authority, or any successor organisation. FSCS The Financial Services Compensation Scheme. Index The RBS VC BRIC Index. Initial Index Level The closing level of the Index on the Initial Valuation Date. Initial Valuation Date The date when we calculate the Initial Index Level. ISA An Individual Savings Account. ISA Manager The person who is approved to administer an ISA, and in respect of an ISA related to the Plan, means The Royal Bank of Scotland plc. Maturity Date The date on which your original investment and any additional return due to you is paid into a Client Money account, pending your further instructions. Maturity Value The final value of the Securities and the Plan, calculated as set out in the Plan brochure and the prospectus of the Securities. Plan RBS Emerging Markets (BRIC) Growth Plan 1, comprising the investments subscribed for through your ISA and/or your Direct Account, as specified in your Application Form(s). Plan Manager The company which is responsible for the administration of the Plan, which in this case is The Royal Bank of Scotland plc. Securities The securities, in the form of warrants, notes or certificates, which are available for purchase on your behalf as part of the Plan. Start Date The date on which Securities are purchased on your behalf. Transfer Application Form An application form to transfer your investment in an existing ISA to an ISA under the Plan. Valuation Date The two days per month when you can withdraw money from the Plan, and which will be the 8th and 21st of each month (or the next Business Day when not a Business Day). We, us, our and RBS plc The Royal Bank of Scotland plc. We are a member of The Royal Bank of Scotland Group plc (the RBS Group ). For information about our group of companies, please visit and click on About Us. 3

4 What are indices? Indices are tools for measuring the performance of a collection of financial assets. An index may, for example, be composed of shares in companies from a specific industry sector or a particular country or it may contain a range of commodities such as oil, gold or wheat. An index is therefore often useful as a benchmark which can be used to represent the performance of a particular market sector. What are emerging markets? Emerging markets are those countries that are typically experiencing rapid growth in their social, political and economic development. These markets are generally compared to the developed markets, such as the UK and the US, which typically have more mature, well developed economies. The term BRIC is an acronym that stands for Brazil, Russia, India and China. These four countries represent the largest economies in the emerging markets. What is market capitalisation? Market capitalisation is a measure of the size of a company. It is calculated by multiplying the number of shares in a company by the current share price. 4

5 Introducing the RBS Emerging Markets (BRIC) Growth Plan 1 The RBS Emerging Markets (BRIC) Growth Plan 1 (the Plan ) is a five and a half year investment linked to the RBS VC BRIC Index (the Index ). Your money will be used to buy Securities issued by The Royal Bank of Scotland plc. The Plan The Plan is designed to repay your original investment in full at maturity plus a return equal to any rise in the Index after averaging, as explained on page 8. The repayment of your original investment plus any return will depend upon the ability of The Royal Bank of Scotland plc ( RBS plc ) to pay what it owes you. In the event that RBS plc defaults or goes bankrupt you could lose some or all of your money. The RBS VC BRIC Index The RBS Volatility Controlled ( VC ) BRIC Index is one of an exclusive range of indices that are created, owned and maintained by RBS plc and designed to provide access to a variety of investment themes. The RBS VC BRIC Index is designed to provide exposure to the performance of the shares of some of the largest companies in Brazil, Russia, India and China ( BRIC ). Additionally, the RBS VC BRIC Index applies two automatic features; a Volatility Control Overlay and a Circuit Breaker. Both features aim to protect the Index against some of the inherent volatility exhibited by shares, and particularly emerging market shares, and cushion the effect of sudden market movements. More detailed information on the Index is provided later in this brochure. The RBS Emerging Markets (BRIC) Growth Plan 1 is only available via your financial adviser Before you invest in the Plan you should ensure that you read and understand this brochure, including the Terms and Conditions. You can only invest in this Plan if a financial adviser has confirmed it is suitable for you. Official Index name The official name of the Index is the RBS VC BRIC Index (EUR) ER 16%. 5

6 Is the Plan right for me? The points below highlight some of the factors you should consider with your financial adviser when deciding whether to invest in the Plan. The Plan may be right for you if: You have a minimum 5,000 to invest. You have enough money to cover any emergencies and are happy to keep your money invested for five and a half years. You want to know that your original investment will be repaid to you at the end of five and a half years (subject to the risk that RBS plc defaults or goes bankrupt and is unable to pay what it owes you). You accept the risk that you may not receive any return on your investment. You are happy for your money to be invested with RBS plc for five and a half years. You want the opportunity to take advantage of your capital gains tax annual exemption and it suits you that gains from this investment are likely to be taxed as a capital gain rather than as income. You want the opportunity to make a tax efficient return by investing in a stocks and shares ISA. You would like an investment linked to the RBS VC BRIC Index. The Plan may not be right for you if: You may need access to your money in the next five and a half years. You do not have any funds set aside for an emergency. You are looking for a regular income or dividends from your investment. You definitely want to receive a return on your investment. You are not willing to take the risk that RBS plc may default or go bankrupt during the life of the Plan. You want to add to your investment on a regular basis. You are not sure how the Plan works or have not understood this brochure. You do not want an investment linked to the RBS VC BRIC Index. 6

