INFORMATION MEMORANDUM dated 29 April 2015

Permanent tsb p.l.c. (a limited liability company registered in Dublin under No. 222332) €125,000,000 Fixed Rate Resettable Additional Tier 1 Securities Issue price: 100.029 per cent.

The €125,000,000 Fixed Rate Resettable Additional Tier 1 Securities (the "Securities") will be issued by Permanent tsb p.l.c. ("Permanent tsb" or the "Issuer") on or about 6 May 2015 (the "Issue Date"). The Securities will bear interest on their principal amount from (and including) the Issue Date to (but excluding) 1 April 2021 (the "First Reset Date"), at a rate of 8.625 per cent. per annum and thereafter at the relevant Reset Interest Rate as provided in Condition 5. Interest will be payable on the Securities annually (save for the first short interest period from the Issue Date until 1 April 2016) in arrear on 1 April in each year, provided that the Issuer may elect to cancel any interest payment (in whole or in part) at its full discretion, and must cancel payments of interest (i) in the circumstances described in Condition 5.1 or 8.1 and/or (ii) if and to the extent that such payment could not be made in compliance with the Solvency Condition as defined in Condition 3.2. Any interest which is so cancelled will not accumulate or be payable at any time thereafter, no amount will become due from the Issuer in respect thereof and cancellation thereof shall not constitute a default for any purpose on the part of the Issuer.

Upon the occurrence of a Trigger Event, the Securities will be immediately and mandatorily redeemed as of the Conversion Date and settled (such redemption and settlement being the "Conversion" and the term "converted" shall be construed accordingly) by the allotment, issue and delivery by Permanent TSB Group Holdings plc (the "Parent") of fully paid registered ordinary shares of the Parent to the Securityholders, all as more fully described in Condition 8.

For so long as any Securities are outstanding, the Parent has covenanted in a Trust Deed dated 6 May 2015 (the "Trust Deed"), inter alia, to allot, issue and deliver on the Conversion Settlement Date such number of Parent Ordinary Shares to the Settlement Shares Depositary to be held for the Securityholders in respect of each outstanding Security being converted at such time as may be required in accordance with the terms and conditions of the Securities (the "Conditions").

The Securities are perpetual securities with no fixed redemption date, and the Securityholders have no right to require the Issuer to redeem or purchase the Securities at any time. The Issuer may, in its discretion but subject to Supervisory Permission, and compliance with the Solvency Condition, elect to (a) redeem all (but not some only) of the Securities at their principal amount, together with interest accrued and unpaid from and including the immediately preceding Interest Payment Date up to (but excluding) the redemption date, (i) on the First Reset Date or on any Interest Payment Date thereafter or (ii) at any time following the occurrence of a Tax Gross-Up Event (as defined in Condition 20) or a Capital Disqualification Event (as defined in Condition 7.3) which is continuing, or (b) repurchase the Securities at any time in accordance with the then prevailing Regulatory Capital Requirements.

The Securities are not intended to be sold and should not be sold to retail clients in the EEA, as defined in the rules set out in the UK Temporary Marketing Restriction (Contingent Convertible Securities) Instrument 2014 (as amended or replaced from time to time, the "TMR") other than in circumstances that do not and will not give rise to a contravention of those rules by any person. Potential investors are referred to the section headed "Restrictions on marketing and sales to retail investors" on pages 2 to 3 of this Information Memorandum for further information. Potential investors should read the whole of this document, in particular the "Risk Factors" set out on pages 14 to 53.

Application has been made to the Irish Stock Exchange for the approval of this Information Memorandum as listing particulars. Application has been made to the Irish Stock Exchange for the Securities to be admitted to the official list and to trading on the global exchange market (the "Global Exchange Market") which is the exchange regulated market of the Irish Stock Exchange. The Global Exchange Market is not a regulated market for the purposes of the Markets in Financial Instruments Directive (2004/39/EC) ("MiFID").

The Securities will be issued in registered form and available and transferable in minimum amounts of €200,000 and integral multiples of €1,000 in excess thereof. The Securities will initially be represented by a global certificate in registered form (the "Global Certificate") and will be registered in the name of a nominee of a common depositary for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking, société anonyme ("Clearstream, Luxembourg" and, together with Euroclear, the "Clearing Systems").

Sole Structuring Advisor, Sole Co-ordinator and Lead Manager

Deutsche Bank

Joint Lead Manager

Davy This Information Memorandum may be used only for the purposes for which it has been published.

The Issuer accepts responsibility for the information contained in this Information Memorandum. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Information Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.

Certain information in this Information Memorandum has been extracted or derived from independent sources. Where this is the case, the source has been identified. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by the relevant source, no facts have been omitted which would render the reproduced information inaccurate or misleading.

This Information Memorandum is to be read in conjunction with all documents which are deemed to be incorporated herein by reference (see "Documents Incorporated by Reference"). This Information Memorandum should be read and construed on the basis that such documents are incorporated in and form part of the Information Memorandum.

No person is or has been authorised by the Issuer to give any information or to make any representation not contained in or not consistent with this Information Memorandum or any other information supplied in connection with the offering of the Securities and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer.

Neither Deutsche Bank AG, London Branch nor J&E Davy (the "Managers") nor any of their respective affiliates have authorised the whole or any part of this Information Memorandum and none of them makes any representation or warranty or accepts any responsibility as to the accuracy and completeness of the information contained in this Information Memorandum.

None of the Minister for Finance of Ireland (the "Minister"), the Department of Finance of Ireland, the Irish Government, the National Treasury Management Agency or any person controlled by or controlling any such person, or any entity or agency of or related to the Irish State, or any director, officer, official, employee or adviser (including without limitation legal and financial advisors) of any such person (each such person, a "relevant person" for the purposes of this paragraph) accepts any responsibility for the contents of, or makes any representation or warranty as to the accuracy, completeness or fairness of any information in, this Information Memorandum or any document referred to in this Information Memorandum or any supplement or amendment thereto (each a "transaction document" for the purposes of this paragraph). Each relevant person expressly disclaims any liability whatsoever for any loss howsoever arising from, or in reliance upon, the whole or any part of the contents of any transaction document. No relevant person has authorised or will authorise the contents of any transaction document, or has recommended or endorsed the merits of the offering of securities or any other course of action contemplated by any transaction document.

Neither this Information Memorandum nor any other information supplied in connection with the offering of the Securities (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the Issuer that any recipient of this Information Memorandum or any other information supplied in connection with the offering of the Securities should purchase any Securities. Each investor contemplating purchasing any Securities should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Information Memorandum nor any other information supplied in connection with the offering of the Securities constitutes an offer or invitation by or on behalf of the Issuer to any person to subscribe for or to purchase any Securities in any jurisdiction where such offer or invitation is not permitted by law.

Neither the delivery of this Information Memorandum nor the offering, placing, sale or delivery of the Securities shall in any circumstances imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other information supplied in connection with the offering of the Securities is correct as of any time subsequent to the date indicated in the document containing the same.

The Securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"). Subject to certain exceptions, the Securities may not be offered, sold or delivered within the United States or to U.S. persons.

Restrictions on marketing and sales to retail investors

The Securities are complex financial instruments and are not a suitable or appropriate investment for all investors. In some jurisdictions, regulatory authorities have adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as the Securities to retail investors.

2 In particular, in August 2014, the U.K. Financial Conduct Authority (the "FCA") published the TMR which took effect on 1 October 2014. Under the rules set out in the TMR (as amended or replaced from time to time, the "TMR Rules"), certain contingent write-down or convertible securities, such as the Securities, must not be sold to retail clients in the European Economic Area (the "EEA") and nothing may be done that would or might result in the buying of such securities or the holding of a beneficial interest in such securities by a retail client in the EEA (in each case within the meaning of the TMR Rules), other than in accordance with the limited exemptions set out in the TMR Rules.

The Managers are required to comply with the TMR Rules. By purchasing, or making or accepting an offer to purchase, any Securities from the Issuer and/or the Managers, each prospective investor represents, warrants, agrees with, and undertakes to, the Issuer and the relevant Manager that:

a) it is not a retail client in the EEA (as defined in the TMR Rules);

b) whether or not it is subject to the TMR Rules, it will not sell or offer the Securities to retail clients in the EEA or do anything (including the distribution of this Information Memorandum) that would or might result in the buying of the Securities or the holding of a beneficial interest in the Securities by a retail client in the EEA (in each case within the meaning of the TMR Rules), other than (i) in relation to any sale or offer to sell Securities to a retail client in or resident in the United Kingdom (the "UK"), in circumstances that do not and will not give rise to a contravention of the TMR Rules by any person and/or (ii) in relation to any sale or offer to sell Securities to a retail client in any EEA member state other than the UK, where (a) it has conducted an assessment and concluded that the relevant retail client understands the risks of an investment in the Securities and is able to bear the potential losses involved in an investment in the Securities and (b) it has at all times acted in relation to such sale or offer in compliance with MiFID to the extent it applies to it or, to the extent MiFID does not apply to it, in a manner which would be in compliance with MiFID if it were to apply to it; and

c) it will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside or outside the EEA) relating to the promotion, offering, distribution and/or sale of the Securities, including any such laws, regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the Securities by investors in any relevant jurisdiction.

Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Securities from the Issuer and/or the Managers, the foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its underlying client.

The Securities may be considered by eligible investors who are in a position to give the above representations, warranties and undertakings and to be able to satisfy themselves that the Securities would constitute an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Securities unless it has the expertise (either alone or with the help of a financial adviser) to evaluate how the Securities will perform under changing conditions, the resulting effects on the value of the Securities and the impact this investment will have on the potential investor's overall investment portfolio.

This Information Memorandum does not constitute an offer to sell or the solicitation of an offer to buy the Securities in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Information Memorandum and the offer or sale of Securities may be restricted by law in certain jurisdictions. The Issuer does not represent that this Information Memorandum may be lawfully distributed, or that the Securities may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, and it does not assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer which is intended to permit a public offering of the Securities or the distribution of this Information Memorandum in any jurisdiction where action for that purpose is required. Accordingly, no Securities may be offered or sold, directly or indirectly, and neither this Information Memorandum nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Information Memorandum or any Securities may come must inform themselves about, and observe, any such restrictions on the distribution of this Information Memorandum and the offering and sale of Securities. In particular, there are restrictions on the distribution of this Information Memorandum and the offer or sale of Securities in the United States and the European Economic Area including Ireland and the United Kingdom.

Unless otherwise indicated, in this Information Memorandum, all references to:

 "2014" or any other year are, unless otherwise indicated, to the 12 months ended on 31 December of the stated year;

 "b" in relation to a number, refers to that number multiplied by one billion (1,000,000,000);

3  "euro" or "€" are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended;

 "m" in relation to a number, refers to that number multiplied by one million (1,000,000);

 "Group" are to the Issuer and its subsidiaries, taken as a whole; and

 "Parent Group" are to the Parent and its subsidiaries, taken as a whole.

IN CONNECTION WITH THE ISSUE OF THE SECURITIES, DEUTSCHE BANK AG, LONDON BRANCH AS STABILISING MANAGER (THE "STABILISING MANAGER") (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) MAY OVER-ALLOT SECURITIES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE SECURITIES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE SECURITIES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE SECURITIES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE SECURITIES. ANY STABILISATION ACTION OR OVER-ALLOTMENT MUST BE CONDUCTED BY THE STABILISING MANAGER (OR PERSONS ACTING ON BEHALF OF THE STABILISING MANAGER) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES.

FORWARD-LOOKING STATEMENTS

This document contains certain "forward-looking statements". Statements that are not historical facts, including statements about Permanent tsb's and/or its directors' and/or management's beliefs and expectations are forward-looking statements. Words such as "believes", "anticipates", "estimates", "expects", "intends", "plans", "aims", "potential", "will", "would", "could", "considered", "likely", "estimate" and variations of these words and similar future or conditional expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur, many of which are beyond Permanent tsb's control and all of which are based on Permanent tsb's current beliefs and expectations about future events. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause Permanent tsb's actual results, performance or achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding Permanent tsb's present and future business strategies and the environment in which Permanent tsb will operate in the future. These forward-looking statements speak only as at the date of this document. Except as required by applicable law or regulation, the Issuer expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in Permanent tsb's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

4 PRESENTATION OF FINANCIAL AND OTHER INFORMATION

FINANCIAL STATEMENTS

Prospective investors should consult their own professional advisers to gain an understanding of the financial information contained in this Information Memorandum. An overview of the basis for presentation of financial information in this Information Memorandum is set out below.

Financial statements

The financial statements included in this Information Memorandum comprise:

 audited consolidated financial statements for the Issuer as at and for the year ended 31 December 2014 (together with comparable financial statements as at and for the year ended 31 December 2013) (the "2014 Financial Statements"); and

 audited consolidated financial statements for the Issuer as at and for the year ended 31 December 2013 (together with comparable financial statements as at and for the year ended 31 December 2012) (the "2013 Financial Statements").

The 2014 Financial Statements and the 2013 Financial Statements (together, the "Financial Statements") have been audited by PricewaterhouseCoopers, independent auditors, in accordance with Irish law and International Standards on Auditing (UK & Ireland) as stated in each of the unqualified audit reports included in the 2014 Financial Statements and 2013 Financial Statements, respectively. The Financial Statements have been prepared in accordance with Irish law and International Financial Reporting Standards ("IFRSs") as adopted by the European Union.

MARKET, ECONOMIC AND INDUSTRY DATA

This Information Memorandum contains information regarding Permanent tsb's business and the industry in which it operates and competes, some of which Permanent tsb has obtained from third-party sources. Permanent tsb and other institutions operating in the financial services industry make available a wide range of financial and operational information to regulatory and market bodies, including the Central Bank of Ireland (the "Central Bank") and the European Central Bank (the "ECB") . These bodies use the data supplied to publish market share statistics relating to retail mortgage lending and savings, among other matters. However, no assurance can be made that the information reported to these bodies by different market participants is, in all cases, directly comparable.

In some cases, independently determined industry data is not available. In these cases, any Permanent tsb market share included in this Information Memorandum is referred to as having been estimated. All such estimates have been made by Permanent tsb using its own information and other market information which is publicly available. All such estimations have been made in good faith based on the information available and Permanent tsb's knowledge of the market within which it operates.

Where third-party information has been used in this Information Memorandum, the source of such information has been identified. In the case of the presented economic and statistical information, similar information may be obtainable from other sources, although the underlying assumptions and methodology, and consequently the resulting data, may vary from source to source.

Where information has not been independently sourced, it is Permanent tsb's own information

NO INCORPORATION OF WEBSITE INFORMATION

Permanent tsb's website is www.permanenttsb.ie. The information on this website or any website directly or indirectly linked to this website has not been verified and is not incorporated by reference into this Information Memorandum and investors should not rely on it.

ROUNDING

Certain data in this Information Memorandum has been rounded. As a result of such rounding, the totals of data presented in tables in this Information Memorandum may vary slightly from the arithmetic totals of such data.

5 CONTENTS

Page

Overview of Permanent tsb and the principal features of the Securities...... 7 Documents incorporated by reference ...... 13 Risk factors ...... 14 Terms and Conditions of the Securities...... 54 Summary of provisions relating to the Securities while represented by the Global Certificate...... 90 Use of proceeds...... 93 Description of the Issuer...... 94 Description of the Parent Ordinary Shares ...... 117 Taxation ...... 119 Subscription and sale ...... 125 General information...... 127

6 OVERVIEW OF PERMANENT TSB AND THE PRINCIPAL FEATURES OF THE SECURITIES

The following overview provides an overview of the business of the Issuer and refers to certain provisions of the terms and conditions of the Securities and is qualified by the more detailed information contained elsewhere in this Information Memorandum. Capitalised terms which are defined in "Terms and Conditions of the Securities" have the same meaning when used in this overview. References to numbered Conditions are to the terms and conditions of the Securities (the "Conditions") as set out under "Terms and Conditions of the Securities".

PERMANENT TSB

Overview

The Issuer was incorporated in Ireland on 21 September 1994 and is an authorised credit institution. The Issuer is a 100% direct subsidiary of the Parent and is the Parent's sole direct subsidiary.

The Issuer is a significant provider of retail financial services in the Irish domestic banking market. The Issuer offers a broad range of banking products and financial services to its customers including current accounts, retail deposits, residential mortgages, term loans, credit cards, overdrafts and general insurance, as well as pensions, investments and life insurance (through a bancassurance arrangement).

The Group operates in the markets of Ireland, the UK and the Isle of Man. The Group includes the Issuer and its 4 wholly owned principal subsidiaries, being Capital Home Loans Limited (which is currently contracted for sale), Permanent Bank International Limited, Irish Permanent (IOM) Limited, and Irish Permanent International (Isle of Man) Limited. See "Description of the Issuer" for further information.

PRINCIPAL FEATURES OF THE SECURITIES

Issuer Permanent tsb p.l.c.

Trustee Deutsche Trustee Company Limited

Registrar Deutsche Bank Luxembourg S.A.

Securities €125,000,000 Fixed Rate Resettable Additional Tier 1 Securities

Risk factors There are certain factors that may affect the Issuer's ability to fulfil its obligations under the Securities and the Trust Deed. In addition, there are certain factors which are material for the purpose of assessing the market risks associated with the Securities and certain risks relating to the structure of the Securities. These are set out under "Risk Factors".

Status of the Securities The Securities constitute direct, unsecured and subordinated obligations of the Issuer and rank pari passu, without any preference, among themselves.

Rights on a Winding-Up The rights and claims of Securityholders in the event of a Winding-Up of the Issuer are described in Conditions 4 and 11.

Solvency Condition Except in the event of a Winding-Up of the Issuer, payments in respect of or arising from (including any damages awarded for breach of any obligations under) the Securities are conditional upon the Issuer being solvent (within the meaning given in Condition 3.2) at the time of payment by the Issuer and no payments shall be due and payable in respect of or arising from the Securities except to the extent that the Issuer could make such payment and still be solvent immediately thereafter (the "Solvency Condition").

7 Interest The Securities will bear interest on their principal amount:

(a) from (and including) the Issue Date to (but excluding) the First Reset Date, at the rate of 8.625 per cent per annum; and

(b) thereafter, at the relevant Reset Interest Rate (as described in Condition 5.4).

Such interest will be payable subject to cancellation as described below, in arrear on 1 April in each year (each, an "Interest Payment Date").The first payment in respect of the period from and including the Issue Date to, but excluding, 1 April 2016 and amounting to €78.00 per Calculation Amount shall be made on 1 April 2016.

Optional cancellation of The Issuer may elect at its full discretion to cancel (in whole or in part) the interest interest otherwise scheduled to be paid on any Interest Payment Date. See Condition 5.1 for further information.

Mandatory cancellation of Further, the Issuer will cancel any interest otherwise scheduled to be paid on interest an Interest Payment Date if and to the extent that the amount of such interest, when aggregated together with any interest payments or distributions which have been paid or made or which are required to be paid or made during the then current financial year on all other own funds items of the Issuer (excluding any such interest payments or distributions paid or made on Tier 2 Capital items or which have already been provided for, by way of deduction, in the calculation of Distributable Items), exceeds the amount of Distributable Items of the Issuer as at such Interest Payment Date.

In addition, the Issuer will also be required to cancel any Interest Amount otherwise scheduled to be paid on an Interest Payment Date if and to the extent that payment of such Interest Amount would cause, when aggregated together with other distributions of the kind referred to in Article 141(2) of the CRD IV Directive (as defined in Condition 20.1) (or any provision of applicable law transposing or implementing Article 141(2) of the CRD IV Directive, as amended or replaced), the Maximum Distributable Amount (if any) then applicable to the Issuer or the Issuer Group to be exceeded.