7 What are the risks? Your money will be used to buy Securities issued by RBS plc and will not be invested directly in the Index. These Securities will be linked to the performance of the RBS VC BRIC Index and will be held on your behalf from the Start Date until the Maturity Date. The Securities are a type of investment in RBS plc and RBS plc is legally obliged, if the Plan is held to maturity, to repay your original investment and any return that may be due. In the unlikely event that RBS plc were to default or go bankrupt, you could lose some or all of your original investment and any potential return. This is known as counterparty risk. Whether or not you receive any return on your investment is dependent on the performance of the RBS VC BRIC Index. Therefore, if the Final Index Level is less than or equal to the Initial Index Level, you will only receive back your original investment (subject to the risk described above). The Index is linked to a collection of underlying company shares in the BRIC countries. Prices of these shares can move up and down very quickly and may be negatively affected by global economic, financial and political developments. In particular: companies in emerging markets may be subject to certain risks and special considerations not typically associated with investing in other more established economies or securities markets. Examples of these risks include greater political and economic uncertainty, different accounting and reporting standards and a higher degree of government involvement in the economy. In the circumstances described on page 10, the exposure of the Index to the underlying company shares may change. If exposure falls below 100%, this will have the effect of limiting gains. If you decide to sell the Plan before maturity, the amount you receive back will be dependent on the market value of the Securities trading on the London Stock Exchange. This means that you could get back significantly less than you originally invested. If the return is not equal to or above the rate of inflation over the life of the Plan, the real value of your investment will fall, as your money will buy you less than it would have done when you invested it. Tax rules may change during the life of the Plan, which may affect the tax treatment of any return you receive. 7

8 How is the investment return calculated? On the Final Valuation Date we will calculate whether the Index has risen and whether any return is due on your original investment. To do this we will compare the Final Index Level with the Initial Index Level. If the Final Index Level is greater than the Initial Index Level, you will receive a return at maturity that is equal to the percentage by which the Final Index Level is greater than the Initial Index Level. If the Final Index Level is equal to or less than the Initial Index Level, you will not receive a return at maturity. You will receive only your original investment. Initial Index Level This is the closing level of the RBS VC BRIC Index on the Initial Valuation Date. Final Index Level This is calculated as the average of the closing levels of the Index on the 5th of each month over the last year of the Plan (13 monthly observations), or the next Business Day when not a Business Day. Averaging The Final Index Level is calculated as the average of the closing levels of the Index over the final year of the Plan (13 monthly observations). This process is known as averaging. Averaging may benefit the performance of the Plan if the Index falls over the averaging period. However, if the opposite occurs, this will constrain the Plan s performance when compared to a calculation method which does not use averaging. Examples of return Below is a table which illustrates some possible outcomes at maturity. Any return is dependent on the performance of the Index and these figures are given as examples only, in order to illustrate how the Plan works. Original investment Change in the RBS VC BRIC Index (comparing the Final Index Level against the Initial Index Level) Total amount received back (including your original investment) at maturity (gross) 10, % 15,000 10, % 11,000 10,000 0% 10,000 10,000-10% 10,000 10,000-50% 10,000 The returns stated are gross of any tax. It is expected that returns outside of an ISA may be subject to capital gains tax. See Types of investment on page 12. 8

9 RBS VC BRIC Index description What does the RBS VC BRIC Index measure? The RBS VC BRIC Index is designed to provide exposure to the shares of 40 of the largest companies based in Brazil, Russia, India and China, as measured by market capitalisation. The Index limits the exposure to any one country or any one company to ensure that the Index is broadly representative of the BRIC economies. Each BRIC country has a maximum weighting of 35% within the Index with each of the countries represented by its 10 largest companies. The individual companies have a maximum weighting of 10% within the Index. These maximum weightings will only apply at each re-weighting date (the process of re-weighting is explained below). The weighting of each country and/or each company within the Index will change as the prices of the underlying company shares change. As a result, twice a year the Index will re-set the weightings to the countries and companies back to the original limits; this is known as re-weighting. Top 10 companies within the Index as at 14 September 2011 Company Country Weighting in the Index China Mobile Ltd China 11.31% China Construction Bank Corp China 9.25% Gazprom OAO Russia 7.63% Petroleo Brasileiro S.A. Brazil 5.91% Vale S.A. Brazil 5.32% NK Rosneft OAO Russia 4.44% CNOOC Ltd China 4.20% Reliance Inds Industries Ltd India 3.36% Lukoil OAO Russia 2.84% MMC Norilsk Nickel Russia 2.83% 9

10 Country weighting within the Index n China 36.70% n Brazil 23.23% n Russia 26.54% n India 13.53% Source: Bloomberg, 14 September If you would like more detail on the Index please visit Volatility Control Overlay On a short term basis, markets can behave unexpectedly and this is particularly true of emerging market shares which can experience large movements in their price level. Volatility is one measure of these price movements, or of the amount by which the price level of a financial asset moves from its average price level over a set period of time. To limit the impact of this volatility, a Volatility Control Overlay is applied. The Index will have increased exposure to the underlying company shares during periods of low volatility but will proportionally reduce exposure as volatility increases. The exposure to the underlying company shares is adjusted daily and can vary from 0% to 100%. If the underlying company shares rise in a volatile manner then the Volatility Control Overlay may limit the effect of this rise. Circuit Breaker Because volatility in emerging market shares can be significantly greater than the volatility in developed market shares, the RBS VC BRIC Index applies a second feature called a Circuit Breaker. The Circuit Breaker protects the level of the Index from crashes in the underlying company shares. The Circuit Breaker aims to completely remove exposure to the underlying company shares when there is a sudden spike in volatility combined with a downward movement in the shares. If the Circuit Breaker is triggered, the exposure to the underlying company shares will be maintained at 0% for five days. If you would like more detail on the Index please visit 10

11 Key considerations when investing in products linked to the RBS VC BRIC Index You are not investing directly in the underlying company shares to which the Index provides exposure and therefore you will not receive dividends. The Index operates on the basis of pre-determined rules set by RBS plc. No assurance can be given that the strategy will be successful, generate positive returns or perform better than any benchmark or other indices. RBS plc has discretion in making certain decisions, calculations and corrections which may apply retrospectively or from the relevant date forward, for example, following the occurrence of market disruption events or index adjustment events. The exercise of this discretion may adversely affect the performance of the Index, though RBS plc must always act in good faith when making any decisions, calculations or corrections. Occasions can arise where RBS plc, or any member of the RBS Group, may have some form of conflict of interest in relation to the structure and operation of the Index. RBS plc maintains a Conflicts of Interest policy as required by the Financial Services Authority to manage any such conflict. The Index rules may be amended by RBS plc acting in a commercially reasonable manner. Any such amendment may be made without the consent of, or notice to, investors in products linked to the Index and may have an adverse effect on the level of the Index, though RBS plc must always act in good faith when making any amendments. The Index may be postponed or terminated if the prices of the underlying company shares are not published, or where, for example, the relevant stock exchanges fail to open or suspend or stop trading. The level of the Index may not be published or, in the event that it is not possible or practicable to continue, the Index may be terminated by RBS plc. Should the Index cease to exist, any product linked to this Index may be restructured or may terminate early. This may have a negative impact on the return on any investment in such a product. If any of these events occur, RBS plc may, as issuer of the Securities, adjust the calculation of payments or defer payments under those Securities. 11

12 Questions Qualifying investors Who can invest? You must be aged 18 or over to apply. You must be UK resident for tax purposes. The Plan is not available for US persons. How much can I invest? The minimum investment is 5,000. There is no maximum for Direct Account investments, ISA transfers or SIPP/SSAS investments. The total 2011/2012 ISA allowance is 10,680. Charges What are the charges? All charges applicable to the Plan have already been built into the Plan structure and so have been accounted for in the returns described in this brochure. These charges will be no more than 5.25% of your original investment and they incorporate all costs including management costs, service fees and any commissions payable to your adviser. How much will any advice cost? We will pay a commission, of up to 3% of your original investment, to the adviser who arranged your investment in the Plan on your behalf. You will be given details of the amount paid to your adviser in our confirmation of your investment. Types of investment Direct Account You can invest direct into the Plan as an individual or a joint account holder and also as a corporate body, a trust or a charity. ISA If you are ordinarily resident in the UK for tax purposes, you can invest up to a maximum of 10,680 via the Plan into a Stocks and Shares ISA. The total annual ISA allowance with all providers is 10,680 for the tax year 2011/2012. This includes any amount you may invest in a Cash ISA during the same year. This Plan is only available as a Stocks and Shares ISA. You can transfer all or part of any existing Stocks and Shares or Cash ISA investments above 5,000 into this Plan. If you transfer an ISA investment you have made in this tax year then you must transfer the full amount. Your existing provider may make a charge for transferring your ISA. You may also lose out on growth or interest while your ISA is being transferred. It is important that we receive your funds before the close of the offer period of this Plan which is 4 November If we receive your ISA transfer funds after this date we will return the cheque to your original ISA Manager. SIPP/SSAS You can invest pension monies via a Self Invested Personal Pension (SIPP) or Small Self Administered Scheme (SSAS). RBS plc places no limit on the maximum investment amount. 12