See Condition 5.1 for further information.

Payments of interest are also subject to the Solvency Condition (see "Solvency Condition" above). Following the occurrence of a Trigger Event, the Issuer will also cancel all interest accrued up to (and including) the Conversion Date (see "Conversion following a Trigger Event" below).

Non-cumulative interest If the payment of interest scheduled on an Interest Payment Date is cancelled in accordance with the Conditions as described above, the Issuer shall not have any obligation to make such interest payment on such Interest Payment Date and the failure to pay such amount of interest or part thereof shall not constitute a default of the Issuer for any purpose. Any such interest will not accumulate or be payable at any time thereafter and holders of the Securities shall have no right thereto whether in a Winding-Up of the Issuer or otherwise, or to receive any additional interest or other compensation as a result of any such cancelled payment of interest.

Conversion following a Trigger If the Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group at Event any time falls below 7.00 per cent (a "Trigger Event") and the Issuer is not in

8 Winding-Up, the Issuer shall immediately notify the Supervisory Authority of the occurrence of the Trigger Event and, by no later than one month (or such shorter period as the Supervisory Authority may then require) from the occurrence of the relevant Trigger Event:

(a) each Security shall be immediately and mandatorily redeemed as of the Conversion Date and settled (such redemption and settlement being the "Conversion" and the term "converted" shall be construed accordingly) by the allotment, issue and delivery by the Parent on the Conversion Settlement Date of fully paid Parent Ordinary Shares to the Settlement Shares Depositary to be held for the Securityholders;

(b) any interest which is accrued and unpaid up to (and including) the Conversion Date (whether or not such interest has become due for payment) shall be cancelled; and

(c) Securities so converted shall be automatically cancelled by the Issuer and may not be held, reissued or resold.

See Condition 8.1 for further information.

Conversion Mechanism (a) Upon Conversion, the Issuer shall redeem the Securities at a price (the Conversion Settlement Sum) equal to their principal amount. The Securityholders shall be deemed irrevocably to have directed and authorised the Issuer to pay the Conversion Settlement Sum to the Parent in consideration of the Issuer and the Parent's agreement to allot, issue and deliver Parent Ordinary Shares pursuant to the Trust Deed to the Settlement Shares Depositary for the Securityholders and the obligation of the Issuer to pay the Conversion Settlement Sum to the Parent shall discharge in full the Issuer's obligation to pay the principal on the relevant Securities to the Securityholders.

(b) The number of Parent Ordinary Shares to be delivered shall equal the Conversion Settlement Sum divided by the Conversion Price rounded down to the nearest whole number of Parent Ordinary Shares.

(c) On Conversion the Parent shall subscribe for the Issuer Shares (as defined in Condition 8.1). The number of Issuer Shares subscribed will equal the amount of the Conversion Settlement Sum divided by the €0.32 nominal value per share of the Issuer Shares. The Issuer Shares shall be issued by the Issuer to the Parent on the Conversion Settlement Date and the Parent agrees to pay to the Issuer the subscription amount for the Issuer Shares (the Issuer Shares Subscription Amount) on the Conversion Settlement Date.

(d) The allotment of the Issuer Shares to the Parent on the Conversion Settlement Date shall be conditional upon the allotment of the Parent Ordinary Shares on the Conversion Settlement Date in accordance with the provisions of Conditions 8.1(a) and 8.2(a).

(e) The Parent and the Issuer shall set off in full on the Conversion Settlement Date, the Conversion Settlement Sum payable by the Issuer to the Parent against the equal amount of the Issuer Shares Subscription Amount payable by the Parent to the Issuer.

The "Conversion Price" shall be €3.00 (subject to adjustment in the circumstances provided in Condition 8.4).

9 See Condition 8.2 for further information.

Maturity The Securities are perpetual securities with no fixed redemption date. The Securities may only be redeemed or repurchased by the Issuer in the circumstances below (as more fully described in Condition 7).

Optional redemption The Issuer may, in its sole discretion but subject to the conditions set out under "Conditions to redemption" below, redeem all (but not some only) of the Securities on the First Reset Date or on any Interest Payment Date thereafter at their principal amount together with interest accrued and unpaid from and including the immediately preceding Interest Payment Date to but excluding the relevant redemption date.

Redemption following a Capital The Issuer may, in its sole discretion but subject to the conditions set out Disqualification Event or a Tax under "Conditions to redemption" below, redeem all (but not some only) of Gross-Up Event the Securities at any time following the occurrence of a Capital Disqualification Event (as defined in Condition 7.3) or a Tax Gross-Up Event (as defined in Condition 20), in each case, at their principal amount together with interest accrued and unpaid from and including the immediately preceding Interest Payment Date up to but excluding the relevant redemption date.

Conditions to redemption Any redemption of the Securities will be subject to obtaining Supervisory Permission. In addition, if the Issuer has elected to redeem the Securities and either (i) the Solvency Condition is not satisfied in respect of the relevant payment on the date scheduled for redemption, or (ii) prior to redemption of the Securities, a Trigger Event occurs, then the relevant notice of redemption will be automatically rescinded and will be of no force and effect.

Purchase of the Securities The Issuer or any of its Subsidiaries may, at its option but subject to Supervisory Permission, purchase or otherwise acquire any of the outstanding Securities at any price in the open market or otherwise at any time in accordance with the then prevailing Regulatory Capital Requirements.

Withholding tax and All payments by or on behalf of the Issuer in respect of the Securities shall be Additional Amounts made free and clear of, and without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature ("Taxes") imposed or levied, collected, withheld or assessed by or on behalf of Ireland or any political subdivision or any authority thereof or therein having power to tax, unless the withholding or deduction is required by law. In that event, the Issuer will (subject to certain exceptions specified in Condition 9.1) pay such additional amounts ("Additional Amounts") as may be necessary in order that the net amounts received by the Securityholders after the withholding or deduction shall equal the amounts which would have been receivable in respect of the Securities in the absence of such withholding or deduction.

Payments in respect of principal and interest on the Securities will be made subject to any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the US Internal Revenue Code of 1986 or otherwise imposed pursuant to Sections 1471 through 1474 of the US Internal Revenue Code of 1986, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the preceding paragraph) any law implementing an intergovernmental approach thereto.

Enforcement In the event of a Winding-Up, or if the Issuer, subject to Condition 5.1, has

10 not made payment of any amount in respect of the Securities for a period of seven days or more after the date on which such payment is due, the Issuer shall be deemed to be in default under the Trust Deed and the Securities and, unless proceedings for a Winding-Up have already commenced, the Trustee may institute proceedings for a Winding-Up. The Trustee may prove in any Winding-Up of the Issuer (whether or not instituted by the Trustee) and shall have such claim as is set out in Condition 4.

The Trustee may, at its discretion and without notice, institute such other proceedings and/or take any other steps or action against the Issuer and/or the Parent as it may think fit to enforce any term or condition binding on the Issuer and/or the Parent under the Trust Deed (other than any payment obligation) provided that in no event shall the Issuer, by virtue of the institution of any such proceedings, be obliged to pay any sum or sums, in cash or otherwise, sooner than the same would otherwise have been payable by it pursuant to the Conditions or the Trust Deed. No Securityholder shall be entitled to proceed directly against the Issuer or to institute proceedings for a Winding-Up unless the Trustee, having become bound so to do, fails to do so within a reasonable period and such failure shall be continuing.

See Condition 11 for further information.

Modification The Trust Deed contains provisions for convening meetings of Securityholders to consider any matter affecting their interests, pursuant to which defined majorities of the Securityholders may consent to the modification or abrogation of any of the Conditions or any of the provisions of the Trust Deed, and any such modification or abrogation shall be binding on all Securityholders

In addition, the Trustee may agree (other than in respect of a Reserved Matter, as defined in the Trust Deed and subject to Supervisory Permission being obtained), without the consent of the Securityholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the Conditions or any of the provisions of the Trust Deed or the Agency Agreement (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Securityholders) or may agree, without any such consent as aforesaid and irrespective of whether the same constitutes a Reserved Matter, to any modification which, in its opinion, is of a formal, minor or technical nature or to correct a manifest error.

Substitution of the Issuer The Trustee may, without the consent of the Securityholders but subject to Supervisory Permission, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute of the Issuer) as the principal debtor under the Securities and the Trust Deed of any member of the Issuer Group or any successor in business to the Issuer, subject to:

(a) the Trustee being satisfied that such substitution is not materially prejudicial to the interests of the Securityholders; and

(b) certain other conditions set out in the Trust Deed being complied with.

Form The Securities will be issued in registered form. The Securities will initially be represented by a Global Certificate and will be registered in the name of a nominee of a common depositary for the Clearing Systems.

Denomination €200,000 and integral multiples of €1,000 in excess thereof.

11 Clearing systems Euroclear and Clearstream, Luxembourg.

Listing Application has been made for admission of the Securities to the official list of the Irish Stock Exchange and to trading on the Global Exchange Market of the Irish Stock Exchange with effect from the Issue Date.

Governing law The Securities and the Trust Deed, and any non-contractual obligations arising out of or in connection with the Securities or the Trust Deed, will be governed by, and construed in accordance with, English law except for the provisions governing the subordination of the Securities or the allotment, issue or registration of the Parent Ordinary Shares or the Issuer Shares, which are governed by, and construed in accordance with, Irish law.

Submission to jurisdiction The Issuer has, in the Trust Deed, irrevocably agreed for the benefit of the Trustee and the Securityholders that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed or the Securities (including a dispute relating to any non-contractual obligations arising out of or in connection with the Trust Deed or the Securities) and accordingly has submitted to the exclusive jurisdiction of the English courts.

ISIN: XS1227057814

Common Code: 122705781

12 DOCUMENTS INCORPORATED BY REFERENCE

The following documents, which have previously been published and have been filed with the Irish Stock Exchange, are incorporated in, and form part of, this Information Memorandum:

 the 2014 Financial Statements and the auditors report thereon; and

 the 2013 Financial Statements and the auditors report thereon.

 the Analyst and Investor Presentation dated 12 March 2015.

Any statement contained in a document which is incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Information Memorandum to the extent that a statement contained herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information Memorandum.

The Issuer will provide, without charge, to each person to whom a copy of this Information Memorandum has been delivered, upon the oral or written request of such person, a copy of any or all of the documents which are incorporated by reference herein. Written or oral requests for such documents should be directed to the Issuer at its registered office set out at the end of this Information Memorandum. The documents listed above can be found on the Issuer's website.

Any documents themselves incorporated by reference in the documents incorporated by reference in this Information Memorandum shall not form part of this Information Memorandum.

13 RISK FACTORS

Any investment in the Securities is subject to a number of risks, which are contingencies which may or may not occur, and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring.

Prior to investing in the Securities, prospective investors should carefully consider the risk factors associated with any investment in the Securities, the Group and the financial services industry in Ireland in general, together with all the other information contained in this document. This section describes the risk factors which are considered by the Issuer to be material to the Group and an investment in the Securities. However, these should not be regarded as a complete and comprehensive statement of all potential risks and uncertainties. There may be other risks and uncertainties which are currently not known to the Issuer or which it currently does not consider to be material. Should any of the risks described below, or any other risks or uncertainties, occur this could have a material adverse effect on the Group's business, results of operation, financial condition or prospects which in turn would be likely to cause the price of the Securities to decline and, as a result, an investor in the Securities could lose some or all of its investment.

Factors which the Issuer believes may be material for the purpose of assessing the market risks associated with the Securities are also described below. Any of these factors, individually or in the aggregate, could have an adverse effect on the Group's business, results of operations and financial position. In addition, many of these factors are correlated and may require changes to the Group's capital requirements, and events described therein could therefore have a compounding adverse effect on the Group.

Prospective investors should also read the detailed information set out elsewhere in this Information Memorandum and reach their own views prior to making any investment decision.

Capitalised terms which are defined in "Terms and Conditions of the Securities" have the same meaning when used in these Risk Factors.

RISKS RELATED TO THE GROUP

1. The Group's business and financial performance has been and will continue to be affected by general economic conditions in Ireland, the UK and the Isle of Man, and economic conditions globally.

The Group is directly and indirectly subject to inherent risks arising from general economic conditions in Ireland, the UK and the Isle of Man, and the state of the global financial markets both generally, and as they specifically affect financial institutions. All of the Group's operations are based in Ireland, the UK and the Isle of Man and substantially all of its loans and advances to customers are to customers in Ireland and the UK; accordingly its interest and other income is derived almost entirely from Irish and UK customers. The Group is therefore particularly exposed to macroeconomic conditions in Ireland and the UK.

Ireland has experienced an extremely challenging macroeconomic environment and period of fiscal adjustment following a prolonged period of over-reliance on construction and property-related activity. This was reflected in a severe contraction in Irish GDP between 2008 and 2013. In particular, from mid-2008, the global economy (including the global financial system) and the euro area experienced a period of significant turbulence and uncertainty which triggered widespread problems at many commercial banks, investment banks, insurance companies and other financial and related institutions in Ireland (including the Group) and around the world. The dislocation severely impacted property prices in Ireland and general levels of liquidity, the availability of credit and the terms on which credit was available. This crisis in the financial markets led the Irish Government, other governments and monetary authorities to inject liquidity into the financial system and to take other forms of action relating to financial institutions, including bank recapitalisations and the provision of government guarantees for certain types of funding, aimed at both supporting the sector and providing confidence to the broader market. The Group was a recipient of Irish Government support during this period. These market dislocations were also accompanied by recessionary conditions and trends in Ireland and many economies around the world. The widespread deterioration in these economies adversely affected, among other things, consumer confidence, levels of employment, the state of the housing market, the commercial real estate sector, bond markets, counterparty risk, inflation, the availability and terms of credit, transaction volumes in funding and retail markets, the liquidity of the global financial markets and market interest rates.

The re-emergence of any such financial turbulence or the failure of ongoing progress towards a return to more normal patterns and economic conditions could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

2. The Group's business and financial performance has been and will continue to be affected by specific economic conditions in Ireland and the UK.

14 The Group's business and financial performance has been and will continue to be affected by specific economic conditions in Ireland and the UK. Specific risks facing the Group's business include, but are not limited to the following:

 Property price movements: A decrease in house prices could negatively impact the Group's business as any such decline would reduce the value of the collateral securing the relevant mortgage and have a negative impact on impairment provisions. Furthermore, a decrease in house prices could erode customer confidence, negatively impact arrears and threaten new and targeted mortgage lending levels. Whilst an increase in house prices is of benefit to the Group as it increases the value of collateral securing mortgages, and may increase customer confidence, it may also negatively impact the business to the extent that the affordability of housing impacts on the number of new mortgages generated for the Group. Similarly, a decrease in commercial property prices could also negatively impact the Group's business as any such decline would reduce the value of the collateral securing commercial real estate mortgages.

 Interest rates: Either a substantial increase in interest rates in the short to medium term, or a prolonged period of continuing low interest rates, could negatively impact the Group's business. For further information, see the Risk Factor "A prolonged period of low interest rates, or a substantial increase in interest rates over the short to medium term, is a risk to the Group's business."

 Unemployment: As a retail bank, the Group's business performance is impacted by the economic status, wellbeing and confidence of its customers, a principal driver of which is overall employment levels. Although unemployment in Ireland and the UK has fallen recently, it remains relatively high by historical standards. Higher unemployment rates and the resultant decrease in customer confidence and customer income may also have a negative impact on the Group's results of operations, including through a decreased appetite for products of the Group, an increase in arrears, forbearance, impairment provisions and defaults. Higher levels of unemployment have historically resulted, for example, in an increase in arrears in customer loans, a decrease in new mortgage borrowing and deferred levels of spending.

 Constrained disposable income: In Ireland and the UK, household spending remains constrained (for example, as a result of the introduction of residential property taxes in Ireland), which in turn negatively impacts on consumer confidence. These pressures on households may, particularly if combined with a substantial increase in interest rates in the short to medium term, lead to an increase in arrears in the Group's residential mortgage and other loan portfolios, and an associated increase in impairment provisions, as well as lower demand for new loans.

Consequently, a substantial increase in interest rates over a short to medium period or a prolonged period of continuing low rates, a decrease in house prices reducing the value of collateral or an increase that negatively impacts affordability, or sustained high levels of unemployment, or continued or further constraints on household disposable income may have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

3. A prolonged period of low interest rates, or a substantial increase in interest rates over the short to medium term, is a risk to the Group's business.

Interest rates are impacted by factors outside of the Group's control, including the fiscal and monetary policies of governments and central banks as well as political and economic conditions. The mortgage portfolio of the Group includes Irish and UK tracker mortgages which are set by reference to the European Central Bank (ECB) base rate or the Bank of England base rate and also includes variable interest rate mortgages in respect of which the interest rates are set internally by the Group. As at 31 December 2014, tracker mortgages linked to the ECB base rate represented 64 per cent. of the Group's Republic of Ireland ("ROI") mortgage portfolio and tracker mortgages linked to the Bank of England base rate represented 98 per cent. of the Group's UK mortgage portfolio. As at 31 December 2014, variable rate mortgages represented 34 per cent. of the Group's ROI mortgage portfolio and 2 per cent. of the Group's UK mortgage portfolio. As at 31 December 2014, the remaining 2 per cent. of the Group's ROI mortgage portfolio was made up of fixed rate mortgages. The variable and tracker rates are subject to change and consequently the Group could be subject to a higher risk of default in payment by a borrower as a result of a significant increase in variable rate or tracker rates.

To the extent that there is a prolonged period of low interest rates, this will continue to exert downward pressure on net interest income and will reduce returns on certain financial products of the Group, including tracker mortgages, whose interest rates are linked to the ECB base rate or the Bank of England base rate. In addition, while a prolonged low interest rate environment allows the Group opportunities to reduce the cost of its funding, the reduced return for depositors may reduce the incentive for customers to save and this could restrict the Group's ability to fund its balance sheet and could constrain new lending which could adversely impact on the Group's business, results of operations, financial condition and prospects.

15 There are differences between the interest rate repricing frequency of the Group's assets (including mortgages) and the Group's liabilities (including deposits). In time of rapidly increasing interest rates liabilities may reprice quicker than assets. This may adversely affect the Group's business, results of operations, financial conditions and prospects.

Conversely, although a rise in interest rates would deliver certain benefits to the Group, it could in the absence of a corresponding improvement in customer earnings, put pressure on borrowers particularly those whose loans are linked to the ECB base rate or the Bank of England base rate and who may have become accustomed to the current low interest rate environment. Borrowers with a mortgage loan subject to a variable or tracker rate of interest will be exposed to increased monthly payments if the related mortgage interest rate adjusts upward. A significant portion of the Group's outstanding residential mortgage loan products are potentially subject to such changes in interest rates. In an increasing interest rate environment, any increase in interest rates could, and a substantial increase in increase rates would, negatively impact the affordability of mortgages for customers as a result of increasing mortgage repayment costs, and this could potentially result in an increase in impairments in the mortgage book which could have a material adverse effect on the Group's business, results of operations, financial condition and prospects. Furthermore, rising interest rates may impact on affordability for borrowers and accordingly may adversely impact new mortgage lending and/or other new lending.