13 Tax Tax treatment depends on individual circumstances and may be subject to change in the future. These statements are not intended to be, nor should they be regarded as, legal or tax advice and you should consult your tax adviser to obtain advice about the particular tax treatment in relation to this Plan, particularly if you may be subject to tax in other jurisdictions. How will my investment be treated for tax purposes in the UK? All returns from the Plan will be paid gross. Direct Account It is expected, based on our understanding of current tax regulations, that any returns from the Plan for individuals and joint account holders will be treated as growth to capital and may be subject to capital gains tax. Individuals may be able to use their annual capital gains tax allowance exemption. ISA Under current legislation, the proceeds of Securities held within an ISA are not subject to either UK income tax or UK capital gains tax, and any gains or losses on your Securities will be disregarded for the purposes of the calculation of UK taxes. Making an investment How do I apply? The Plan is only available via your financial adviser and they will explain how to apply for the Plan. Before you invest in the RBS Emerging Markets (BRIC) Growth Plan 1, it is important that you read and understand this brochure, including the Terms and Conditions. You can only invest in this Plan if your financial adviser has confirmed it is suitable for you. What confirmation of my investment will I receive? Within five Business Days of our receipt of your money and a correctly completed Application Form, and subject to your financial adviser having satisfied certain conditions, we will send you a confirmation that your application has been accepted. We will also enclose details of your right to cancel within 14 days of us accepting your application. What happens to my money before the Start Date? We will place your money in a Client Money account with Lloyds TSB Bank plc. No interest will be paid. If Lloyds TSB Bank plc were to default or go bankrupt before Securities are purchased on your behalf on the Start Date and you suffered a loss as a result of this, you may be eligible to claim compensation from the UK Financial Services Compensation Scheme (the FSCS ). See What are the compensation arrangements? on page 16. What happens to my money on the Start Date? We will arrange that your money will be used to buy Securities issued by RBS plc with a fixed Maturity Date. We shall be the custodian of your Securities but these Securities and the Securities of other investors will be held by a sub-custodian on our behalf. You will however remain the beneficial owner. The Securities have been structured so that they can give the Plan return described earlier in this brochure. The return depends on the ability of RBS plc to pay what it owes you at maturity. 13

14 The credit rating is not investment advice and should not be seen as a recommendation to purchase, sell, or hold a financial obligation from a particular financial institution, they are simply one factor that you can look at when making a decision on whether to make a particular investment. A rating is not a guarantee that a particular institution cannot fail. Credit ratings What are credit ratings? Credit ratings can be a useful way to compare the credit risk associated with different product providers and related investments. Ratings are assigned by independent companies known as ratings agencies and they are reviewed regularly and are subject to change if the company s circumstances change significantly and the agency considers it necessary. Fitch s ratings range from AAA (Most Secure/Best) to D (Most Risky/Worst), Moody s ratings of these companies range from Aaa (Most Secure/Best) to C (Most Risky/Worst) and Standard & Poor s ratings range from AAA (Most Secure/Best) to D (Most Risky/Worst). A rating outlook indicates the likely rating trend over a one to two-year period. It reflects financial or other trends that have not yet reached the level that would trigger a rating change, but which may do so if such trends continue. A stable outlook means that the rating is unlikely to change in the short term. A negative outlook means that the rating may be lowered in the near future. The credit rating is not investment advice and should not be seen as a recommendation to purchase, sell, or hold a financial obligation from a particular financial institution. Credit ratings are simply one factor that you can look at when making a decision on whether to make a particular investment. A rating is not a guarantee that a particular institution cannot fail. What are the current RBS plc credit ratings? On 14 September 2011 RBS plc is rated AA-, with a stable outlook, by Fitch, Aa3 by Moody s and A+, with a stable outlook, by Standard & Poor s. On 24 May 2011 Moody s announced that the RBS plc rating of Aa3 was under review down. This means that the credit rating is being reviewed by Moody s for a possible downgrade. After making an investment How will you keep me up-to-date with my Plan? We will send a statement twice a year in April and October to the address you have given us. Information on the performance of the Index is available on our website at: Should you wish to find out any other information regarding your investment, please contact your financial adviser or contact us, see Contacts on page 17. Can I change my mind before the Start Date? You can change your mind within 14 days of the day you receive confirmation that your application has been accepted. To do this you must complete and return the cancellation form which is enclosed with your confirmation. If you do choose to cancel your investment in the Plan, simply fill out the cancellation form and return it to us at the address under Contacts. If you cancel the Plan and we receive your cancellation form before the Start Date we will return your original investment without any interest. If we receive your cancellation form on or after the Start Date we will return the market value of the Plan, which may be significantly less than your original investment. If you cancel an ISA or ISA transfer there is a risk that the ISA status of your investment will be lost. In our cancellation form we will ask you what you would like us to do with the funds. If you do not cancel you will remain invested in the Plan. 14

15 Can I withdraw my money before maturity? The Plan is designed to be held for the full five and a half year period until the Maturity Date, however you can sell all or part of your investment early if you need to. There will be two Valuation Dates each month, on the 8th and 21st, when you can sell the Securities and withdraw money from the Plan. In order to meet these dates we must receive your request by 12 noon on the Business Day immediately before the Valuation Date. Although you will not be charged any fee by RBS plc for withdrawing your investment before the Maturity Date, early termination of the arrangements we put in place for each investment will mean that, if you withdraw your investment early, it is likely you will receive significantly less than the value at maturity and you may well receive less than your original investment. The amount you receive will be based on the early withdrawal value of the Plan on the Valuation Date we process your request and not on the early withdrawal value on the day we receive your withdrawal request. You can withdraw amounts equal to 500 or more but, if you do want to keep the Plan open, you must leave at least 500 invested in it. If you want to transfer your ISA to another provider, the full ISA amount must be transferred. Partial transfers are not permitted. What happens if I die before the Plan matures? If you die before the Maturity Date, the Plan will become part of your estate. Your personal representatives will need to contact us in order to let us know how they wish to proceed with the Plan as part of probate/administration. If you made a Direct Account investment, your Plan will remain open until we have received instruction from your personal representatives. If you were invested in an ISA, your ISA will lose its ISA tax status and will be closed automatically. The Plan will be continued as a Direct Account investment until we receive instructions from your personal representatives. Your representatives will have two options: Close the Plan with the proceeds paid to your representatives. The value they receive will be subject to the current market value of the Securities so they may receive back less than you originally invested. Keep the Plan open and transfer it to a named beneficiary(ies) to continue the investment until maturity. If your representatives choose this option, the beneficiary(ies) must read and agree to the Terms and Conditions as detailed in this brochure. What happens at maturity? On the Final Valuation Date, we will calculate the total return due to you. Prior to the Maturity Date we will write and inform you of the options that are available to you. After we receive your instructions, we will process them and endeavour to meet your request within 5 Business Days of the Maturity Date or receipt of your instructions if later. Until we receive your instructions, we will hold your money in a Client Money account with Lloyds TSB Bank plc. No interest will be paid. If we do not receive your instructions within a reasonable time we may return your money to your nominated bank or building society account. 15