4. Constraints on liquidity are a risk to the Group's business.

Financial institutions such as the Group are subject to liquidity risk. Liquidity risk is the risk that the Group may experience difficulty in meeting its contractual obligations as and when they fall due, without incurring excessive cost. This risk is inherent in banking operations and can be heightened by a number of enterprise-specific factors, including an over-reliance on a particular source of funding (including, for example, short term and overnight funding), changes in credit ratings or market-wide phenomena such as market dislocation (as more particularly described in the Risk Factor "The Group's business and financial performance has been and will continue to be affected by general economic conditions in Ireland, the UK and the Isle of Man, and economic conditions globally") and major disasters.

The Group principally raises funding through retail and corporate and institutional deposits and secured funding arrangements. Secured funding arrangements include the sale of residential mortgage backed securities (RMBS), and repo arrangements (both with the ECB, and with third parties). As at 31 December 2014, the Group had corporate and institutional deposits of €5.5b (including €1.7b secured deposits), and retail deposits of €14.9b (including Isle of Man deposits). Other secured transactions include third party repo arrangements of €3.7b and Eurosystem repo borrowings of €4.9b. The Group maintains a portfolio of unencumbered assets which are a further source of liquidity to it. These unencumbered assets are largely Irish sovereign bonds and other bonds which qualify as high quality liquid assets under Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms, as amended or replaced from time to time (the Capital Requirements Regulation) and Directive (2013/36/EU) of the European Parliament and of the Council on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms dated 26 June 2013 (the CRD IV Directive and together with the Capital Requirements Regulation, CRD IV). As at 31 December 2014, the Group had €3.2b of such assets. In addition the Group also has access to unencumbered retained RMBS structures which as at 31 December 2014 provided a further €2.1b of liquidity. Furthermore the Group's ability to access deposit and secured funding arrangements on satisfactory economic terms is subject to a variety of factors, including a number of factors which are outside its control, such as general market conditions, regulatory requirements and levels of confidence in the Irish banking system. The Group's ability to access secured funding is also dependent upon the quality of its underlying collateral and consequently any material deterioration in the value of such collateral, which is likely to be influenced by factors beyond the Group's control, could have a negative effect on the Group's ability to access such funding. If access to funding is constrained for a prolonged period of time, the Group's costs could increase as competition for deposits could intensify and the cost of accessing the funding markets would rise. Similarly, any material decrease in the Group's customer deposits could have a negative effect on the Group's liquidity and also, particularly if accompanied by one of the other factors described above (such as an insufficiency of liquidity or a deterioration in collateral values), could have a negative impact on the Group's ability to meet its minimum liquidity requirements, which may also adversely affect the Group's business, results of operations, financial condition and prospects. A significant constraint on liquidity could lead to the imposition of administrative actions or sanctions against the Group by regulators and in an extreme scenario lead to a suspension or revocation of the Issuer's banking authorisaton. For further information see the Risk Factor "Reduced availability of funding, or an increased cost of funding, are risks to the Group's business".

5. Reduced availability of funding, or an increased cost of funding, are risks to the Group's business.

In addition to the Group's retail deposit base, the Group sources funding in a number of ways, principally through corporate and institutional deposits and wholesale unsecured and secured funding transactions. The secured funding transactions consist of repo transactions and sales of RMBS. The Group has created ROI and UK RMBS structures using significant elements of the ROI and UK residential mortgage books. These structures issue bonds which are both sold in the market to provide term funding and used in short and medium term repo transactions. If the Group's sources of

16 funding become volatile or unavailable, the Group may be required to utilise other, possibly more expensive, sources to meet its funding needs.

The availability of secured funding arrangements depends on a variety of factors including market conditions, the general availability of credit to the financial services industry, and rating agencies' and funding markets' assessment of both the Group's credit strength and the credit strength of the underlying collateral. These and other factors may in adverse circumstances limit the Group's ability to raise funding or could result in a significant increase in the Group's cost of funding or have other adverse effects on the Group's business, results of operations, financial condition and prospects including its ability to meet its minimum liquidity requirements. A significant constraint on liquidity could lead to the imposition of administrative actions or sanctions against the Issuer by regulators and in an extreme scenario lead to a suspension or revocation of its banking authorisation. For further information see the Risk Factor "Constraints on liquidity are a risk to the Group's business".

6. The Group relies on retail and corporate deposits to fund a proportion of its lending activities. The ongoing availability of deposits is sensitive to factors outside the Group's control.

The Group relies on retail and corporate deposits to meet a significant proportion of its funding requirements within its banking business. As at 31 December 2014, the Group had retail deposits (including current accounts) of €14.9b (including Isle of Man deposits), corporate and institutional deposits of €5.5b (which includes deposits from Irish government institutions of €2.2b). Continued growth in the Group's lending activities will depend, in part, on the continued availability of retail or corporate deposits on satisfactory terms, for which there is active competition. Increases in the cost of such funding would adversely affect the Group's margins and results of operations, and a lack of, or decrease in, the availability of such retail and corporate deposit funding could restrict the Group's ability to fund its balance sheet and could constrain new lending which could negatively impact the Group's future growth.

In particular, retail depositors are a significant source of funding for the Group, with retail deposits and current accounts representing 45 per cent. of the Group's funding as at 31 December 2014. The ongoing availability of these deposits is subject to fluctuations due to factors such as the confidence of depositors in the Group, and other certain factors outside the Group's control including, for example, macroeconomic conditions in Ireland, confidence of depositors in the economy in general and the financial services industry specifically, the availability and extent of deposit guarantees and competition for deposits from other financial institutions. Furthermore, any increase in deposit interest retention tax ("DIRT") by the Irish Government or a reduction in the rate of return (or the continuation of historically low rates of returns) offered to retail depositors could have an adverse impact on retail deposits in credit institutions. These or other factors could lead to a reduction in the Group's ability to access retail deposit funding on satisfactory terms in the future, and any increases in the cost of such funding could have a negative impact on the Group's margins and results of operations. Given the relative size of the Group's retail deposit base, any serious loss of confidence by its retail depositors which results in significant withdrawals of deposits would have significant impact on the Group's liquidity position and this could lead to the imposition of administrative actions or sanctions against the Group by the Group's regulators and in an extreme scenario lead to a suspension or revocation of the Issuer's banking authorisation.

As at 31 December 2014, the deposits of eligible depositors covered under a deposit protection scheme operated in accordance with the Financial Services (Deposit Guarantee Scheme) Act 2009 (as amended), the European Communities (Deposit Guarantee Schemes) Regulations 1995 (as amended) and the European Communities (Deposit Guarantee Schemes) (Amendment) Regulations 2009 (the Deposit Guarantee Scheme) (which was established under Irish and European legislation to protect eligible depositors in the event of a bank, building society or credit union authorised in Ireland being unable to repay deposits) and protects eligible deposits up to a limit of €100,000 per eligible person were €10.8b. Any reduction in the sums covered pursuant to the Deposit Guarantee Scheme, or any withdrawal of the protections afforded by the scheme could result in a serious loss of confidence by retail and corporate depositors, which could result in significant withdrawals of deposits. The Group participated in the Eligible Liabilities Guarantee Scheme (ELG Scheme) established under the Credit Institutions (Financial Support) Act 2008 as amended by the Credit Institutions (Eligible Liabilities Guarantee) (Amendment) (No.2) Scheme 2010 (S.I. No. 546/2010), which was closed to new liabilities in March 2013. The Group had residual covered deposits of €1.3b as at 31 December 2014. Any significant withdrawals resulting from a reduction in protections from, or a loss of confidence in, such schemes, could have an adverse effect on the Group's business, results of operations, financial condition and prospects and could prevent the Issuer from meeting its minimum liquidity requirements and in an extreme scenario this could lead to the imposition of administrative actions or sanctions against the Issuer by the Issuer's regulators or lead to a suspension or revocation of the Issuer's banking authorisation. For further information see the Risk Factor "Constraints on liquidity are a risk to the Group's business".

7. Any change to the conditions of Eurosystem Funding or a significant reduction or withdrawal of Eurosystem Funding is a risk to the Group's business.

17 The Issuer avails of funding provided to financial institutions by the ECB and the national central banks of certain participating member states of the European Union (Eurosystem Funding) which is an important lower cost source of funding for the Issuer. As at 31 December 2014, the Issuer had availed of Eurosystem Funding in the amount of approximately €4.9b representing 15 per cent. of total funding.

The Eurosystem comprises the ECB and the national central banks of the member states of the European Union which have adopted the euro. The Eurosystem provides access to funding to banks in participating member states including the Issuer. Eurosystem Funding is provided through ECB standing facilities - the Main Re-financing Operations ("MRO") and Long Term Refinancing Operation ("LTRO"). Transactions are normally for a week (MRO) or three months (LTRO) but the ECB does periodically offer different durations. All transactions require the Issuer to post adequate collateral. The collateral must meet the criteria set out in the ECB monetary policy framework and may include both marketable assets (e.g. listed bonds) and non-marketable assets (e.g. credit claims). The criteria (which include credit standards) are subject to periodic amendment by the ECB and in particular since the commencement of the financial crisis there have been a number of changes which have widened the range of acceptable collateral.

Any significant alteration of the conditions of any programme available as part of such Eurosystem Funding (for example a narrowing of the eligibility criteria for collateral), or any increase in the price of any programme available as part of such funding, or any reduction or withdrawal of such support may adversely affect the Group's business, results of operations, financial condition and prospects. Any such reduction or withdrawal may also increase competition for other sources of funding which could increase the cost of, or reduce the availability of funding for the Group. The Issuer's access to Eurosystem Funding is dependent on the availability and continued eligibility of the Issuer's assets to serve as collateral. Accordingly, any impact on the volume of the Issuer's eligible collateral, as a result of downgrades to the ratings of the collateral or changes to the ECB eligibility criteria or any other factors, could restrict the Issuer's ability to continue to access Eurosystem Funding. This would further limit its access to funding and could further materially affect the Issuer's business, results of operations, financial condition and prospects, and could prevent the Issuer meeting its minimum funding requirements. For further information see the Risk Factor "Constraints on liquidity are a risk to the Group's business".

The Issuer has reduced its reliance on Eurosystem Funding by more than two thirds from its peak in 2011. Any replacement funding that the Issuer may need to source to replace Eurosystem Funding may not be available on equally favourable terms and may be at a more expensive rate than the Eurosystem Funding and this could have a negative impact on the Issuer's business, results of operations, financial condition and prospects.

8. The Group's assets are subject to encumbrances.

A significant proportion of the Group's funding is secured funding. Assets used for secured funding are subject to the legal claims of another party and consequently such assets would not be available to unsecured creditors including depositors in the event of a wind up of the Group. Furthermore as a result of the requirements to meet strict eligibility criteria, the quality of encumbered assets may be higher than the quality of unencumbered assets. Encumbrance may also increase potential outflows in times of stress as a fall in the value or quality of the existing collateral creates a need to post more collateral. High levels of asset encumbrance could result in restrictions on the availability of unsecured funding (including deposits) and/or increase the cost of such funding. Restrictions may be imposed by regulatory authorities on the level of encumbrance and any such restrictions could adversely impact on the Group's business, results of operations, financial condition and prospects.

9. Decreases in the credit quality of the Group's borrowers and counterparties, or difficulties in relation to the recoverability of loans and other amounts due from such borrowers and counterparties, are risks to the Group's business.

The Group uses a range of financial instruments to fund and hedge its activities including derivative contracts such as interest rate swaps, cross currency swaps, future rate agreements, futures and options. The Group enters into derivative contracts primarily to hedge the Group's interest rate risk and foreign exchange rate risk in its underlying balance sheet asset & liability positions. The Group does not utilise or provide credit default derivatives.

Counterparty risk is the risk that the counterparty to a contract into which the Group has entered defaults prior to the maturity of the contract. Counterparty risk includes derivative contracts where the Group is exposed to the risk of the counterparty defaulting prior to the maturity of "in-the-money" products, thereby necessitating replacement of the contract at applicable market rates.

Risks arising from changes in credit quality and the recoverability of both secured and unsecured loans and amounts due from the Group's borrowers and counterparties are inherent in the Group's businesses. Additional or unanticipated adverse changes in the credit quality or behaviour of the Group's borrowers and counterparties or adverse changes arising from a deterioration in economic conditions or a change in the political environment in Ireland, the UK or elsewhere, a

18 substantive increase in interest rates, a rise in unemployment, or a change in the political environment or a reduction in household disposable income could increase impaired loans, impairment charges and expected losses which in turn could have a material adverse effect on the Group's business, results of operations, financial condition and prospects. As at 31 December 2014, the Group had recognised impairment provisions of €3.7b and had NPLs of €8.3b.

In Ireland and in the UK (primarily through its subsidiary Capital Homeloans Limited (CHL)(which is contracted for sale) which, together with over half of its loan book, is to be disposed of by the Group, the Group has provided mortgages to buy-to-let investors. An excess supply of rental property or falls in rental demand could also impact borrowers' income and ability to service such loans. In particular, as at 31 December 2014, 25 per cent. of the loans and advances to customers in Ireland and 94 per cent. in the UK are buy-to-let mortgages, where the relevant properties (in respect of the mortgages forming part of the collateral security for such mortgages) are not owner-occupied. The borrower's ability to service payment obligations in respect of a loan secured on such a property is likely to depend on the borrower's ability to rent the properties on appropriate terms. This dependency on rental income increases the likelihood, during difficult market conditions, that the rate of delinquencies and losses on loans secured by such non-owner occupied properties will be higher than for loans secured on the primary residence of a borrower. Properties may not be tenanted throughout the life of the mortgage loan, and the rental income achievable from the tenancies of the relevant property may not be sufficient to provide the borrower with sufficient income to meet the borrower's obligations in respect of the mortgage loan during the life of such loan, the tenancies may not be on market terms, a tenant may not always be able to pay their rent and a borrower may not always respect the terms of such tenancy relating to the maintenance of the relevant property. The obligations of a borrower to make payments under a mortgage loan are without regard to whether the relevant property is let and without regard to the amount of rent received from the relevant tenant however these factors may affect the borrower's ability to satisfy its obligations under the mortgage loans.

Furthermore, as at 31 December 2014, approximately 24 per cent. by value of the residential mortgage book in Ireland and 95 per cent. in the UK constitute interest only mortgage loans which have a requirement that the borrower pay scheduled interest payments only. Whilst interest only mortgages generally represent a higher risk for the Group due to the absence of capital repayments, the majority of these mortgages are buy-to-let mortgages where interest only is a customary term of the mortgage agreement, and where overall risks are generally lower due to the ability to more easily realise the underlying charged property. There is no scheduled amortisation of principal. Consequently, upon the maturity of such loans, the relevant borrower will be required to make a "bullet" payment that will represent the entirety of the principal amount outstanding. Borrowers may have insufficient equity to refinance their interest only loans with lenders and/or may have insufficient resources to pay the total amount outstanding at the required time and this could lead to higher delinquency rates and losses which in turn may adversely affect the Group's performance, business, results of operations, financial conditions and prospects. The ability of such a borrower to repay in full at maturity may depend on such borrower's ability to sell the property, the rental income derived from such property, ability to refinance the property or obtain funds from another source such as savings accounts, a pension policy, personal equity plans or an endowment policy. The ability of a borrower to sell or refinance the property will be affected by a number of factors, including the value of the property, the borrower's equity in the property, the financial condition of the borrower, tax laws and general economic conditions at the time. A significant downturn in the property markets or the economy could lead to a greater increase in defaults or repayment of principal of such interest only mortgage loans which could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

As at 31 December 2014, approximately 27 per cent. of the Group's ROI residential non performing home loans and 4 per cent. of the Group's non performing buy-to-let loans had been restructured as split mortgages. Split mortgages involve placing a portion of the debt in a warehoused balance and typically no contractual payments are required in respect of this warehoused balance until maturity. Consequently, while customer affordability (and hence the size of the warehoused balance) will be subject to regular and ongoing review, upon the maturity of such loans the relevant borrower will be required to make a 'bullet' payment that will represent the entirety of the warehoused principal amount outstanding. Borrowers may not be in a position to refinance their warehoused debt with another lender before or at maturity, may be unable to trade down to an alternative property or may have insufficient resources to pay the final total amount. This could lead to higher delinquency rates and losses which may adversely affect the Group's business, results of operations, financial conditions and prospects.

If house prices decrease or employment levels decrease, the Group's residential mortgage lending portfolios may be exposed to substantial increases in impairment charges, which could have a material adverse effect on the Group's business, results of operations, financial condition and prospects. For further information see the Risk Factor "The Group's business and financial performance has been and will continue to be affected by specific economic conditions in Ireland and the UK".

10. The effective management of non-performing home loans (NPLs), commercial real estate, buy-to-let loans and unsecured loans are dependent on early identification of loans that may become impaired, effective consultation with borrowers, delivery of sustainable solutions and/or effective enforcement of security.

19 The global financial crisis and the Irish banking crisis resulted in a significant deterioration in the credit quality of loans and advances to customers in Ireland, and consequently a significant increase in NPLs and impairment provisions at a number of Irish banks, including the Group. The Group seeks to effectively manage non-performing home loans, buy-to- let loans and unsecured loans through its Asset Management Unit (AMU) platform (as more particularly detailed in Description of the Issuer) in particular by the early identification of deteriorating loans with a view to taking corrective action to either minimise losses and reduce impairments or to prevent loans becoming impaired. It is the Group's policy to provide for impairment promptly and consistently across its portfolios. Management of these loans involves implementing, where appropriate, forbearance solutions, entering into sustainable restructuring arrangements, or taking action to enforce the Group's security. There are inherent operational complexities in effectively managing the AMU platform and monitoring its ongoing performance. Effective credit management depends upon:

 early identification of loans that may become impaired;

 effective consultation with borrowers;

 delivery of sustainable solutions; and/or

 effective enforcement of security where necessary.

The effective management of non-performing home loans, buy-to-let loans and unsecured loans is therefore dependent on the Group's ability to operate efficiently and to manage such loans for value. The actions implemented by the AMU platform may not be effective in preventing loans becoming impaired, or in maximising the return from impaired loans, and any such failure could result in a material adverse impact on the Group's business, results of operations, financial condition and prospects.

11. The Restructuring Plan Term Sheet imposes certain restrictions which restrict the Group's ability to operate its business as it would otherwise have done so. In addition a failure to comply with the conditions and restrictions specified in the Restructuring Plan Term Sheet could lead to the need for further action by the European Commission which in turn could lead to adverse outcomes for the Group.

On 9 April, 2015, the European Commission approved the final decision clearing all State aid granted to the Parent Group. The term sheet submitted to the European Commission following negotiations based on the draft prepared by the Parent Group in consultation with the Department of Finance, and submitted by the Department of Finance to the European Commission on 30 March 2015, which sets out the terms for the restructuring of the Parent Group which Ireland has committed to implement, and which forms part of the decision adopted by the European Commission on 9 April 2015 (the "Restructuring Plan Term Sheet") in relation to that decision sets out the terms for the restructuring of the Parent Group which Ireland has committed to implement. The Restructuring Plan Term Sheet imposes certain restrictions which restrict the Parent Group's ability to operate its business as it would otherwise have done so, which may have a negative impact on the Parent Group's business, operations and competitive position.

In addition a failure to comply with the conditions and restrictions set out in the Restructuring Plan Term Sheet could lead to the need for further action by the European Commission which in turn could lead to material and significant adverse outcomes for the Group. These could include a requirement that the Parent Group dispose of a significantly larger proportion of its assets and/or agree to a significantly more stringent divestment timetable or more onerous behavioural restrictions than those included in the Restructuring Plan Term Sheet. In addition the European Commission could envisage other options such as liquidation of the Parent Group or alternatively the European Commission may require the Irish Government to recover the State aid from the Parent Group. At certain stages of the process, the Parent Group could challenge a European Commission decision that is adverse to the interests of the Parent Group in the EU courts. However, should the Parent Group ultimately be unsuccessful in any such challenge, the Parent Group would be required to comply with the European Commission's decision and therefore, the consequences for the Parent Group could, as described above, be significantly adverse to the Group's interests.