16 Further questions How can I get a copy of the issuer s prospectus for the Securities? The prospectus for the Securities in the Plan is available from us for free, please see Contacts on page 17. Do you provide additional support to advisers? We may provide advisers with support to help improve their service to you. This could include training, seminars and/or marketing materials. For specific details on any support provided, please contact your adviser or us. What are the compensation arrangements? Before the Start Date and after the Maturity Date Before the Securities are purchased on your behalf on the Start Date and after the Maturity Date, your money will be held in a Client Money account at Lloyds TSB Bank plc. If during these times, Lloyds TSB Bank plc defaults or becomes bankrupt and you suffered a loss as a result of this, you may be eligible to claim compensation from the Financial Services Compensation Scheme (the FSCS ). Deposit accounts are covered for up to 85,000 per firm, per customer. In the event that RBS plc itself defaults or becomes bankrupt during these periods your money would be returned to you since it is being held as protected Client Money segregated from RBS plc assets. From the Start Date to the Maturity Date After the Start Date and for the duration of the five and a half year period until the Maturity Date, your money will be invested in Securities issued by RBS plc. If RBS plc defaults or becomes bankrupt during this period you would not have a claim under the FSCS for that reason alone. There are other exceptional circumstances in which you may be able to claim compensation from the FSCS if RBS plc defaults or becomes bankrupt and had failed to meet its obligations in the management of the Plan. The maximum compensation in this scenario would be 50,000 per firm, per customer. Further information is available from your adviser or us. You can find more information about the FSCS (including eligibility to claim) on their website, or by calling What is my customer category? We will treat you as a Retail Client unless we agree otherwise. This means that you will receive the highest level of regulatory protection. What if I want to complain? If your complaint relates to the advice you received when purchasing the Plan, please contact your financial adviser. If you have a complaint about any aspect of the service we have provided, please contact us at: The Royal Bank of Scotland plc, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG, or call us on Copies of our complaint handling procedure are available, from the above contact details, on request. If you are unhappy with the way we have handled your complaint you can contact the Financial Ombudsman Service who may take the matter up on your behalf: Financial Ombudsman Service, South Quay Plaza, 183 Marsh Wall, London E14 9SR. 16

17 Contacts The Royal Bank of Scotland plc If you have any queries or if you require a copy of the issuer s prospectus for the Securities, please contact us at: The Royal Bank of Scotland plc BNY Mellon House Ingrave Road Brentwood CM15 8TG Tel: Lines are open between 9am and 5pm Monday to Friday. Calls may be recorded for training and monitoring purposes. Regulator RBS plc is authorised and regulated by The Financial Services Authority. Its address is: The Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS We are entered on their register under number You can check this at or by contacting them on About The Royal Bank of Scotland plc The Royal Bank of Scotland plc is a subsidiary of The Royal Bank of Scotland Group plc. The Royal Bank of Scotland Group plc is one of the world s foremost financial services companies. We work closely with our personal, commercial and large corporate and institutional customers to address their financial needs. Internationally, the RBS Group s brands include The Royal Bank of Scotland and RBS Coutts and NatWest in the UK, Citizens and Charter One in the United States and other well known financial services providers. This item can be provided in Braille or large print, please call us on to request this. For general queries, text phone users can contact us (using the Typetalk service) by prefixing our number with

18 18 The RBS VC BRIC Index is one of an exclusive range of indices that are created, owned and maintained by RBS plc