Additionally, the Parent Group could be subject to a variety of risks as a result of implementing the Restructuring Plan Term Sheet in relation to the deleveraging and disposal measures. For example, while the Restructuring Plan Term Sheet lays down maximum haircuts which will apply to the sale of the Group's CHL loan portfolio and to the €1.67b of non- performing loans relating to the commercial real estate portfolio, there is no assurance that the price that the Parent Group receives for any assets sold pursuant to the Restructuring Plan Term Sheet will be at a level the Parent Group considers adequate or which might potentially be available in circumstances in which the Parent Group was not required to sell such assets in order to implement the Restructuring Plan Term Sheet. In particular, should the Parent Group fail to complete the divestments required by the Restructuring Plan Term Sheet, within the relevant time periods set out in the Restructuring Plan Term Sheet, a divestiture trustee(s) could be appointed by the European Commission to conduct the sale with a mandate to complete any such disposal on terms which could be materially adverse to the Parent Group.

20 The Parent Group will also be subject to a variety of other risks as a result of implementing the Restructuring Plan Term Sheet in relation to the behavioural measures specified in the Restructuring Plan Term Sheet. The implementation of these behavioural measures by the Parent Group may lead to the emergence of one or more new competitors and/or a material strengthening of one or more of the Group's existing competitors in the Irish banking market which could have a material adverse impact on the performance of the Group. In implementing the behavioural measures, the Group may be required to provide access to its customers for the benefit of new and current competitors. There can be no assurance that the Group will be able to continue to compete as effectively (whether against existing or new or strengthened competitors) and maintain or improve its revenues and margins in the resulting environment, which could adversely affect the Group's results, operations and financial condition and its business generally.

This, and other potential consequences of implementing the behavioural measures, could mean that the Group will lose some existing customers, deposits and business and could damage the potential for the Group to gain customers and realise additional associated revenues and margins that it otherwise might have achieved in the absence of such behavioural measures. Such implementation may also result in disruption to the Group's business, which may impact adversely on its customers and could result in operational costs which could potentially be substantial. A monitoring trustee(s) (and possibly a divestiture trustee(s)) will be appointed in respect of the Restructuring Plan Term Sheet and the actions or interpretations of the monitoring trustee(s) (and any divestiture trustee(s)) may further adversely impact on the Group and its performance.

If any or all of the risks described in this risk factor materialise or have a greater impact than expected or any other currently unforeseen risks materialise, there could be a negative impact which could be material on the Group's business, operations and competitive position.

12. The Capital Plan imposes a number of capital requirements and other conditions on the Group.

Following the announcement of the SSM CA results on 26 October 2014, which identified a capital shortfall of €855m under the adverse scenario stress test, the Parent Group submitted the Capital Plan to the ECB on 21 November 2014 which set out how it proposed to address the capital shortfall identified. The ECB in its letter to the Parent Group dated 20 February 2015 acknowledged the progress that had been made by the Parent Group in relation to its funding position, liquidity risk and its management of arrears through the AMU function, but it also recognised that challenges remain for the Parent Group, and as a result, the ECB imposed certain capital requirements on the Parent Group, to be complied with following the successful implementation of the Capital Plan. In particular, the ECB noted that despite significant improvements in the Parent Group's liquidity profile (and a reduction in its reliance on Eurosystem Funding), it is exposed to liquidity risk that may crystallise where there is stress to its funding model arising out of, or in connection with, the Group's asset encumbrance model, funding concentration and access to wholesale markets. The ECB separately noted that in order to supplement existing systems for assessing, maintaining and distributing internal capital, that the Parent Group should introduce a firm-specific ICAAP review more than once per year to ensure that the Parent Group arrives at an appropriate Pillar 2 capital charge.

The Group will be subject to a variety of other risks as a result of implementing the Capital Plan measures. Compliance by the Group with the capital requirements and the implementation of the measures contained therein by the Group may restrict the Group's ability to continue to compete as effectively (whether against existing or new or strengthened competitors) and maintain or improve its revenues and margins, which could adversely affect the Group's results, operations and financial condition and its business generally. Furthermore, if the Issuer fails to meet the requirements set out in the Capital Plan this could result in administrative actions or sanctions against it or supervisory measures or resolutions any of which could adversely affect the Group's business, results of operations, financial condition and prospects and could damage the Issuer's relationships with its regulators.

For further information on the Capital Plan and the requirements set out in the letter from the ECB dated 20 February 2015, please see the "Description of the Issuer" section of this Information Memorandum.

13. The Group is exposed to conduct risk in the execution of the Group's activities and processes.

Conduct risk is the risk of a bank or other authorised institution such as the Issuer failing to secure good customer outcomes resulting in detrimental outcome for the Group (such as fines, operational, reputational or brand damage). Conduct risk can arise from an institution's failure to ensure that its products and services are suitable for the customers they are sold to, from conflicts of interest embedded into financial structures, processes and management, from poor culture and incentives or flawed documentation, from information asymmetries and from a failure to act in the best interests of customers.

Conduct risk is an increasing area of regulatory focus. For further detail on specific risks faced by the Group in this regard, see the Risk Factor "The Group is exposed to risk in respect of the manner in which it determines and implements interest rate changes".

21 Negative public opinion can result from the actual or perceived manner in which the Group conducts its business activities or from actual or perceived practices in the banking and financial industry. Negative public opinion may adversely affect the Group's ability to keep and attract customers and, in particular, corporate and retail deposits which in turn may adversely affect the Group's financial condition and results of operations. The Group cannot be sure that it will be successful in avoiding damage to its business from conduct risk.

Failure to adequately address conduct risk in a timely manner, or at all, could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

14. The Group is exposed to risk in respect of the manner in which it determines and implements interest rate changes.

The Central Bank has confirmed that the fair treatment of mortgage holders is one of its key priorities. In particular, the Central Bank has stated that it is examining the manner in which lenders are treating new and existing variable rate mortgage holders when determining and implementing rate changes, and it has emphasised that mortgage interest rates and charges (and in particular the rates set for standard variable rate mortgages, which banks generally have the right to vary unilaterally) should be set in a transparent, fair and consistent manner that does not disadvantage certain groups of customers, especially those that have less ability to switch mortgage.

Mortgage lending, and in particular PDH and BTL mortgage lending, is a significant part of the Issuer's business and, as such, in common with other mortgage lenders, the Issuer is at risk of a review or investigation by the Central Bank, and potentially sanctions or penalties, pursuant to the Administrative Sanctions Regime or otherwise, in respect of any perceived or actual failure to act appropriately when setting interest rates on its mortgage products. Any such review or investigation, and any related litigation or regulatory action, could adversely affect the Group's business, financial condition, results of operations and profitability, and could result in negative public opinion towards the Group. For further information on the consequences of such negative public opinion, see the Risk Factor "The Group is exposed to conduct risk in the execution of the Group's activities and processes".

In addition, the Issuer's mortgage rates may come under further pressure from competitors in the future. Increasing competitive pressure or political or regulatory focus on an alignment of mortgage rates between those from new business and the existing standard variable rate, or, on an alignment of mortgage rates with those charged by lenders in other euro area markets, may result in a reduction in the Issuer's standard or managed variable rates, and any such reduction in its rates could impact adversely on the Issuer's net interest income and NIM, which in turn may adversely affect the Issuer's financial condition, results of operations, revenues and profitability.

15. The business of the Group is and will be concentrated in the Irish banking market and the Group may therefore have greater exposure to political, economic and other factors affecting the Irish banking market, than more diversified businesses.

The Group's businesses are and will be concentrated in the Irish banking market, and among retail and owner managed enterprise (OME) customers in Ireland in particular. This means that the Group has a significant concentration risk relating to the Irish market and to the wellbeing of retail and OME customers in Ireland. The Group's performance may therefore be significantly affected by events beyond its control affecting Ireland, and retail and OME customers. For example, a future downturn in the Irish or global economy, or factors that may adversely impact the Group's customers, include those arising out of a substantial increase in interest rates over the short to medium term or a prolonged period of continuing low rates, a decrease in house prices reducing the value of collateral or an increase that negatively impacts affordability, or sustained high levels of unemployment, or continued or further constraints on household disposable income (which risks are discussed in further detail in the Risk Factor "The Group's business and financial performance has been and will continue to be affected by specific economic conditions in Ireland and the UK") could have a negative impact on the Group's businesses that is more pronounced than in respect of more diversified businesses. Any such outcomes which arise or persist as a result of geographic and concentration risk could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

16. The Group may not be able to maximise the return from its planned programme of disposals.

As part of its planned programme of disposals, the Group intends to sell certain non-core assets (for further information on this planned programme of disposals, please see the "Description of the Issuer" section of this Information Memorandum. The Group is also required to dispose of certain of its non-core assets pursuant to the Restructuring Plan Term Sheet as more particularly discussed the "Description of the Issuer" and the Risk Factor "The Restructuring Plan Term Sheet imposes certain restrictions which restrict the Group's ability to operate its business as it would otherwise have done so. In addition a failure to comply with the conditions and restrictions specified in the Restructuring Plan Term Sheet could lead to the need for further action by the European Commission which in turn could lead to adverse outcomes for the Group". section of this Information Memorandum. There can be no assurance that, at the time the

22 Group seeks or is required to dispose of such assets (whether voluntarily or otherwise), relevant market conditions (including exchange rates) will be favourable or that the Group will be able to maximise the returns, and/or reduce the capital impact, of such disposed assets. To the extent that market conditions are not favourable or optimal, the Group may not be able to dispose of assets at the desired price or may be unable to minimise any potential capital loss, and/or the Group may not achieve a price that it considers adequate. The Group may also have to give warranties, representations and indemnities and/or other covenants and commitments in order to conclude a sale with a third party buyer which may result in claims, losses, payments to third parties and/or litigation in adverse scenarios. The marketability and value of any asset(s) owned by the Group will, therefore, depend on many factors beyond the control of the Group and there may not be a ready market for any asset(s) of the Group at the time of sale. Any such outcomes could have a material adverse effect on the Group's business, results of operations, financial condition and prospects and could result in the Group not being in a position to meet its obligations under the Capital Plan as set out in the Risk Factor "The Capital Plan imposes a number of capital requirements and other conditions on the Group".

17. The Group has entered into agreements to sell certain of its Non-Core Business assets and to repurchase the Contingent Capital notes, however, such transactions might not complete.

As more particularly described in the "Description of the Issuer" section of this Information Memorandum., the Group has entered into agreements to sell (i) approximately €3.5b (£2.5b) of the gross outstanding loan balances of the CHL mortgage book (the completion of which is subject to regulatory approval) together with the sale of the CHL loan servicing platform of the Group; and (ii) €1.5b of the gross outstanding loan balance comprised within the Irish commercial real estate portfolio (the "Non-Core Ireland Sale Portfolios"). The completion of these transactions has not yet occurred. The Issuer anticipates that completion of the transactions will occur in the third and second quarter of 2015 respectively, in accordance with the terms of the relevant contracts. If any of the disposals are not completed, this could have an adverse effect on the Group's business, results of operations, financial condition and prospects, both in terms of costs and expenses expended in respect of the transactions, and in terms of any other consequences, legal or otherwise that may arise from the transactions not completing, including for example, where any such non-completion results in the Group not meeting its deleveraging obligations set out in the Restructuring Plan Term Sheet. For further information see the Risk Factor "The Restructuring Plan Term Sheet imposes certain restrictions which restrict the Group's ability to operate its business as it would otherwise have done so. In addition a failure to comply with the conditions and restrictions specified in the Restructuring Plan Term Sheet could lead to the need for further action by the European Commission which in turn could lead to adverse outcomes for the Group".

The Issuer has also entered into an agreement with the Minister to repurchase the €400m convertible contingent tier 2 capital notes issued by the Issuer to the Minister on 26 July 2011 (the Contingent Capital Notes) pursuant to the terms of the Note Purchase Agreement as more particularly described in the "Description of the Issuer" section of this Information Memorandum. The Note Purchase Agreement provides that the obligations of the Issuer and the Minister to complete the repurchase are conditional upon the satisfaction of a number of conditions precedent. If the conditions are not satisfied, this transaction may not complete, and this could have a material adverse effect on the Group's intended strategy for remedying the SSM CA adverse scenario capital shortfall which could have an adverse effect on the Group's business, results of operations, financial condition and prospects, both in terms of costs and expenses expended in respect of the transaction, and in terms of any other consequences, legal or otherwise that may arise. For further information, see the Risk Factor "If the Group does not complete the Capital Raise or the issuance of the AT1 Securities, it will not be able to repurchase the Contingent Capital Notes".

18. The Group's strategic plans and financial targets may not be realised.

The Group has identified and set strategic plans and financial targets for the Group (for further information see in the "Description of the Issuer" section of this Information Memorandum). These plans include targets which rely on the proper implementation of those strategies and which may be sensitive to a number of internal and external dependencies, for example it should be noted that the return on equity is sensitive to the Group's net interest margin (NIM) and operating costs. Furthermore, these strategic plans and financial targets may be adversely affected by macroeconomic factors (in Ireland, the UK or globally) and industry and other factors that are outside of the Group's control. The Group's strategic plans and financial targets may not be realised in whole or in part, and any failure by the Group to implement these strategic plans could have a material adverse effect on the Group's business, results of operations, financial condition and prospects. Any failure by the Group to implement its strategic plans, in whole or in part, could require the Group to reassess such strategic plans.

The targets set out in the Group's strategic plans also rely, in part, on the proper implementation of those strategies by the Group, for example, the continuation of reduced deposit pricing combined with competitively priced new lending and reduced wholesale funding costs. There is a risk that the Group may not be able to continue to deliver new products or existing products at acceptable margins, that future regulation may change the nature of product charging and/or sales in a way that impacts the Group's ability to deliver the planned income, that its chosen business model proves to be inappropriate, or that customers are not attracted by the products and services on offer. For example, the Group has

23 announced its entry into the small and medium sized enterprises (SME) market with a strategic focus on the OME sector which typically fall under the micro and small business segments of the broader SME market. Implementation of this strategy is underway, with expansion to reach a broader set of customers planned for 2015, but there can be no assurance that the Group will be successful in obtaining market share. Furthermore, while the Group's policy is to continually monitor the market for opportunities to create and launch new products that would be profitable for the Group, these are subject to review and internal approval, and may not ultimately be brought to market. In addition, there is a risk that the Group's competitors may introduce similar products to those introduced by the Group in the future and that those competitors' products will be favoured by the Group's existing and/or prospective customers. Any such outcome could have a detrimental impact on the Group's strategic plans and its efforts to increase its market share in selected products.

Macroeconomic factors that may adversely impact the Group's targets and the confidence of customers of the Group, include those arising out of a substantial increase in interest rates over a short to medium period or a prolonged period of continuing low rates, a decrease in house prices reducing the value of collateral or an increase that negatively impacts affordability, or sustained high levels of unemployment, or continued or further constraints on household disposable income, which risks are discussed in further detail in the Risk Factor "The Group's business and financial performance has been and will continue to be affected by specific economic conditions in Ireland and the UK".

19. The Group's participation in the Government guarantee schemes could require the Group to implement operational policies that could materially adversely affect the Group's results, financial condition and prospects.

On 30 September 2008, pursuant to the Credit Institutions (Financial Support) Scheme 2008 (S.I. No.411 of 2008), the Government introduced a guarantee of bank liabilities of specified covered institutions (including the Issuer and its subsidiary PIOM). The period of guarantee was two years. The guarantee under the CIFS Scheme expired on 29 September 2010. The ELG Scheme came into effect on 9 December 2009 and provided for certain liabilities, including deposits, of a number of Irish credit institutions (including the Issuer) and its subsidiaries PBI (which was transferred to the Group on 24 February 2011) and PIOM (prior to the surrender of its deposit taking licence in 2010) to be guaranteed by the Minister. Various fees were payable by the covered institutions to the Minister in return for these Government guarantee schemes. The termination of, or changes to the operation of, or the participation by the Group in, the Government guarantee schemes or changes in the terms of the Group’s participation in such schemes could have an adverse effect on the Group’s results, financial condition and prospects.

The terms and conditions of the ELG Scheme place certain restrictions on the operation of the Group's business, for so long as they are covered institutions in respect of the ELG Scheme. In particular, the Minister may impose restrictions on the expansion of capital and lending activity of the Issuer as a covered institution, the declaration and payment of dividends and the implementation of buy-backs or share redemptions. Furthermore, no covered institution, including the Issuer, may acquire shares in any other credit institution or financial institution, establish subsidiaries or enter into or acquire new business(es) where such activities would increase the liability of the covered institution under the ELG Scheme. In addition, the Minister may issue directions to covered institutions to comply with some or all of the provisions of conduct, transparency and reporting requirements applicable to covered institutions under the Government guarantee schemes. The Group’s participation in the Government guarantee schemes could require the Group to implement operational policies that could materially adversely affect the Group’s results, financial condition and prospects.

20. The Irish Government, through the Minister may exert a very significant level of influence over the Group.

The Irish Government (through the Minister) is the largest holder of Parent Ordinary Shares. Through the Irish Government's shareholding in the Parent, the Minister is in a position to exert significant influence over the Group and its business. Even when the level of Irish Government ownership is reduced following the completion of the placing and open offer of shares in the capital of the Parent as described in the Description of the Issuer section of this Information Memorandum (the Capital Raise) it is expected to hold the majority of the enlarged issued share capital, the Irish Government will still be a significant shareholder and could use such shareholding (potentially in combination with the shareholdings of other investors), in addition to its other contractual rights and under legislation, to exert a high level of influence over the Parent and the Group's business, operations, governance and/or its capital structure. The Irish Government (through the Minister) could exercise its voting rights in a manner which is not aligned with the interests of the Group.

21. Weaknesses or failures in the Group's processes and procedures, external events or other operational risks are a risk to the Group's business.

The Group's businesses are dependent on their ability to process and report, accurately and efficiently, a high volume of complex transactions across numerous and diverse products and services, and subject to a number of different legal and regulatory regimes. Operational risks are inherently present in the Group's businesses including, as a result of potentially

24 inadequate or failed internal processes (including financial reporting and risk monitoring processes), IT or equipment failures or the failure of external systems and controls such as those of the Group's suppliers or counterparties (supplier and counterparty systems, controls, and a significant element of such risks being entirely outside the control of the Group) or from people-related or external events. This exposes the Group to customer redress, administrative actions or sanctions, potential loss of customers and the potential requirement to hold additional regulatory capital. Examples of the types of risks that the Group faces in this regard are:

 the risk of internal fraud (including financial fraud and/or theft) carried out by employees or officers of the Group, possibly resulting from lack of adequate segregation of responsibilities, or inappropriate internal access levels to systems being accorded to individuals, providing them with knowledge that facilitates fraud;

 the risk of external fraud, being customer or third party fraud against the Group such as card skimming or cloning;

 the risk of a cyber attack against the Group and its information technology (IT) and account management systems and the reputational damage the Group would suffer as a result of any such attack. This would include denial of service attacks;

 the risk of over-reliance on IT system outputs without adequate understanding of key inputs or of the calculations performed by the system;

 the risk of partial or complete failure of some or all of the Group's IT systems, including any potential weaknesses in, or failure of, the Group's 'business continuity' strategy and systems;

 the risk of poor external service delivery or inadequate internal management of third-party service providers;

 the risk that third-party service providers have inadequate business continuity plans rendering them unable to deliver service to the Group (for example in a disaster); and

 the risk that business units develop key financial and/or credit models without adequate oversight and testing prior to use by the business, therefore leading to inappropriate decision making and reporting.