19 Terms and Conditions Please read these Terms and Conditions carefully and keep them for future reference. They provide you with important information about the Plan and, together with the Plan brochure and the Issuer s Prospectus, they form the agreement between you and us. When you sign the Application Form you are agreeing to these Terms and Conditions. The law which we take as the basis for establishing relations with you prior to the conclusion of the agreement is also the law of England. Definitions Application Form The application form to invest in the Plan, either via an ISA or Direct Account, and can include a Transfer Application Form. Business Day Any day (other than Saturday or Sunday) on which banks are open for business in the UK. Client Money Money held in accordance with the provisions of the FSA s Client Assets Sourcebook relating to client money. Direct Account Any part of your investment that is not part of an ISA. Final Index Level The average of the closing levels of the Index on the 5th of each month from, and including, 5 June 2016 to, and including, 5 June 2017 (13 monthly observations in total), or the next Business Day when not a Business Day, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. Final Valuation Date The date when we calculate the Final Index Level and the Maturity Value, which will be 5 June 2017, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. FSA The Financial Services Authority, or any successor organisation. FSA Rules The FSA s Handbook of Rules and Guidance, as amended from time to time. FSCS The Financial Services Compensation Scheme, or any successor organisation. HMRC Her Majesty s Revenue & Customs. Index The RBS VC BRIC Index. Initial Index Level The closing level of the Index on the Initial Valuation Date. Initial Valuation Date The date when we calculate the Initial Index Level, which will be 5 December 2011, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. ISA Individual Savings Account, which is a scheme of investment managed in accordance with the ISA Regulations by the ISA Manager under terms agreed between the ISA Manager and the investor. ISA Investment Any assets, including the Securities, within the ISA at any time. ISA Manager The person who is approved to administer an ISA, and in respect of an ISA related to the Plan, means The Royal Bank of Scotland plc. ISA Regulations The Individual Savings Account Regulations 1998, as amended or replaced from time to time. Issuer The issuer of Securities, which will be The Royal Bank of Scotland plc. Issuer s Prospectus The prospectus for the Securities. Maturity Date The date on which your original investment and any additional return due to you is paid into a Client Money account, pending your further instructions, and which will be 12 June 2017, subject to adjustment in accordance with the provisions of the Securities as set out on page 11 of this Plan brochure. Maturity Value The final value of the Securities and the Plan, calculated as set out in the Issuer s Prospectus and the Plan brochure. Plan The RBS Emerging Markets (BRIC) Growth Plan 1, comprising the investments subscribed for through your ISA and/or your Direct Account, as specified in your Application Form(s). Plan Manager The company which is responsible for the administration of the Plan, which in this case is The Royal Bank of Scotland plc. Securities The securities, in the form of warrants, notes or certificates, which are available for purchase on your behalf as part of the Plan. Start Date The date on which Securities are purchased on your behalf, which will be 12 December Transfer Application Form An application form to transfer your investment in an existing ISA to an ISA under the Plan. Valuation Date The two days per month when you can withdraw money from the Plan, and which will be the 8th and 21st of each month (or the next Business Day when not a Business Day). We, us, our and RBS plc The Royal Bank of Scotland plc. We are a member of The Royal Bank of Scotland Group plc (the RBS Group ). For information about our group of companies, please visit and click on About Us. 19

20 1. Application 1.1 The Royal Bank of Scotland plc is authorised and regulated by the FSA. Under these Terms and Conditions, we act as both Plan Manager (which means that we are responsible for the administration of your Plan) and as ISA Manager (which means that, where you invest via an ISA, we administer your ISA). 1.2 You may open a Plan on the terms of the Plan brochure, the Issuer s Prospectus and these Terms and Conditions. To open a Plan, you should complete the relevant Application Form (either ISA or (non-isa) Direct Account) and send it to the address on the relevant Application Form. 1.3 Upon receipt of a duly completed Application Form and cheque (where required), the Plan Manager may accept your application subject to these Terms and Conditions, and subject to your financial adviser having satisfied various procedural requirements relating to the Plan. Completed Application Forms and payments must be received by the deadlines specified in the Plan brochure. We reserve the right to reject an application for any reason, including, specifically, a failure by your financial adviser to meet our requirements before the Initial Valuation Date. Since this failure may take place after the deadlines relating to the receipt of your completed Application Forms and payments specified in the Plan brochure, we may be required to provide notice of rejection after such deadlines and therefore after we have indicated acceptance to you. In the event of an application being rejected, we will notify you and your financial adviser as soon as practicably possible. 1.4 Within five Business Days of accepting your application, we will confirm your application to open a Plan. 1.5 Money held by RBS plc prior to Securities being purchased on your behalf on the Start Date AND then, between either early termination or final redemption at the Maturity Date and final settlement with you, will be held by RBS plc as Client Money in an account with a third party bank appointed by RBS plc for these purposes. No interest will be payable on such Client Money balances held by the third party bank. The third party bank for the Plan will be Lloyds TSB Bank plc. 2. ISA Accounts 2.1 You must subscribe to your ISA with either your own money or by the transfer of the proceeds of an existing ISA already held by you. Transfers of existing ISAs will normally be arranged by us with the existing ISA Manager(s) following our receipt of a Transfer Application Form from you, at which point we will contact your existing ISA Manager(s) to arrange the transfer for you. Once the proceeds from the existing ISA have been transferred, your ISA will be subject to these Terms and Conditions. 2.2 To effect an ISA transfer, you should complete a Transfer Application Form and send it to the address on the form. A cancellation notice will be sent to you upon our acceptance of your Transfer Application Form. 2.3 You may instruct RBS plc to transfer to another approved ISA Manager the whole of your ISA, subject to and in accordance with the ISA Regulations. Transfers will be processed by RBS plc in accordance with clause 13 as soon as we are reasonably able but in any event within 30 days of receipt of a valid instruction. 2.4 Generally, ISAs can be either cash ISAs or stocks and shares ISAs. Where you are subscribing for a stocks and shares ISA you must not have subscribed, and may not subscribe in the future, to another stocks and shares ISA in the same tax year. Please note that the Securities may be held only in a stocks and shares ISA under the ISA Regulations. 2.5 You will immediately inform us in writing if you cease to be a qualifying individual for the purposes of the ISA Regulations. We will notify you if, by reason of any failure to satisfy the provisions of the ISA Regulations, an ISA has, or will, become void. Where an ISA becomes void for any reason, in the absence of instructions otherwise from you, we will continue to hold the Securities for you, but in a Direct Account and you will lose any favourable tax treatment applicable. 2.6 We shall not accept any further amounts into an ISA if the ISA Regulations no longer give you the right to invest in that ISA. 3. Custody 3.1 RBS plc will act as custodian of your Securities purchased as part of the Plan. RBS plc has appointed The Bank of New York Mellon SA/NV, London Branch (the Sub-custodian ) in the UK to hold and administer your Securities on our behalf. We may change this Sub-custodian from time to time as we consider appropriate. At all times, you will, and indeed must, remain the beneficial owner of the Securities purchased on your behalf as part of the Plan. Where a certificate or other document evidencing title to an ISA Investment is issued, it shall be held by RBS plc or as we may direct. 3.2 Your Securities will be registered in the name of the Subcustodian s nominee (the Nominee ). We have agreed with the Sub-custodian that your Securities will not be lent to any third party and money may not be borrowed on anybody s behalf against the security of your Securities. 3.3 Although the amount of Securities that you hold will be recorded and separately identified by RBS plc in its records, your holding will not be identifiable by separate documents or certificates of title and will be pooled with all other holders of the Securities. Therefore, in the event of our default where there may be a shortfall in the total pool of Securities held by RBS plc, this shortfall may be shared pro rata among all relevant investors. 20