The Group's risk controls and frameworks (that are subject to ongoing review and enhancement) or loss-mitigation actions implemented may not be effective in controlling each of the operational risks faced by the Group. Any weakness in these controls or actions could result in regulatory penalties and could also have a material adverse effect on the Group's business, results of operations, financial condition and prospects, as well as reputational damage which could exacerbate such adverse impact.

22. In Ireland and the Isle of Man, the Group is responsible for contributing to compensation schemes in respect of banks and other authorised financial services firms which are unable to meet their obligations to customers.

Certain members of the Group, being the Issuer and Permanent Bank International Limited (PBI), a principal subsidiary of the Group incorporated in the Isle of Man, are obliged to contribute to investor compensation schemes in Ireland and the Isle of Man, respectively, which are designed to compensate (up to defined limits) certain classes of customers of authorised financial services firms where a firm is unable, or likely to be unable, to pay claims against it. These compensation schemes are funded by levies on firms authorised by the respective financial regulators.

In Ireland the Investor Compensation Act 1998 provided for the establishment of the Investor Compensation Company Limited (the "ICCL") to administer and supervise an investor compensation scheme. The Investor Compensation Act 1998 requires authorised financial services firms to pay the ICCL such contribution to the fund maintained by the ICCL as the ICCL may from time to time specify. The maximum amount payable under the investor compensation scheme is 90 per cent. of the amount lost by an eligible investor, subject to a maximum compensation payment of €20,000 per eligible investor.

The Central Bank operates the Deposit Guarantee Scheme to which authorised banks (including the Issuer) are required to make contributions. The Deposit Guarantee Scheme provides compensation to depositors in respect of eligible deposits up to a maximum level of compensation payable of €100,000 per eligible depositor, per institution. For further information on the Deposit Guarantee Scheme in Ireland, see the Risk Factor "The Group relies on retail and corporate deposits to fund a proportion of its lending activities. The ongoing availability of deposits is sensitive to factors outside the Group's control".

25 PBI is a participant in the Isle of Man Depositor Compensation Scheme which is managed by the Isle of Man Treasury. This scheme provides compensation to depositors in respect of eligible deposits up to a maximum level of compensation payable of £50,000 per depositor, per institution.

In the event that one or more of these compensation schemes significantly changes the basis for charging fees in respect of these schemes, the associated increased costs to the Group could have an adverse effect on its business, results of operations, financial condition and prospects.

23. The Group is dependent on the performance of third party service providers.

The Group is dependent on the performance of third-party service providers for critical aspects of its business including, without limitation, the outsourcing agreement with TSYS, a third-party payments processor that acts as the Issuer's acquirer for all debit and credit card transactions originated on the VISA and MasterCard schemes; the outsourcing agreement with Sentenial which provides a service to allow corporate originators to upload multi-formatted payment files into SEPA formats for processing by the Issuer; and the outsourcing agreement with Citibank which acts as a clearing agent for the Issuer and as a direct participant with the European Banking Association. If any elements of these processing functions fail, or do not meet the service standards required, then the Group could face a number of adverse outcomes such as substantial monetary damages, customer redress and litigation (for a list of such potential outcomes, see the Risk Factor "The Group must comply with a wide range of laws and regulations"). Upon the completion of the disposal of the CHL loan servicing platform, the Group will be dependent on the acquirer of that platform to service on behalf of the Group the residual UK assets and the Isle of Man loan portfolios forming part of the Non-Core UK Business. The dependency of the Group on such third-party service providers is a risk to the Group, and in particular risks may arise in any of the following circumstances:

 failure by such third-parties to perform their contractual obligations;

 inadequate business continuity management on the part of the third-party service provider;

 inability of such third-parties to retain key members of staff;

 cost overruns in relation to the services provided by third-parties;

 fraud (including financial fraud and/or theft) or misconduct by an officer, employee, or agent of a third-party, which could result in losses to the Group, or damage the Group's reputation;

 disputes between the Group and third-parties, which could increase the Group's expenses and distract the Group's board and senior executives;

 insolvency of such third-parties;

 liability of the Group for the actions or omissions of such third-parties (including without limitation data protection issues); and/or

 withdrawal of the relevant third-party service provider from the market.

If the third-party service providers fail to successfully perform the services for which they have been engaged, either as a result of their own fault or negligence, or due to the Group's failure to properly supervise any such service providers, this could have a material adverse effect on the Group's business, results of operations, financial condition and prospects and could negatively impact its reputation among customers and counterparties.

24. The Group relies on recruiting, retaining and developing appropriate senior management and skilled personnel.

The Group's success depends in part on the continued service of key members of its management team and skilled personnel. The ability to continue to attract, train, motivate and retain highly qualified professionals is a key element of the Group's strategy of building a safe, stable and resilient Group. The successful implementation of this and other elements of the Group's strategy more broadly depends on the availability of skilled management, at its head office, in its branches, and at each of its business units. If the Group or one of its business units or other functions fails to staff their operations appropriately, or loses one or more of its key senior managers and fails to replace them in a satisfactory and timely manner, its business, financial condition and results of operations, including control and operational risks may be adversely affected. Likewise, if the Group fails to attract and appropriately train, motivate and retain qualified professionals, its business may also be affected. Restrictions currently imposed on the remuneration of key executives

26 pursuant to the placing agreement entered into between the Parent, Issuer, the Minister and the National Treasury Management Agency (the NTMA) dated 27 July 2011 (the 2011 Placing Agreement), and the Relationship Framework, or any other external constraints which may be placed on the Group in this regard, may also impact on the Group's ability to attract and/or retain appropriately skilled personnel which in turn could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

25. The Group's policies and guidelines for risk management may prove inadequate for the risks faced by its businesses.

The Group's guidelines and policies for risk management may not always prove to be adequate in practice. The Group faces a wide range of risks in the Group's activities described in the Risk Factors section of this Information Memorandum, including, in particular:

 Liquidity and funding risk: This is the risk that the Group is not able to meet its financial obligations as they fall due, or can do so only at excessive cost;

 Interest rate risk: Changes in interest rate levels, yield curves and spreads may affect the Group's interest rate margin realised between lending and borrowing costs or cause losses through un-hedged or mismatched asset and liability positions sensitive to changes in interest rates;

 Credit risk: This is the risk that a borrower or a counterparty fails to pay interest or to repay the principal or make other required payments on a loan or other financial instrument;

 Capital risk: This is the risk that the Group has insufficient capital to cover regulatory requirements and/or growth or deleveraging/disposal plans;

 Market risk: This is the risk of a negative impact from movements in market prices on the value of assets and liabilities;

 Strategic risk: This is the risk that the Group does not achieve its corporate and/or strategic objectives;

 Model risk: This is the risk that an adverse outcome (incorrect or unintended decision or financial loss) occurs as a result of weaknesses or failures in the design or use of a model. The adverse consequences include, but are not limited to, financial loss, poor business or strategic decision making or damage to the Group's reputation;

 Compliance Risk: This is the risk of legal or regulatory sanctions, material financial loss, or loss to reputation that the Group may suffer as a result of its failure to comply with or failure to be aware of laws, regulations, rules, related self-regulatory organisation standards, and codes of conduct applicable to the Group's activities;

 Conduct risk: This is the risk of fines and/or operational, reputation or brand damage due to any inappropriate execution of the Group's activities and processes; and

 Operational risk: This is the risk that the Group's businesses are impacted from internal or external factors which may include, but are not limited to, fraud, errors by employees, failure to document transactions properly (or to obtain proper internal authorisation), failure to comply with regulatory requirements and conduct of business rules, software/hardware failures (particularly in relation to electronic banking applications), natural disasters, terrorist action, disease or the failure of external systems such as, for example, operational problems at other institutions or third-party service providers.

Failure to adequately address the above risks in a timely manner, or at all, may in adverse circumstances limit the Group's ability to raise funding or could result in a significant increase in the Group's cost of funding or have other adverse effects on the Group's business, results of operations, financial condition and prospects including its ability to meet its minimum liquidity requirements and in an extreme scenario lead to a suspension or revocation of the Issuer's banking authorisation.

26. A change in control may lead to adverse consequences for the Group.

The Group and its subsidiaries are parties to contracts, arrangements and other agreements which contain change of control provisions that may be triggered in the event of a direct or indirect change of control of a Group entity, for example, as a result of an investor obtaining a majority stake in the Group. Agreements with change of control provisions typically provide for, or permit, the termination of the agreement upon the occurrence of a change of control of one of the parties or if the new controlling party does not satisfy certain criteria. The crystalisation of change of

27 control provisions could result in the loss of contractual rights and benefits for the Group and/or its subsidiaries, as well as the termination of such agreements. On a change of control of the relevant Group entity, the exercise of such rights or the decision by a counterparty not to waive or vary its rights on a change of control could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

27. The Group is exposed to litigation and regulatory investigation risk.

The Group operates in a legal and regulatory environment that exposes it to potentially significant litigation and regulatory investigation and other risk. The Group is and may become involved in various disputes and legal proceedings, including litigation and regulatory investigations generally or arising from the matters identified the Description of the Issuer section of this Information Memorandum in particular. Disputes, legal proceedings and regulatory investigations are subject to many uncertainties, and their outcomes are often difficult to predict. Any such disputes, proceedings and/or investigations can have negative impacts on the Group, including negative publicity, loss of revenue, litigation, higher scrutiny and/or intervention from regulators, regulatory or legislative action, and loss of existing or potential client business.

Adverse regulatory action, for example, including significant fines or other sanctions resulting from the investigation by the Central Bank into certain transactions between the Issuer and Irish Bank Resolution Corporation Limited (now in special liquidation and formerly known as Anglo Irish Bank Corporation p.l.c.) (IBRC) which were made public in February 2009, or adverse judgments in litigation relating to such matters, could result in restrictions or limitations on the Group's operations or could have a material adverse effect on the Group's business, results of operations, financial condition, profitability and prospects as well as reputational damage which could exacerbate any such adverse impacts.

The Issuer is subject to a number of regulatory codes such as the Consumer Protection Code and the Code of Conduct for Mortgage Arrears. The Group has been affected by conduct risk issues in recent years. In particular, in 2012, the Central Bank published the results of a themed review of the sales of payment protection insurance by Irish regulated credit institutions under the Consumer Protection Code. The objective of the review was to identify if there were instances where the Consumer Protection Code 2006 was not complied with in respect of the sale of payment protection insurance by credit institutions. Following the review the Central Bank requested firms, including the Issuer, to conduct a comprehensive review of their sales process and procedures in place from 1 August 2007 and where appropriate to remediate consumers. The Issuer carried out this review and, as part of that undertook to refund to customers the sum of approximately €11.4m (including interest) of which €10.7m has been paid out to date.

Fixed Rate Mortgage Exits

Pursuant to its powers under the administrative sanctions regime, the Central Bank is currently conducting an enforcement investigation into the Issuer's compliance with the Consumer Protection Code and, in particular, is investigating alleged breaches of the Consumer Protection Code 2006. These alleged breaches arose from the failure of the Issuer to inform customers that, as a consequence of exiting early from a fixed rate mortgage contract, they would no longer be able to avail of the option of a tracker rate in the future and/or no longer default to a tracker rate at the end of that fixed rate period. The Issuer is in communication with the Central Bank in order to resolve these issues. The Group is conducting a review to identify, and address as appropriate, those situations where the required disclosures were not made to customers who lost their contractual entitlement to tracker rate mortgages, in these or similar circumstances, or where, in certain circumstances, the Group did not offer customers the correct contractual tracker rate. The Group has outlined some proposals to the Central Bank for the redress and compensation of affected customers, where appropriate, including providing affected customers the option to revert to the contractual tracker rate. The Group's proposals to the Central Bank may not align with the Central Bank’s expectation in respect of the identification of impacted customers or the approach to determining the appropriate redress and compensation to be offered and may result in additional unanticipated costs. The Central Bank also has the power to impose sanctions under the administrative sanctions regime either by way of agreed early resolution or an inquiry process. The Central Bank also has the power to broaden the scope of any issues under investigation or to investigate new issues on the basis of information provided to it by the Group or otherwise. The Central Bank has expressed its serious concern with the manner in which certain customers have been treated with respect to this issue, including in relation to customers who were or are in arrears and regarding the timeframe in which the process, including the identification of affected customers, the provision of redress and compensation to customers, where appropriate, is being conducted. The Group is also exposed to the risk that customers who were impacted, or who may consider themselves to have been impacted, by the loss of a tracker rate mortgage entitlement due to a failure to provide information, or who otherwise claim that they are entitled to a tracker rate mortgage, including those who fell into arrears as a result of, or who were impacted by legal action including enforcement proceedings initiated by the Group arising from, these issues, may seek alternative sources of redress and compensation, including by way of litigation, or otherwise seek to criticise the Group's actions, where they are dissatisfied with the Group’s proposals to resolve this matter and/or the manner in which they were treated by the Group before this matter is resolved.

28 An adverse finding or criticism in relation to this investigation, including in relation to the subject matter and related process of the investigation, or the Issuer's response to these issues, may result in negative publicity, loss of revenue, litigation, higher scrutiny and/or intervention from regulators and could also result in restrictions or limitations on the Group's operations or could have a material adverse effect on the Group's business, results of operations, financial condition, profitability and prospects as well as reputational damage which could exacerbate any such adverse impacts.

Minority Shareholder Litigation

Furthermore, a group of minority shareholders in the Parent have issued a number of proceedings in the High Court of Ireland since 2011 (as more particularly described in the Description of the Issuer section of this Information Memorandum):

 The respondent in five of the cases is the Minister as the applicants are challenging decisions of the Minister to seek certain direction orders from the High Court of Ireland in relation to the recapitalisation of the Group in 2011 and the sale of the Irish Life business in 2012, as well as seeking to restrain the Minister from taking certain steps in respect of the Group. The Parent and the Issuer are notice parties to four of these five sets of proceedings. The High Court of Ireland has referred certain issues to the Court of Justice of the European Union (the CJEU) in the case relating to the direction order in respect of the 2011 recapitalisation while it dismissed the two cases relating to the sales of the Irish Life business, although one of these cases remains under appeal in the Supreme Court. The case relating to the restructuring plan has not yet been addressed in the High Court of Ireland. The High Court of Ireland also dismissed an injunction application issued in November 2014 seeking to restrain the Minister from taking certain steps pending the determination of the reference to the CJEU. That decision is under appeal by the plaintiffs to the Court of Appeal and the plaintiffs have also indicated that they intend to pursue this case to a full hearing. The plaintiffs also sought to appeal to the Supreme Court certain aspects of a ruling that was made by the Court of Appeal on 19 March 2015 in relation to how the appeal that has been brought by the plaintiffs to the Court of Appeal is to proceed. On 20 April 2015, the Supreme Court issued its determination refusing the plaintiffs' application for leave to appeal to the Supreme Court in respect of the ruling of the Court of Appeal dated 19 March 2015.

 There are two related sets of High Court of Ireland proceedings in which certain minority shareholders in the Parent are challenging the constitutionality of provisions of the Credit Institutions (Stabilisation) Act 2010 pursuant to which the direction orders referred to above were made. The Parent and the Issuer are also a notice party to these proceedings.

 There are also three sets of High Court of Ireland proceedings involving the Parent, the Issuer, certain current and former directors of the Group and certain minority shareholders which relate to the interaction between the minority shareholders and the directors as well as corporate governance.

 On 15 April 2015, a further set of proceedings were issued in the High Court of Ireland against the Parent, its directors and the ISE. In these proceedings, the plaintiffs have sought, inter alia, a series of declarations and an injunction against the Parent, its directors and the ISE in respect of the Parent's proposed issuance of new shares. The plaintiffs have sought a declaration that the Parent's share issuance is being effected in a manner that is illegal and incompatible with EU law, that the related capital increase is invalid and that the Parent be precluded from issuing new shares for the purpose of repaying the Minister approximately €400m in respect of the Contingent Capital Notes. The plaintiffs have also sought an injunction to restrain the issuance of the new Parent Ordinary Shares to raise capital for the purpose of repaying the Minister pending certain other events, including the determination of the case that is before the CJEU, referred to above. The plaintiffs have also sought to restrain the ISE from admitting any such new Parent Ordinary Shares to trading pending certain events, again including the determination of the case that is before the CJEU, referred to above. The Minister was subsequently joined as a notice party to these proceedings.

Following a hearing on 24 April 2015, the High Court on 25 April 2015 dismissed all of the plaintiffs’ application for orders, including those applications seeking to restrain the Parent from proceeding with the proposed issuance of new shares and to restrain the ISE from admitting to trading any of the new Parent Ordinary Shares. The plaintiffs may, as a matter of course, appeal the High Court’s decision to the Court of Appeal and may seek an expedited hearing of the appeal. The plaintiffs may also seek to appeal the High Court’s decision (or any decision of the Court of Appeal) to the Supreme Court of Ireland. There would be no automatic right to make such appeal; in determining whether to grant leave to appeal, the Supreme Court would require to be satisfied that the decision involves a matter of general public importance and/or that the interests of justice require that the appeal be heard by the Supreme Court and, in the case of a direct appeal to the Supreme Court, that there are exceptional circumstances warranting such an appeal. The plaintiffs may also seek to bring

29 an additional application before the CJEU arising out of these issues, either as part of the case that is before the CJEU, referred to above, or separately to it. Following the dismissal by the High Court on 25 April 2015 of all of the plaintiffs’ applications, the Parent is not prevented from proceeding with the proposed issuance of new shares and would not be so prevented by any such appeal brought by the plaintiffs, or by initiation of any case in the CJEU relating to these proceedings, absent a contrary binding determination by a relevant court. The Parent intends to vigorously defend any appeal that may be issued in these proceedings, and any related case before the CJEU which the plaintiffs may initiate, and the substantive trial of the action in due course. Furthermore, the Parent intends to proceed with the issuance of new Parent Ordinary Shares unless otherwise directed by binding determination of a relevant court.

The Group could be adversely affected to the extent that its reputation or the reputation of its brand is damaged as a result of any such proceedings or any adverse judgments issued in connection with any such proceedings and/or regulatory investigations, or to the extent that it incurs significant costs in connection with any such proceedings, any of which outcomes could in turn have a material adverse effect on the Group's business, results of operations, financial condition, profitability and prospects, or could expose the Group to customer redress, administrative actions or sanctions, potential loss of customers and the potential requirement to hold additional regulatory capital.

There is a risk that the minority shareholders may continue to bring legal challenges seeking to delay, restrict or prevent the Capital Raise and any such delay, restriction or prevention may have material adverse consequences for the Group's regulatory position, business, results of operations, financial condition, profitability and prospects and liquidity and funding and may damage its reputation or brand. See also the Risk Factor "If the Group does not raise capital through the Capital Package, it may be unable to access additional capital or find alternative methods of raising capital".

In addition there is a risk that the minority shareholders may continue to bring other legal challenges seeking to restrict or disrupt the operations of the Parent Group, or otherwise challenge the actions of the Parent Group.

In respect of any proceedings where the Group is a respondent, any adverse judgments in respect of those proceedings could expose the Group to substantial monetary damages, other penalties and/or injunctive relief, and in an extreme scenario an adverse judgment in respect of these proceedings could result in orders being made in respect of historic transactions entered into by the Group, requiring that such concluded transactions be varied or unwound.

28. The Group may be subject to privacy or data protection failures or data related to fraudulent activity.

The Group is subject to regulation regarding the use of personal customer data. The Group processes personal customer data (including for example name, address and bank details of customers) as part of its business, some of which may be sensitive personal data, and therefore the Group must comply with strict data protection and privacy laws and regulations. Such laws restrict the Group's ability to collect and use personal information relating to customers and potential customers including the use of that information for marketing purposes. The Group is also at risk from cyber-theft. The Group seeks to ensure that procedures are in place to ensure compliance with the relevant data protection regulations by its employees and any third-party service providers, and also implements security measures to help prevent cyber-theft. Notwithstanding such efforts, the Group is exposed to the risk that this data could be wrongfully appropriated, lost or disclosed, stolen, or processed in breach of data protection and privacy laws and regulations. If the Group or any of the third-party service providers on which it relies fails to store or transmit customer information in a secure manner, or if any loss or theft of personal customer data were otherwise to occur, the Group could be subject to investigative or enforcement action by relevant regulatory authorities and could face liability under data protection and privacy laws and other regulations. The Group could also be targeted by other forms of fraudulent activity. Any of these events could also result in the loss of the goodwill of its customers and, negatively impact the Group's brand and reputation and deter new customers which could have a material adverse effect on the Group's reputation, business, results of operations, financial condition and prospects.

29. The Group's operations have inherent reputational risk.

The Issuer believes that the Group's brand and its reputation is one of its most important assets and its ability to attract and retain customers and conduct business with its counterparties could be adversely affected to the extent that its reputation or the reputation of its brand is damaged. Failure to address, or appearing to fail to address, various issues that could give rise to reputational risk could cause harm to the Group's and the Group's prospects. Reputational issues may arise, for example, as a result of:

 breaching or facing allegations of having breached legal or regulatory requirements:

 failing or facing allegations of having failed to maintain appropriate standards of customer privacy, data protection or customer service;

30  technology failures that impact upon payment processing, customer services and for accounts;

 litigation; or

 other specific events such as media speculation or political comment.

A failure to address any such issues appropriately could make customers, depositors, counterparties and investors unwilling to do business with the Group, which could adversely affect the Group's business, results of operations, financial condition and prospects and could damage the Group's relationships with its regulators. The Group may not be successful in avoiding damage from reputational risk.

30. The Irish parliamentary banking inquiry into factors which contributed to the Irish banking crisis announced by the Irish Government, may result in the Group incurring costs in facilitating and engaging with the investigation and may, depending on the findings of the investigation, result in reputational damage to the Group or further investigations into the Group's conduct.

On 7 May 2014, formal steps began to establish the Banking Inquiry under the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act 2013. On 14 May 2014, a Joint Committee of the Oireachtas was appointed and it has proposed the following terms of reference for the Banking Inquiry: "To inquire into the reasons Ireland experienced a systemic banking crisis, including the political, economic, social, cultural, financial and behavioural factors and policies which impacted on or contributed to the crisis, by investigating relevant matters relating to banking systems and practices, regulatory and supervisory systems and practices, crisis management systems, and policy responses and the preventative reforms implemented in the wake of the crisis."

As more particularly set out in the Risk Factor "The Group's operations have inherent reputational risk", the Group's reputation is one of its most important assets and its ability to attract and retain customers and conduct business with its counterparties could be adversely affected to the extent that its reputation or the reputation of its brand is damaged as a result of the manner in which the Banking Inquiry is conducted, any public debate which will surround it and, ultimately, any findings which it makes. Any negative impact on the brand or reputation of the Group could have a material adverse effect on the Group's business, results of operations, financial conditions and prospects.

31. The value of certain financial instruments recorded at fair value is determined using financial models incorporating assumptions, judgements and estimates that may change over time or may ultimately not turn out to be accurate.

In establishing the fair value of certain financial instruments, the Group relies on quoted market prices or, where the market for a financial instrument is not sufficiently active, internal valuation models that utilise observable financial market data. In certain circumstances, the data for individual financial instruments or classes of financial instruments utilised by such valuation models may not be available or may become unavailable due to changes in financial market conditions. In such circumstances, the Group's internal valuation models require the Group to make assumptions, judgements and estimates to establish fair value. In common with other financial institutions, these internal valuation models are complex, and the assumptions, judgements and estimates the Group is required to make often relate to matters that are inherently uncertain. For example, in respect of calculations made by the Group as to the fair value of derivatives and debt instruments, the principal dependencies are future interest rates and credit spreads. Such assumptions, judgements and estimates may need to be updated to reflect changing facts, trends and market conditions. Valuations in future periods, reflecting prevailing market conditions, may result in significant changes in the fair values of these instruments, which could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

32. A deterioration in employee relations could adversely affect the Group.

The Group consults with its employees and the relevant trade unions regarding pay, work practices and conditions of employment. Furthermore, general salary increases have in recent times been frozen as a result of the Group's financial position, and in any event, the 2011 Placing Agreement applies restrictions on the Group's ability to alter terms and conditions of employment. The Group may not be able to negotiate wages and salaries and terms and conditions of employment on terms that support its ability to offer its services at competitive rates, the Group's future industrial relations issues may not be resolved through negotiation or the existing industrial relations fora, and the Group's employees may resort to industrial action. In the event that the Group becomes subject to industrial action or other labour conflicts, this may result in increased costs, disruption to the Group's business and loss of customers and could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

33. Rating downgrades and/or negative market sentiment may impact the Group, the financial services sector and/or Ireland.

31 If sentiment towards Ireland, the banks and/or other financial institutions operating in Ireland (including the Group) were to deteriorate, or if the Group's ratings and/or the ratings of the sector were to be further adversely affected, this could have a material adverse effect on the Group's business, results of operations, financial condition and prospects and could restrict its ability to source regulatory capital and funding. The Group's credit ratings are subject to change and could be downgraded as a result of many factors, including a reduction in the Group's credit strength and the credit strength of the Group's collateral, or the failure of the Group to implement its strategies successfully. In addition, any such change in sentiment or reduction in ratings could result in an increase in the costs of, and a reduction in the availability of, wholesale funding and deposit arrangements which could have a material adverse effect on the Group's business, results of operations, financial condition and prospects and on its liquidity and funding. In particular, any further downgrade in the Group's credit ratings could:

 undermine confidence in the Group (which could, among other matters, result in retail and/or corporate deposit withdrawals);

 limit the range of counterparties willing to enter into transactions with the Group, as many institutions require their counterparties to satisfy minimum ratings requirements;

 increase the Group's borrowing costs; or

 adversely affect the Group's liquidity and competitive position.

34. A rating downgrade to funding vehicles is a risk to the Group's business.

The Group places a significant element of its ROI and UK residential mortgages into RMBS structures. The rated notes issued under these structures may be sold to investors or used in repo transactions. Their eligibility for such transactions is dependent on their credit ratings. For further information see the Risk Factor "Reduced availability of funding, or an increased cost of funding, are risks to the Group's business". Credit ratings are dependent on a variety of factors including interest rates, arrears levels, collateral values, counterparty risk and the rating agencies assessment of the Irish and UK economies, housing markets and the Group's ability to manage and/or service the mortgages.

An adverse change in the credit rating of the rated notes may limit the Group's ability to raise funding using the notes which could result in a significant increase in the Group's cost of funding or have other adverse effects on the Group's business, financial performance or future prospects including its ability to meet its regulatory liquidity minimums (for further information see the Risk Factor "Constraints on liquidity are a risk to the Group's business".

RISKS RELATED TO THE INDUSTRY

1. There may be difficulties in enforcing, or delays in enforcing security against defaulting borrowers.

The Issuer must comply with the CCMA before enforcing security against defaulting borrowers in Ireland. The CCMA provides that residential mortgage lenders (such as the Issuer) must wait eight months before taking legal action in respect of mortgages in arrears. In addition, the Issuer has agreed to support the Banking and Payments Federation of Ireland's statement of intent issued on 10 November 2009. This statement of intent provides that where a customer who is facing repayment difficulties in respect of his principal private residence enters into a mutually acceptable arrangement with his lender which is implemented, and reviewed on a periodic basis, the lender will not initiate any form of legal action against that borrower in respect of that debt.

In addition to the CCMA and the Consumer Protection Code, the ability of the Issuer to enforce security against certain defaulting borrowers in Ireland may also be delayed by virtue of the Central Bank's Code of Conduct for Business Lending to Small and Medium Enterprises published by the Central Bank (the SME Code). The SME Code is a code of conduct for business lending to small and medium enterprises. The SME Code applies to small and medium enterprises which can include natural persons, in particular "a natural or legal person or group of natural or legal persons, but not an incorporated body, with an annual turnover in excess of €3m in the previous financial year, acting within their business, trade or profession". To the extent that the Issuer engages in lending to SMEs, it will have to comply with the SME Code, which includes provisions relating to communications with the borrower, information to be provided to the borrower and provision and arrangements which are to be made with a borrower prior to enforcing security against defaulting borrowers.

In addition to compliance with the codes referred to above, the ultimate enforcement of security against defaulting borrowers by way of legal process can be a lengthy process, with enforcement taking up to six years in some instances.

32 In the UK, the Group's ability to act against defaulting borrowers may be constrained by the requirements of the FCA's Mortgages and Home Finance: Conduct of Business sourcebook ("MCOB"). The MCOB sets out the procedures that mortgage lenders (such as CHL) must comply with when dealing with customers in arrears to ensure that those customers are treated fairly. Delays in, or a restriction on, the Group's ability to enforce security against defaulting borrowers in Ireland or the UK may adversely affect the Group's business, results of operations, financial condition and prospects.

2. Increased volatility in financial markets has resulted in, and may continue to result in, reduced asset valuations.

Increased volatility and any dislocation affecting certain financial markets and asset classes could reduce the mark-to- market valuations of assets in the Group's 'available for sale' trading portfolios and assets and liabilities designated at fair value through the profit and loss account. For further information see the Risk Factor "The value of certain financial instruments recorded at fair value is determined using financial models incorporating assumptions, judgements and estimates that may change over time or may ultimately not turn out to be accurate". The 'available for sale' portfolio accounted for 7.3 per cent. of the Group total assets as at 31 December 2014. Any deterioration in the performance of the assets in the Group's 'available for sale' portfolio could lead to additional impairment losses and adversely impact the Group's results, financial condition and prospects.

Reduced asset valuations will also impact the valuation of collateral used and/or available for secured funding See also the Risk Factor "Reduced availability of funding, or an increased cost of funding, are risks to the Group's business."

3. Market risks, including interest rate risk, foreign exchange risk and bond price risk, are risks to the Group's business.

Market risk is the potential adverse change in the Group's earnings or the value of its net assets arising principally from movements in, or volatility of, interest rates, bond prices, exchange rates and other market prices. The major part of the Group's market risk is interest rate risk in the euro and Sterling markets. Changes in interest rate or bond price levels in these or other markets may impact the value of assets, the value of liabilities or the margin received by the Group. The terms of existing loans or facilities may mean that the Group is restricted in its ability to increase interest rates charged to customers in response to changes in interest rates that affect the costs of funding.

Foreign currency exchange risk is the volatility in earnings resulting from the retranslation of foreign currency (e.g. Sterling and U.S. Dollar) denominated assets and liabilities from mismatched positions. It arises due to the fact that the Group conducts business in a range of currencies other than euro, principally Sterling and U.S. Dollars. The Group's assets and liabilities subject to foreign exchange risk comprise the retail and corporate deposit books and loan book, combined with the interbank lending, wholesale market funding instruments and the liquid asset investment portfolio. The main foreign exchange exposure for the Group arises in managing its sterling-denominated loan business and the Isle of Man deposit book business conducted by PBI. Substantial changes in interest or foreign exchange rates could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

4. Competition in the Irish personal financial services markets may adversely affect the Group's operations.

The Irish market for financial services is competitive, with several factors affecting the Issuer's ability to sell its products, including price, returns offered, range of product lines, product quality, brand, reputation and distribution strength, name recognition and management performance. Within Ireland, the Group's principal competitors comprise the major Irish banks, deposit takers and credit unions, including Allied Irish Banks p.l.c., Bank of Ireland, KBC Bank Ireland p.l.c., Ulster Bank Ireland Limited and An Post.

The Group competes with other providers of personal financial services, and operates in a competitive and consolidated market. The main personal financial services markets in which the Group operates is mature and slow growing, so that growth requires taking market share from competitors. As a result, the Group's business may be impacted by competitor actions (including by actions of competitors who are less adversely affected by legacy issues (such as tracker mortgage drag) and who may have access to funding at a cheaper rate than the Group). The Group's business could also be impacted by reductions in the variable interest rates (potentially driven by increased competition or through regulatory intervention) that it applies to both its new and existing mortgage business, which could adversely impact the Group's interest income margins. Competition may increase in some or all of the Group's principal markets or products and this may have a material adverse effect on the Group's business, results of operation, financial condition and prospects.

Competition may elevate the focus on price and service as the key differentiators, each of which carries a cost to the provider. If the Group is unable to match the efficiency of its competitors in these respects, it risks losing competitiveness and being unable to match its strategic, growth and income aspirations. The Group primarily focuses on its policy of offering consistent long-term good value and better service to its customers. The market for financial services and the mortgage market in particular have been reshaped by the recent financial crisis. Lenders have moved

33 increasingly towards a policy of concentrating on the highest quality customers, judged by credit score and loan to value criteria, and there is strong competition for these customers. Furthermore, as the wholesale funding market has become more challenging, there has been greater competition for retail deposits, which has inevitably impacted lenders' margins.

Competition may intensify further in response to consumer demand, technological changes, the impact of consolidation by the Group's competitors, regulatory actions and other factors. For example, ready access to a network of properties and an existing customer base has enabled certain non-financial institutions (such as Tesco) to begin to offer financial products such as loans to consumers (and could allow other intermediaries to expand the scope and scale of their product range by offering mortgage products, e.g. credit unions); and technological advances have enabled other participants (such as Rabobank) to act as a virtual bank and offer savings and other products without a traditional 'bricks and mortar' network of branches. As a further example, in response to competition in the mortgage market, in early January 2015 the Issuer announced proposals to reduce its interest rate on variable interest-rate mortgages for new customers by between 0.36 per cent. and 0.42 per cent. These reduced rates came into effect on 12 January 2015. An extension in the scope and scale of lending into areas such as mortgages by lenders such as the credit union sector could result in increased competition. Increased competition as a result of these or other factors could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

5. Changes in accounting policies or in industry accounting standards could materially affect how the Group reports its financial condition and results of operations.

From time to time, the International Accounting Standards Board and/or the European Union change the international financial reporting standards issued by the International Accounting Standards Board, as adopted by the European Commission for use in the European Union ("IFRS"), that govern the preparation of the Group's financial statements. These changes can be difficult to predict and could materially impact how the Group's records and reports its financial condition and results of operations. In some cases, the Group could be required to apply a new or revised standard retroactively, resulting in restating prior period financial statements. For example, IFRS 9 Financial Instruments is the new standard to replace IAS 39. It will change the classification and measurement of some financial assets, the recognition and the financial impact of impairment and hedge accounting and is mandatorily effective for periods beginning on or after 1 January 2018. It is not possible to estimate the precise financial effects of this new standard, although it is expected that IFRS 9 will have a significant impact for the Group, in line with the industry as a whole.

6. The Group may be subject to risks relating to the proposed Resolution Directive.

The purpose of the European Parliament and Council adopted Directive 2014/59/EU providing for the establishment of an EU-wide framework for the recovery and resolution of credit institutions and investment firms (the Resolution Directive) is to harmonise and upgrade the tools for dealing with bank crises across the EU.

The Resolution Directive will apply to both credit institutions and larger investment firms. It will require relevant entities to prepare recovery plans to overcome financial distress and Member States to appoint 'National Resolution Authorities' that will be granted certain powers and lay out plans to resolve failed banks in a way which preserves their most critical functions. The key requirements of the Resolution Directive can be divided into the following categories:

 Preparation and prevention: The Resolution Directive requires that each institution (at entity and group level) draw up recovery and resolution plans on how to deal with situations which might lead to financial stress or the failure of the group.

 Early Intervention: The Resolution Directive provides for powers of intervention where the financial situation or solvency of an institution is deteriorating (e.g. if a bank is in breach or about to breach, regulatory capital requirements) or where there is a 'serious infringement of law'. If the implementation of the recovery plan is insufficient, a special manager may be appointed to replace the management of the entity.

 Resolution: National Resolution Authorities are required to prepare a resolution plan for institutions (at entity and group level) setting out options for resolving the institution in different scenarios including systematic instability.

Member States must adopt and publish the laws, regulations and administrative provisions necessary to comply with the Resolution Directive by 31 December 2014 and apply those measures from 1 January 2015. The introduction of the new rules and proposals will increase regulatory and compliance costs for the Group. The impact of the Resolution Directive and the impact of its implementation are uncertain, and it therefore may have wider and/or unanticipated consequences for the Group and the financial services industry in general.

7. The Group's business and financial performance would be adversely affected by the exit from the EMU of one or more of its members, or the withdrawal of the United Kingdom from the European Union.

34 The possibility remains that the euro could be abandoned as a currency by one or more countries that have already adopted its use and, in an extreme scenario, abandonment of the euro could result in the dissolution of the European Monetary Union (the EMU). This would lead to the re-introduction of individual currencies in one or more EMU member states. The effects on the European and global economies of the exit of one or more European Union member states from the EMU, the potential dissolution of the EMU and the redenomination of financial instruments from euro to a different currency, are impossible to predict fully. If any such events were to occur they would likely:

 result in significant market dislocation;

 heighten counterparty risk; and

 affect adversely the management of market risk and, in particular, asset and liability management due, in part, to redenomination of financial assets and liabilities.

In addition, an outright or partial withdrawal of the United Kingdom from the European Union would likely have profound implications for Ireland. A withdrawal could, among other outcomes, disrupt the free movement of goods, services and people between the two countries, and, undermine bilateral cooperation in key policy areas as well as significantly disrupt trade. In particular, a withdrawal would mean that Ireland would not be able to negotiate bilateral trade agreements with the UK under current EU rules.

If any such events were to occur, the Group anticipates that such an event would be likely to materially adversely impact the cost and availability of funding arrangements, thereby increasing competition for retail funds and adversely impacting the Group's net interest margin, and there may be other unanticipated implications for the Group as a result of any such events.

8. The implementation of mortgage rate changes in the Irish mortgage market is subject to heightened scrutiny.

As a result of the Central Bank actions described in the Risk Factor "The Group is exposed to risk in respect of the manner in which it determines and implements interest rate changes." and recent political discussion and press coverage, the setting of variable mortgage interest rates in the mortgage market in Ireland has become subject to heightened scrutiny. A case taken against the Financial Services Ombudsman in the Irish courts has further highlighted the issue. That case relates to the rejection by the Financial Services Ombudsman of a complaint against a financial institution other than the Issuer in connection with that financial institution's terms and conditions governing the complainants' variable interest rate mortgages.