21 4. Taxation 4.1 Under current legislation, the proceeds of Securities held within an ISA are not subject to either UK Income Tax or UK Capital Gains Tax, and any gains or losses on your Securities will be disregarded for the purposes of the calculation of UK taxes. 4.2 Where, however, your Securities are held through the Direct Account (and therefore not subject to the ISA tax shelter) you may be subject, depending on your personal circumstances, to UK tax on any income received or any capital gain arising on disposal. These statements are based on current legislation, regulations and practice, all of which may change. 4.3 Where any deduction or withholding for or on account of tax is required by law (a Tax Deduction ) from any amount otherwise payable, we shall be entitled to make such Tax Deduction and shall not be required to make any increased payment to compensate you for such Tax Deduction. 5. Death In the event of your death, your ISA will lose its ISA status immediately, and any gains or losses after that date will not benefit from the ISA tax shelter. The investment forms part of your estate for Inheritance Tax purposes and, accordingly, we shall act on the instructions of your personal representatives. Your personal representatives can sell your Securities or, subject to these Terms and Conditions, transfer them to your beneficiaries. 6. Maturity Under the terms of the Plan, the final value of the Plan will be calculated on the Final Valuation Date. Prior to the Maturity Date, we will contact you to inform you of your options at maturity and any action required by you. Upon receipt of your valid instructions, we will process them and endeavour to meet your request within 5 Business Days of the Maturity Date or receipt of your instructions, if later. Payment(s) will be made in accordance with clause 13 and subject to any requirements under clause 19. Any sums owing to you, that are not immediately paid, will be held by us as Client Money. Interest will not be paid on such sums. We may return the funds to you if we don t receive your instructions. 7. Conflicts of interest 7.1 RBS plc is a multi-service financial institution, and occasions can arise where we, one of our clients or another member of the RBS Group, may have some form of conflict of interest in relation to the business which is being transacted for you. RBS plc maintains a Conflicts of Interest policy as required by the FSA Rules to manage any such conflict to ensure that customers are not affected by any conflict. In the event that it is not possible to properly manage any conflict, we shall inform you as soon as possible and obtain your instructions. 7.2 For the avoidance of doubt, nothing in this clause will restrict us from providing services to other customers. 8. Compensation 8.1 RBS plc is member of the FSCS, which means that you may be entitled to compensation in the event of our default. Further information is available on request, but in broad terms, your rights are as follows: (a) Money held by us as Client Money will be returned to you and will not be affected by our default. (b) The third party bank that will hold Client Money is also a member of the FSCS; on its default, if you are an eligible claimant under the compensation scheme rules, you may be entitled to compensation of up to 85,000. (c) Where we default in our obligations as Plan Manager under these Terms and Conditions and are insolvent, you may be entitled to compensation of up to 50,000 if you are an eligible claimant under the FSCS rules. 8.2 You should be aware that compensation is not available merely because the Securities perform less well than you expected or because RBS plc becomes insolvent and is unable to pay you back the value of the Securities. 9. Complaints 9.1 If you wish to complain about the Plan or the service we provide to you as the Plan Manager or as the ISA Manager, we have procedures designed to resolve your complaint effectively. Initially you should write to: RBS Administration, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG. 9.2 You may have a right to complain to the Financial Ombudsman Service if you are not satisfied with our resolution of your complaint. Further details are available on request. 10. Cancellation rights 10.1 RBS plc will give you the right to cancel your Plan within 14 days of our acceptance of your Application Form in accordance with the requirements of the FSA Rules. You will also be informed of your right to cancel in the information that we send you on receipt of your Application Form. Alternatively you can write to us at RBS Administration, BNY Mellon House, Ingrave Road, Brentwood, Essex CM15 8TG. If you do so, please provide your name, address and reference number with clear instructions to cancel your investment If you exercise your right to cancel (or if your application is rejected) within 14 days and we receive such cancellation notice before the Start Date, we will return your cash subscriptions without any interest. Valid cancellation notices received five calendar days or less before the Start Date will be processed at the next available Valuation Date after the Start Date (see clause 12.7), and you will receive your cash subscriptions, without any interest, after such Valuation Date If we receive your cancellation notice on or after the Start Date, we will return to you, without any interest, your cash subscriptions, but the amount repaid to you may be subject to a market value adjustment. 21