Currently, the mortgage market in Ireland, particularly in relation to the practice of implementing mortgage rate changes, is subject generally to heightened scrutiny. The Issuer is at risk of a review or investigation by the Central Bank, and potentially sanctions or penalties, pursuant to the administrative sanctions regime or otherwise, in respect of either perceived or actual failure to act or document, appropriately, in its dealings with mortgage customers (aside from the question of whether the Issuer's terms and conditions comply with legal and regulatory requirements). Any such review or investigation, and any related litigation or regulatory action, could adversely affect the Group's business, financial condition, results of operations and profitability, and could result in negative public opinion towards the Group. For further information on the consequences of such negative public opinion, see the Risk Factor "The Group is exposed to conduct risk in the execution of the Group's activities and processes".

RISKS RELATING TO REGULATION, SUPERVISION AND TAXATION

1. The Group must comply with a wide range of laws and regulations.

As a financial services firm, the Group is subject to extensive and comprehensive regulation. In particular, the global financial crisis and the Irish banking crisis has resulted in banking regulation internationally and in Europe that has been strongly focused on capital adequacy rules, which has affected the Group's results of operations and financial condition, and the Group expects that banking regulation internationally and in Ireland will continue to have an impact on the Group's results of operations and financial condition in future periods.

The Group must comply with numerous laws and regulations which significantly affect the way it does business. Consequently, the Group is exposed to many forms of risk in connection with compliance with such laws and regulations, including, but not limited to:

 breaching general organisational requirements, such as the requirement to have robust governance arrangements (which include a clear organisational structure with well defined, transparent and consistent lines of responsibility), effective processes to identify, manage, monitor and report the risks the Group is or might be

35 exposed to, and internal control mechanisms, including sound administrative and accounting procedures and effective control and safeguard arrangements for information processing systems;

 the possibility of mis-selling of financial products or the mishandling of complaints related to the sale of such products by or attributed to an employee of the Group, including as a result of having sales practices, complaints procedures and/or reward structures in place that are determined to have been inappropriate;

 breaching laws and requirements relating to the safeguarding of customer data, the detection and prevention of money laundering, terrorist financing, bribery and corruption and other financial crime; and

 non-compliance with legislation relating to unfair or required contractual terms or disclosures.

Failure to comply with the wide range of laws and regulations could have a number of adverse consequences for the Group, including the risk of:

 substantial monetary damages or fines, other penalties and injunctive relief, the amounts of which are difficult to predict and may exceed the amount of provisions set aside to cover such risks;

 regulatory investigations, reviews, proceedings and enforcement actions or sanctions;

 being required to amend sales processes, product and service terms and disclosures, withdraw products or provide redress or compensation to affected customers;

 the Group either not being able to enforce contractual terms as intended or having contractual terms enforced against the Group in an adverse way;

 civil or private litigation (brought by individuals or groups of individuals/claimants) in Ireland, the UK, the Isle of Man or other jurisdictions (which may arise out of regulatory investigations and enforcement actions);

 criminal enforcement proceedings; and

 regulatory restrictions on the Group's business, any or all of which could result in the Group incurring significant costs, may require provisions to be recorded in the Group's financial statements, could adversely impact future revenues from affected products and services and could have a negative effect on the Group's reputation and the confidence of customers in the Group, as well as taking a significant amount of the directors' and management's time and resources away from the implementation of the Group's strategy. Regulatory restrictions could also require additional capital and/or liquidity to be held. Any of these risks, should they materialise, could have a material adverse effect on the Group's business, results of operations, financial condition and prospects. In addition to the above, failure to comply with the wide range of laws and regulations could result in the Group's regulators taking administrative actions or imposing sanctions against the Group as well as potentially cancelling or restricting the Group's regulatory authorisations altogether, thereby preventing it from carrying on its business.

2. The Group is subject to extensive regulation and supervision in relation to the levels of capital in its business. The minimum regulatory capital requirements, as well as the manner in which existing regulatory capital is calculated, could change in the future.

The global financial crisis and the Irish banking crisis has resulted in banking regulation internationally and in Europe that has been strongly focused on capital adequacy rules. If the Group fails to meet its minimum regulatory capital requirements, this may result in administrative actions or sanctions against it or supervisory measures or resolution. For further information on the Group's current capital requirements the Description of the Issuer section of this Information Memorandum. Effective management of the Group's capital is critical to its ability to operate and grow its business and to pursue its strategy. Any change that limits the Group's ability to effectively manage its balance sheet and capital resources (including, for example, reductions in profits and retained earnings as a result of credit losses, write-downs or otherwise, increases in risk-weighted assets, delays in the disposal of certain assets or the inability to raise capital or funding through funding markets as a result of market conditions or otherwise) could have a material adverse effect on the Group's business, results of operations, financial condition and prospects.

Basel III has been implemented in the EEA through a regulation and an associated directive together referred to as CRD IV. As a result of CRD IV, the Group is required to hold higher minimum capital ratios and will need to address the requirement for the introduction of conservation, countercyclical and systemic risk buffers (to the extent applied) which have commenced and will be phased in over the period to January 2019. Further information on the key elements of

36 CRD IV are contained in the Risk Factor "The implementation of CRD IV will continue to have an effect on the Group's business".

3. The implementation of CRD IV will continue to have an effect on the Group's business.

From 1 January 2014, the Group has been regulated under CRD IV, as implemented in Ireland. This has introduced significant changes in the prudential regulatory regime applicable to banks including: increased minimum levels of capital; enhanced quality standards for qualifying capital; increased risk weighting of assets, particularly in relation to market risk and counterparty credit risk; and the introduction of a leverage ratio and new liquidity metrics. CRD IV provides for some of these measures to be phased in over transitional periods up to 2024.

The key elements of the Capital Requirements Regulation, which form part of CRD IV include the following:

 Capital requirements – higher minimum capital ratios and the introduction of conservation, countercyclical and systemic risk buffers, which in general are expected to be phased in over the period to January 2019, where applicable;

 Definition of capital – changes to regulatory capital recognition criteria that are designed to increase the quantum and quality of regulatory capital;

 Increased capital requirements – increases to the risk weights of counterparty credit exposures relating to derivatives transactions entered into with certain financial institutions (although these will be lower in respect of cleared transactions) and introducing requirements for institutions to set aside regulatory capital to cover credit valuation adjustment risk (in addition to counterparty default risk);

 Common Equity Tier 1 ratio – a risk-based ratio calculated as common equity tier 1 capital (CET1) divided by risk weighted assets, as calculated on the basis set out in CRD IV;

 Securitisation exposures – from 2014 certain securitisation exposures can either be deducted from CET1 or risk weighted 1,250 per cent.;

 Deductions from capital – expected losses less provisions will be deducted in full from CET1 capital, gross of tax. Under Basel II, only 50 per cent. of the deduction was from Core Tier 1 Capital. In addition, deferred tax assets will be deducted from CET1, subject to a 10 year transition period for Irish banks;

 New liquidity metrics – two new liquidity ratios will be introduced. These are a short-term liquidity stress ratio, referred to as the liquidity coverage ratio (LCR), and a longer-term ratio, referred to as the net stable funding ratio (NSFR). Both ratios will be required to be maintained at levels in excess of 100 per cent., when fully implemented in January 2018; and

 New leverage ratio – a new ratio, calculated by dividing Tier 1 capital by gross balance sheet exposure (the leverage ratio), is required to be maintained at a level of at least 3 per cent. This requirement will be harmonised at EU level from January 2018.

CRD IV requirements adopted in Ireland may change or be supplemented, whether as a result of further changes to CRD IV agreed by EU legislators, binding regulatory technical standards to be developed by the European Banking Authority and requirements applied to Irish banks (including individual model approvals previously granted under CRD II and/or CRD III) or otherwise. Such changes, either individually and/or in aggregate, may lead to further requirements in relation to the Group's capital, leverage, liquidity and funding ratios or alter the way such ratios are calculated.

A market perception or an actual shortage of capital issued by the Group could result in regulatory or Irish Government actions, including requiring the Group to issue additional CET1 securities, requiring the Group to retain earnings or suspend dividends (a requirement under the SSM's Dividend Distribution Policy ECB/2015/2) or issuing a public censure or the imposition of sanctions or trigger a conversion of the Contingent Capital Notes (if these have not been repurchased at that time) or of the Securities. In particular, in connection with the implementation of the Capital Plan the Joint ECB/CBI Supervisory Team has prohibited the Parent from paying any dividends to shareholders prior to 31 December 2015 (and thereafter only with ECB approval). These factors may affect the Group's capacity to continue its business operations, generate a return on capital, pay future dividends or pursue acquisitions or other strategic opportunities, impacting future growth potential.

37 Furthermore the Group may be required to hold higher levels of capital than currently required, either as a result of new rules or regulations, or as a consequence of supervision by the regulators or otherwise, and in such circumstances, this could adversely impact the Group's operational flexibility, reduce earnings and/or restrict earnings growth.

Future legislative and regulatory changes could impose operational restrictions on the Group, limit new lending, cause the Group to raise further capital, increase the Group's expenses and/or otherwise adversely affect its business.

The Group conducts its business subject to ongoing regulation by its regulators. The regulatory regime requires the Group to be in compliance with standards applicable to many of its activities. If the Group fails to comply with any relevant regulations, there is a risk of an adverse impact on its business due to sanctions, fines or other action imposed by regulatory or supervisory authorities.

The Group's current market environment is experiencing increased levels of regulatory and Irish Government intervention in the banking, personal finance and real estate sectors. Future changes in law, regulation, fiscal or other policies are unpredictable and beyond the Group's control and could materially adversely affect the Group's business, results of operations, financial condition and prospects, particularly to the extent that the Group fails to comply with such changes, whether by reason of being unaware of them or otherwise.

Regulators and other bodies in Ireland and worldwide have produced a range of proposals for future legislative and regulatory changes which could impose operational restrictions on the Group, cause the Group to raise further capital, increase the Group's expenses and/or otherwise adversely affect the Group's business, results of operations, financial condition and prospects. These include, amongst others:

 Central Bank Regulations on Mortgages: On 9 February 2015, the Central Bank introduced new regulations, the Central Bank (Supervision and Enforcement) Act 2013 (Section 48) (Housing Loan Requirement) Regulations 2015, which implement new macro-prudential measures in an effort to enhance the resilience of the Irish retail mortgage banking sector and households to housing market developments. The measures place restrictions on the loan to value ("LTV") and loan to income ("LTI") ratios lenders can apply when lending for house purchase and will apply to all lending in Ireland by regulated firms. The measures set out are (i) to restrict new lending for principal dwelling houses ("PDH") for non-first time buyers to below 80 per cent. LTV; (ii) to restrict new lending for PDHs for first time buyers to below 90 per cent. LTV for PDHs valued up to €220,000; (iii) to restrict new lending for PDHs for first time buyers of PDHs valued over €220,000 to below 90 per cent. LTV on the first €220,000 value of the PDH and to below 80 per cent. LTV on any excess value over €220,000.; (iv) to restrict the cumulative monetary value of lending for PDH purposes which breach the limits referred at (i), (ii) and (iii) to 15 per cent. of the euro value of all PDH loans entered into by a lender on an annual basis (v) to restrict new lending for PDHs to below 3.5 times LTI to no more than 20 per cent. of the value of all new PDH loans entered into a lender on an annual basis; and (vi) to restrict new lending to buy-to-let to below 70 per cent. LTV to no more than 10 per cent. of the value of all housing loans for investment purposes entered into by a lender on an annual basis.

 Supervision by the ECB: Banking activities in Ireland are regulated and supervised by the ECB under the European Union (Single Supervisory Mechanism) Regulations 2014 (SI No. 495 of 2014) (the SSM Regulation), the Central Bank Acts and related legislation, and in respect of matters falling outside the scope of the SSM Regulation, by the Central Bank under the Central Bank Acts and related legislation. Under the SSM Regulation, the ECB is responsible for all core banking supervisory responsibilities which includes authorisations capital adequacy, large exposures, liquidity and qualifying holdings. The Group has been designated as a significant credit institution for the purposes of the SSM on the grounds that the total value of the Group's assets exceeds €30b, and as such, from 4 November 2014 it has been directly supervised by the ECB. Under the SSM, significant institutions in Ireland, including the Group, are supervised directly by a 'joint supervisory team' led by the ECB and consisting of both ECB and Central Bank supervisors. The Central Bank remains responsible in Ireland for all areas of supervision not allocated to the ECB under the SSM Regulation, including conduct of business rules and the protection of customer interests. Any future stress tests carried out by or on behalf of the ECB may have adverse implications for the Group to the extent that it does not meet the thresholds required in any such tests, or to the extent that it passes by only a marginal amount. Such adverse results would require the Group to raise additional capital and/or otherwise adversely affect the Group's reputation, business, results of operations, financial condition and prospects.

At this point it is impossible to predict the effect that any of the above changes will have on the Group's operations, business and prospects and how further changes will be implemented. Depending on the specific nature of the requirements and how they are enforced, such changes could have a significant impact on the Group's operations, structure, costs and/or capital requirements. Accordingly, no assurance can be given that the implementation of any of the foregoing matters or any other regulatory or legislative changes that may be proposed will not have a material adverse effect on its operations, business, results, financial condition or prospects.

38 4. The Group is exposed to the risk of changes in tax legislation and its interpretation and to increases in the rate of corporate tax and other tax matters.

The Group's activities are principally conducted in Ireland and it is therefore subject to a range of Irish taxes at various rates. Future actions by the Irish Government to increase tax rates or to impose additional taxes would reduce the Group's profitability. By way of example, the Group was subject to a levy in the amount of €27m in 2014 that was introduced through the 2013 Finance Act. The levy is in the form of a stamp duty and will apply for the period from 2014 to 2016, and is payable in October of each such year. The levy applies to all authorised Irish banks and building societies who were obliged to operate DIRT in 2011, other than those with a DIRT liability of less than €100,000 in that year. Revisions to tax legislation or to its interpretation might also affect the Group's financial condition in the future. In addition, the Group is subject to periodic tax audits which could result in additional tax assessments relating to past periods of up to five years being made. Any such assessments could be material which might also affect the Group's financial condition in the future.

In accordance with applicable accounting rules, the Group has recognised deferred tax assets on losses available to relieve future profits to the extent that it is probable that such losses will be utilised. These deferred tax assets are reflected in the Group's CET1, in accordance with Article 478(2) of the Capital Requirements Regulation. The assets are quantified on the basis of current tax legislation and are subject to change in respect of the tax rate or the rules for computing taxable profits and allowable losses. As at 31 December 2014, the amount of recognised deferred tax assets of the Group on trading losses is €420m. A failure to generate sufficient future taxable profits or changes in tax legislation may reduce significantly the recoverable amount of the deferred tax assets currently recognised in the financial statements with a resultant negative impact on the Group's regulatory capital and capital ratios.

5. The Irish banking system may restructure and change.

The banking system in Ireland has gone through a period of crisis, arising both from the systemic issues facing the financial sector globally, and from its exposure to the property market (domestically and internationally). Following the financial crisis, and the associated Irish Government and regulatory action, the domestic banking landscape in Ireland has undergone major changes as banking institutions have merged or exited. As a result of such actions, the Group became 99.2 per cent. owned by the Irish Government pursuant to domestic bank restructurings. Furthermore, the combined Allied Irish Banks p.l.c. and Educational Building Society received a capital injection from the Irish Government resulting in 99.8 per cent Irish Government ownership. While in Irish Government ownership Anglo Irish Bank Corporation p.l.c. and Irish Nationwide Building Society were merged, under the Credit Institutions (Stabilisation) Act 2010, to form IBRC which was then put into special liquidation in 2013. Foreign banks exited the Irish market; for example, Bank of Scotland (Ireland) withdrew in 2010 and its Irish operations are in wind-down. Similarly, Danske Bank and ACC Bank (owned by Rabobank) are closed to new retail business in Ireland. Further restructuring of the Irish banking system could occur on a market driven basis or as a result of other factors such as the involvement of the EU or the Irish Government. As a material part of the Group's business and activities is in the Irish banking system, it is likely that the Group would be affected by any such restructuring and the Group will not be able to control the outcome of any such restructuring. Moreover, there is a risk that the Group or its competitive position may be adversely affected by any such restructuring.

6. A change in Irish Government and/or UK government policy could have a material adverse effect on the Group.

Both Irish Government and UK government policy in respect of the banking sector, including its recapitalisation and structure, has and will continue to have a major impact on the Group. Both the Irish Government and the UK government can implement their policies by utilising their powers under existing legislation, the introduction of new or amended legislation or, in the case of the Group and the Irish Government, the exercise of the Irish Government's shareholder and other rights. The current policies of either government may not be continued and the introduction of new policies or the amendment of existing policies could have a significant impact on the Group's business, results of operations, financial condition, liquidity and prospects.

A general election must be held in Ireland no later than 9 April 2016. As a result of this general election, a new Irish Government constituted by different members or parties may be elected. Any such new Irish Government may not continue the policies of the current government and may introduce new policies that could have a significant impact on the Group's business, results of operations, financial condition, liquidity or prospects.

A general election is also scheduled to be held in the UK on 7 May 2015. As a result of such general election, a new UK government constituted by different members or parties may be elected. Any such new UK government may not continue the policies of the current government, and may introduce new policies that could have a significant impact on the Group's CHL business, and its results of operations, financial condition, liquidity or prospects.

39 RISKS RELATING TO THE CAPITAL PACKAGE

1. If the Group does not raise capital through the Capital Package, it may be unable to access additional capital or find alternative methods of raising capital.

Successful implementation of the Capital Raise and the issuance of the Securities (together, the Capital Package) will contribute to further optimisation of the Group's capital structure including by way of the proposed repurchase of the Contingent Capital Notes, supporting the maintenance of appropriate capital in the Group and securing the final amount of the capital shortfall identified under the adverse scenario stress test applied by the ECB as part of the SSM CA, details of the results of which were announced on 26 October, 2014.

If the Capital Package does not proceed, the Group will need to assess its strategic and operational position and may be required to find alternative methods for achieving the requisite capital ratios within the timeframe prescribed under the SSM CA (by 26 July 2015). Such methods could include, amongst other things, an accelerated reduction in Risk Weighted Assets, disposal of certain businesses or increased issuance of additional tier 1 securities (subject to limits on the acceptability of additional tier 1 securities to meet a shortfall under the SSM CA adverse scenario). The Issuer believes that there is a low probability that these alternative methods will be available or would be successful in adequately increasing the Group's regulatory capital ratios, without Irish Government involvement. If alternative methods for meeting the requisite capital ratios within the timeframe specified are unsuccessful it is highly likely that the Group would be forced to request further investment by the Irish Government. However, there can be no assurance that the Irish Government would or could invest in such circumstances.

Additionally, further Irish Government involvement would require prior approval by the European Commission under EU State aid rules. The Group would in such circumstances be reliant on the Irish Government notifying any such involvement to the European Commission, and a failure to notify any State aid could render the Group liable to repay such aid. If the European Commission found that there was an element of additional State aid and approved the granting of any such aid then such Irish Government involvement could be implemented. However, there can be no assurance that any additional State aid would be approved by the European Commission or, if it were approved, that the terms of the approval would be favourable to the Group. The provision of additional State aid to the Group would likely impact on the European Commission's final decision clearing all State aid granted to the Group. In particular, the European Commission might seek further commitments from the State and the Parent Group to restore the long-term viability of the Parent Group, to ensure adequate burden sharing by the Parent Group and its capital holders and to minimise any distortions to competition arising from the additional State aid. Additionally, if the European Commission were not satisfied with the proposed commitments for these purposes other options (including in a worst case scenario a liquidation of the Parent Group) could need to be considered in order to secure final approval of the aid provided to the Parent Group or, alternatively, the European Commission could require the State to recover the aid provided to the Parent Group.