22 10.4 All cancellations will require full clearance of your original cash subscriptions (minimum 15 Business Days) and any requirements under clause 19 to be satisfied before we can issue payment to you. Interest will not be payable on such sums When cancelling an ISA investment, including ISA transfers, you may lose any favourable tax treatment applicable Where you do not exercise your cancellation rights, the Plan will continue in line with the Terms and Conditions. 11. Record keeping 11.1 At all times you or your nominated agent may request a copy of entries in our records relating to your investments in accordance with the FSA Rules and the Data Protection Act 1998, as may be amended from time to time We will prepare a statement twice a year to report on the value of Securities held through your ISA and/or your Direct Account. These will be prepared as at the 31 March and 30 September (or the next Business Day when not a Business Day) and then issued within 25 Business Days of being prepared We may employ agents in connection with the services we are to provide and may delegate any or all of our powers or duties to any delegate(s) of its choice in accordance with the ISA Regulations. We will satisfy ourselves that any person or entity to whom any functions or responsibilities are delegated under these Terms and Conditions is competent to carry out those functions and responsibilities. We shall not be liable for the fraud, negligence or wilful default of any such agent or delegate. This shall not exclude or restrict any liability towards you to which, by virtue of the ISA Regulations, the Financial Services and Markets Act 2000, or the FSA Rules, we may be subject. 12. Termination/sale of Securities 12.1 The Plan or any account comprised in it may be terminated immediately by us by giving written notice to you if in our opinion it is impossible to administer the Plan or that account in accordance with the ISA Regulations or if you are in breach of the ISA Regulations or these Terms and Conditions The ISA will terminate automatically with immediate effect if it becomes void under the ISA Regulations. We will notify you in writing if the ISA becomes void outlining the options available We may terminate the Plan at any time for reasons beyond our reasonable control. Where this happens, and we are unable to resolve the issue causing the problem, we shall give you a reasonable period of written notice We may terminate the Plan at any time should you fail to pay any money due You may terminate the Plan or any account comprised in it at any time by giving us written notice to that effect. You should be aware that if you terminate the Plan before the Maturity Date you may not get back the whole amount you originally invested. At our discretion you may also choose to maintain your Plan, but sell a specified number of Securities. However, in the case of ISA transfers to another provider, only full transfers are possible, partial transfers are not permitted After the Start Date we value the Plan on the 8th and 21st of each month (or the next Business Day when not a Business Day). The deadline for receipt of written instructions is 12 Noon on the Business Day immediately before the specified Valuation Dates Terminations/sale instructions or outward ISA transfer requests received on or after the Start Date will be carried forward to the next available Valuation Date after the Start Date (see clause 12.6). At this point RBS plc will sell the Securities. We wish to remind you that early termination may result in a loss of capital and, if your Plan is an ISA, it may lose its ISA status in accordance with the ISA Regulations Termination of the Plan or any account comprised in it will not affect any legal rights or obligations which may have already arisen. On termination, we will promptly account to you for the proceeds of sale of the Securities held through your Plans in accordance with clause 13, save that we will be entitled to retain any funds required to pay any outstanding tax or other amounts payable from the Plan For any termination of a Direct Account, we will require full clearance of your original subscription (minimum 15 Business Days) and any requirements under clause 19 to be satisfied before we can issue payment to you. Interest will not be payable on such sums Notwithstanding any other term hereof, on any termination of an ISA or sale of a discretionary number of Securities from an ISA, we will pay you the relevant amounts in accordance with clause 13 as soon as we are reasonably able but in any event within 30 days of receipt of a valid instruction. 13. Payments We may, at our discretion, send proceeds to you (e.g. upon termination, maturity etc.) by cheque or by transferring the funds into the bank or building society account from where the initial Plan investment originated. If any payment is requested to an account other than the account from where the initial Plan investment originated, you agree to us carrying out any necessary verification checks as per clause 19 prior to us releasing payment, during which time money will be held by us as per clause