If the Group is unable to complete the Capital Package and alternative methods for meeting the requisite capital ratios (including further investment by the Irish Government) are unavailable, the Group's business, results of operations and financial condition would suffer, it could be subject to censure, sanction or fine by the ECB, its ability to access funding could be reduced and its cost of funding could increase and, in an extreme scenario, lead to a suspension or revocation of the Issuer's banking authorisation. However there can be no assurance that the Irish Government would or could invest in such circumstances. Equally, there can be no assurance that the Capital Raise will proceed. The occurrence of any or all such events would be highly likely to cause its share price to decline with negative implications for Shareholders.

2. If the Group does not complete the Capital Raise, it will not be able to repurchase the Contingent Capital Notes

It is intended that, as part of the Group's ongoing efforts to optimise the Group's capital structure, the Issuer will repurchase the Contingent Capital Notes following the completion of the Capital Package. However, if the Capital Raise is not completed, or if sufficient capital is not raised by way of the Capital Package, or if the terms of repurchase are not agreed, there is a risk that the repurchase of the Contingent Capital Notes will not be completed. This could have a material adverse effect on the Group's intended strategy for remedying the SSM CA adverse scenario capital shortfall, which could have a significant impact on the Group's business, results of operations, financial condition, liquidity and prospects. Furthermore, adverse consequences that may arise if the Contingent Capital Notes cannot be repurchased are set out in the Risk Factor "If the Group does not raise capital through the Capital Package, it may be unable to access additional capital or find alternative methods of raising capital".

40 RISKS RELATED TO THE SECURITIES

The obligations of the Issuer in respect of the Securities are unsecured and deeply subordinated, and the rights of the holders of Parent Ordinary Shares will be further subordinated.

The Securities constitute unsecured and subordinated obligations of the Issuer.

On a winding-up of the Issuer, all claims in respect of the Securities will rank junior to the claims of all Senior Creditors of the Issuer. If, on a winding-up or dissolution of the Issuer, the assets of the Issuer are insufficient to enable the Issuer to repay the claims of more senior-ranking creditors in full, the Securityholders will lose their entire investment in the Securities. If there are sufficient assets to enable the Issuer to pay the claims of senior-ranking creditors in full but insufficient assets to enable it to pay claims in respect of its obligations in respect of the Securities and all other claims that rank pari passu with the Securities, Securityholders will lose some (which may be substantially all) of their investment in the Securities.

For the avoidance of doubt, the holders of the Securities shall, in a winding-up or dissolution of the Issuer, have no claim in respect of the surplus assets (if any) of the Issuer remaining in any winding-up or dissolution following payment of all amounts due in respect of the liabilities of the Issuer.

In addition, as further described below under "Upon the occurrence of a Trigger Event, the Securityholders may lose all or some of the value of their investment in the Securities", the Securities will, upon the occurrence of a Trigger Event, be immediately and mandatorily redeemed as of the Conversion Date and settled (such redemption and settlement being the Conversion and the term converted shall be construed accordingly) by the allotment, issue and delivery by the Parent of fully paid Parent Ordinary Shares to the Settlement Shares Depositary for the Securityholders. The claims of holders of Parent Ordinary Shares in a winding-up or dissolution of the Parent are the most junior-ranking of all claims. Claims in respect of Parent Ordinary Shares are not for a fixed principal amount, but rather are limited to a share of the surplus assets (if any) remaining following payment of all amounts due in respect of the liabilities of the Parent.

Although the Securities may pay a higher rate of interest than notes which are not subordinated, there is a substantial risk that investors in the Securities will lose all or some of the value of their investment should the Issuer or, following the Conversion Settlement Date, the Parent, become insolvent.

In addition, because the Parent is a holding company and conducts substantially all of its operations through its subsidiaries, the claims of the Securityholders following Conversion will be structurally subordinated to the creditors of the Parent's subsidiaries. The Parent's rights to participate in the assets of any subsidiary if such subsidiary is liquidated will be subject to the prior claims of such subsidiary's creditors and any preference shareholders, except in the limited circumstance where the Parent is a creditor with claims that are recognised to be ranked ahead of or pari passu with such claims. Accordingly, if one of the Parent's subsidiaries were to be wound up, liquidated or dissolved, (i) the holders of Parent Ordinary Shares would have no right to proceed against the assets of such subsidiary, and (ii) the Parent would only recover any amounts (directly, or indirectly through its holdings of other subsidiaries) in the liquidation of that subsidiary, other than its claims (if any) as a creditor as aforesaid, if and to the extent that any surplus assets remain following payment in full of the claims of the creditors and preference shareholders (if any) of that subsidiary.

Therefore, following Conversion, on a winding-up or dissolution of the Parent, each Securityholder will be effectively further subordinated from being the holder of a subordinated investment in the Issuer to being the holder of Parent Ordinary Shares and, as such, will not have a claim for a fixed amount in the winding-up of the Parent and his claims will be structurally subordinated to the creditors of the Parent's subsidiaries. Accordingly, in these circumstances, there is an enhanced risk that holders will lose all or some of the value of their investment.

The Securities are not obligations of, and are not guaranteed by, the Minister or the Irish Government or any other person.

No limitation on issuing senior or pari passu securities.

There is no restriction on the amount of securities which the Issuer may issue, nor on the amount of any other obligations it may assume, which rank senior to, or pari passu with, the Securities. The issue of any such securities and/or the assumption of any such other obligations may reduce the amount recoverable by Securityholders on a winding-up of the Issuer and/or may increase the likelihood of a cancellation of Interest Amounts under the Securities.

There are no events of default under the Securities and rights of enforcement are limited.

The Conditions do not provide for events of default allowing acceleration of the Securities. Accordingly, if the Issuer fails to make a payment that has become due under the Securities, investors will not have the right to accelerate the

41 principal amount of the Securities. Upon a payment default by the Issuer, the sole remedy against the Issuer available to the Trustee or (where the Trustee has failed to proceed against the Issuer as provided in the Conditions) any Securityholder will be to institute proceedings in Ireland (but not elsewhere) for the winding-up of the Issuer. The Trustee may claim in any winding up of the Issuer (whether or not such winding up is instituted by the Trustee) and claim in such winding-up for the amounts provided in Condition 4, and may take no other or further action to enforce, prove or claim for such payment. The Issuer (other than in a winding-up) will not be obliged to pay any sum or sums sooner than the same would otherwise have been payable by it. In addition, if the Parent fails to issue and deliver the Parent Ordinary Shares to be issued and delivered on Conversion to the Settlement Shares Depositary on the Conversion Settlement Date, a Securityholder's only right under the Securities against the Parent for any such failure will be to claim to have such Parent Ordinary Shares so issued and delivered.

The Issuer may at any time elect, and in certain circumstances shall be required, not to make interest payments on the Securities.

The Issuer may at any time elect, in its sole discretion, to cancel any interest payment (in whole or in part) on the Securities which would otherwise be due on any Interest Payment Date. Additionally, the ECB has the power under the SSM Regulations, European Union (Capital Requirements) Regulations 2014 and Article 104 of the CRD IV Directive to restrict or prohibit payments by an issuer of interest to holders of Additional Tier 1 instruments (such as the Securities).

Furthermore, the Issuer will be required to cancel any Interest Amount (in whole or in part) which would otherwise fall due on an Interest Payment Date if and to the extent that payment of such Interest Amount would: (i) when aggregated with other relevant stipulated payments or distributions, exceed the Distributable Items of the Issuer; (ii) cause any Maximum Distributable Amount then applicable to the Issuer Group to be exceeded; or (iii) result in a breach of the Solvency Condition described in Condition 3.2.

In addition, if a Trigger Event occurs, the Issuer will cancel all interest accrued up to (and including) the Conversion Date.

With respect to cancellation of interest due to insufficient Distributable Items, see also "The level of the Issuer's Distributable Items is affected by a number of factors and insufficient Distributable Items will restrict the ability of the Issuer to make interest payments on the Securities." below. With respect to cancellation of interest due to the application of a Maximum Distributable Amount, see also "CRD IV introduces capital requirements that are in addition to the minimum capital requirement. These additional capital requirements will restrict the Issuer from making interest payments on the Securities in certain circumstances, in which case the Issuer will automatically cancel such interest payments" below.

Any interest not so paid on any such Interest Payment Date shall be cancelled and shall no longer be due and payable by the Issuer. A cancellation of interest in accordance with the Conditions will not constitute a default of the Issuer under the Securities for any purpose.

If the Issuer elects to cancel, or is prohibited from paying, interest on the Securities at any time, there is no restriction (other than any restriction imposed by any applicable law or regulation) on the Issuer from otherwise making distributions or any other payments to the holders of its shares or any other securities issued by any member of the Issuer Group, including securities ranking pari passu with or junior to the Securities. In determining the interim or final distributions (if any) to be declared in respect of the Issuer's shares in respect of any given financial year, the Board of the Issuer will have regard to all relevant factors which it considers to be appropriate, including the profitability of the Issuer, its resources available for distribution and the capital and liquidity position of the Issuer at the time of declaring the distribution. The obligations of the Issuer under the Securities are senior in ranking to its shares. It is the Board of the Issuer's current intention that, whenever exercising its discretion to declare any distribution in respect of its shares, or its discretion to cancel interest on the Securities, the Board of the Issuer will take into account the relative ranking of these instruments in its capital structure. However, the Board of the Issuer may at any time depart from this policy at its sole discretion.

Any actual or anticipated cancellation of interest on the Securities will likely have an adverse effect on the market price of the Securities. In addition, as a result of the interest cancellation provisions of the Securities, the market price of the Securities may be more volatile than the market prices of other debt securities on which interest accrues that are not subject to such cancellation and may be more sensitive generally to adverse changes in the Issuer's financial condition. Any indication that the Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group is trending towards the combined capital buffer requirement (the level at which the Maximum Distributable Amount restriction under the CRD IV Directive becomes relevant) may have an adverse effect on the market price of the Securities.

42 The level of the Issuer's Distributable Items is affected by a number of factors and insufficient Distributable Items will restrict the ability of the Issuer to make interest payments on the Securities.

The Issuer will be required to cancel any Interest Amount (in whole or in part) which would otherwise fall due on an Interest Payment Date if and to the extent that payment of such Interest Amount would, when aggregated with other relevant stipulated payments or distributions, exceed the Distributable Items of the Issuer.

The level of the Issuer's Distributable Items is affected by a number of factors. The Issuer's future Distributable Items, and therefore the ability of the Issuer to make interest payments under the Securities, are a function of the Issuer's existing Distributable Items and its future profitability. In addition, the Issuer's Distributable Items may also be adversely affected by the servicing of more senior instruments or parity ranking instruments.

The level of the Issuer's Distributable Items may be affected by changes to regulation or the requirements and expectations of applicable regulatory authorities. Any such potential changes could adversely affect the Issuer's Distributable Items in the future.

Further, the Issuer's Distributable Items, and therefore the Issuer's ability to make interest payments under the Securities, may be adversely affected by the performance of the business of the Group in general, factors affecting its financial position (including capital and leverage), the economic environment in which the Group operates and other factors outside of the Issuer's control. In addition, adjustments to earnings, as determined by the Board, may fluctuate significantly and may materially adversely affect Distributable Items.

CRD IV introduces capital requirements that are in addition to the minimum capital requirement. These additional capital requirements will restrict the Issuer from making interest payments on the Securities in certain circumstances, in which case the Issuer will automatically cancel such interest payments.

The Issuer will be required to cancel any Interest Amount (in whole or in part) which would otherwise fall due on an Interest Payment Date if and to the extent that payment of such Interest Amount would cause any Maximum Distributable Amount then applicable to the Issuer Group to be exceeded.

Under CRD IV, institutions are required to hold a minimum amount of regulatory capital equal to 8 per cent. of risk weighted assets. In addition to these so-called "own funds" requirements under CRD IV, supervisors may add extra capital to cover other risks (thereby increasing the regulatory minimum required under CRD IV) and the Issuer may also decide to hold an additional amount of capital. CRD IV also introduces capital buffer requirements that are in addition to the minimum capital requirement and required to be met with Common Equity Tier 1 capital. It introduces five new capital buffers: (i) the capital conservation buffer, (ii) the institution-specific countercyclical buffer, (iii) the global systemically important institutions buffer, (iv) the other systemically important institutions buffer and (v) the systemic risk buffer. Some or all of these buffers may be applicable to the Issuer Group as determined by the ECB.

Under Article 141 (Restrictions on distributions) of the CRD IV Directive, EU Member States must require that institutions that fail to meet the "combined buffer requirement" (broadly, the combination of the capital conservation buffer, the institution-specific counter-cyclical buffer and the higher of (depending on the institution) the systemic risk buffer, the global systemically important institutions buffer and the other systemically important institutions buffer, in each case as applicable to the institution) will be subject to restricted "discretionary payments" (which are defined broadly by CRD IV as payments relating to Common Equity Tier 1 and Additional Tier 1 instruments (which include the Securities) and variable remuneration). The restrictions will be scaled according to the extent of the breach of the "combined buffer requirement" and calculated as a percentage of the profits of the institution since the last distribution of profits or "discretionary payment". Such calculation will result in a "maximum distributable amount" in each relevant period. As an example, the scaling is such that in the bottom quartile of the "combined buffer requirement", no "discretionary distributions" will be permitted to be paid. As a consequence, in the event of breach of the combined buffer requirement it will be necessary to reduce discretionary payments, including potentially exercising the discretion to cancel (in whole or in part) interest payments in respect of the Securities.

The Issuer's capital requirements are, by their nature, calculated by reference to a number of factors any one of which or combination of which may not be easily observable or capable of calculation by investors. Accordingly, investors in the Securities may not be able to assess or predict accurately the proximity of the risk of interest payments being prohibited from time to time as a result of the operation of Article 141 of the CRD IV Directive.

The Securities may be traded with accrued interest, but under certain circumstances described above, such interest may be cancelled and not paid on the relevant Interest Payment Date.

The Securities may trade, and/or the prices for the Securities may appear, on the Global Exchange Market and in other trading systems with accrued interest. If this occurs, purchasers of Securities in the secondary market will pay a price

43 that reflects such accrued interest upon purchase of the Securities. However, if a payment of interest on any Interest Payment Date is cancelled (in whole or in part) as described herein and thus is not due and payable, purchasers of such Securities will not be entitled to that interest payment (or, if the Issuer elects to make a payment of a portion, but not all, of such interest payment, the portion of such interest payment not paid) on the relevant Interest Payment Date.

Upon the occurrence of a Trigger Event, Securityholders may lose all or some of the value of their investment in the Securities.

The Securities are being issued for capital adequacy regulatory purposes with the intention and purpose of being eligible as Additional Tier 1 Capital of the Issuer. Such eligibility depends upon a number of conditions being satisfied, which are reflected in the Conditions. One of these relates to the ability of the Securities and the proceeds of their issue to be available to absorb any losses of the Issuer. Accordingly, if, at any time, the Issuer Group's Common Equity Tier 1 Capital Ratio (calculated in accordance with the CRD IV Regulation including, for the avoidance of doubt, any transitional measures set out in Part Ten of the CRD IV Regulation) falls below 7.00 per cent. (a Trigger Event): (a) each Security shall be immediately and mandatorily redeemed as of the Conversion Date and settled (such redemption and settlement being the Conversion and the term converted shall be construed accordingly) by the allotment, issue and delivery by the Parent on the Conversion Settlement Date of fully paid Parent Ordinary Shares to the Settlement Shares Depositary to be held for the Securityholders; and (b) all accrued and unpaid interest up to (and including) the Conversion Date (whether or not such interest has become due for payment) shall be cancelled.

Upon Conversion, the Issuer shall redeem the Securities at a price (the Conversion Settlement Sum) equal to their principal amount. The Securityholders shall be deemed irrevocably to have directed and authorised the Issuer to pay the Conversion Settlement Sum to the Parent in consideration of the Issuer and the Parent's agreement to allot, issue and deliver Parent Ordinary Shares pursuant to the Trust Deed and the obligation of the Issuer to pay the Conversion Settlement Sum to the Parent shall discharge in full the Issuer's obligation to pay the principal on the relevant Securities to the Securityholders.

The number of Parent Ordinary Shares to be delivered shall equal the Conversion Settlement Sum divided by the Conversion Price rounded down to the nearest whole number of Parent Ordinary Shares. The Conversion Price shall be €3.00 (subject to adjustment in the circumstances provided in Condition 8). See Condition 8 of the Securities.

A Conversion shall be deemed effective with effect from the relevant Conversion Date stated in the Trigger Event Notice to be given by the Issuer and without the requirement for any further formality. Any such Conversion will be irrevocable and, following Conversion, Securityholders will not be entitled to any form of compensation in the event of the Issuer's potential recovery or change in the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio.

A Securityholder will not (i) receive, other than the relevant number of Parent Ordinary Shares as is equal to the Conversion Settlement Sum of that holder's Securities divided by the Conversion Price rounded down to the nearest whole number of Parent Ordinary Shares, any shares or other participation rights in the Issuer and/or the Parent or be entitled to any other participation in the upside potential of any equity or debt securities issued by the Issuer and/or the Parent or any other member of the Issuer Group or the Group or (ii) be entitled to any subsequent re-transfer or any other compensation in the event of any change in the Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group.

The occurrence of a Trigger Event is inherently unpredictable and depends on a number of factors, which may be outside the control of the Issuer. Accordingly, investors may be unable to accurately predict if and when a Trigger Event may occur. See "The circumstances surrounding or triggering a Conversion are unpredictable, and there are a number of factors that could affect the Common Equity Tier 1 Ratio of the Issuer Group" below.

Further, the Conditions provide that a Securityholder, and not the Issuer, shall be responsible for paying any taxes and capital, stamp, issue, registration and transfer taxes and duties arising to such Securityholder on Conversion as a consequence of any disposal or deemed disposal of their Securities (or any interest therein) and/or the issue or delivery to them of any Parent Ordinary Shares (or any interest therein) upon Conversion.

In addition to Conversion of the Securities in accordance with Condition 8, the Securities may also be written off, written down, converted to Parent Ordinary Shares or otherwise modified in a manner which is materially adverse to investors in circumstances where the Central Bank or other resolution authorities exercise powers under EU recovery and resolution regimes. In particular, the Resolution Directive provides for a bail-in tool which resolution authorities can avail of. See "The Council of the European Union has adopted a bank recovery and resolution directive which is intended to enable a range of actions to be taken in relation to credit institutions and investment firms considered to be at risk of failing. The implementation of the directive or the taking of any action under it could materially affect the value of any Securities" below. The Resolution Directive must be implemented in Member States by 1 January 2015 at the latest, except for the provisions on the bail-in tool, which apply from 1 January 2016 at the latest. However, the Resolution Directive has not yet been implemented in Ireland.

44 The current Irish recovery and resolution regime is contained in the Central Bank and Credit Institutions (Resolution) Act 2011 of Ireland (the Resolution Act) and will continue to apply until the Resolution Directive has been implemented in Ireland. The Resolution Act does not contain a bail-in tool which the Central Bank or other resolution authorities can avail of. See "The Council of the European Union has adopted a bank recovery and resolution directive which is intended to enable a range of actions to be taken in relation to credit institutions and investment firms considered to be at risk of failing. The implementation of the directive or the taking of any action under it could materially affect the value of any Securities" below.

Securityholders may lose all or some of the value of their investment as a result of a Conversion. The market price of the Securities is expected to be affected by fluctuations in the Issuer Group's Common Equity Tier 1 Capital Ratio. Any reduction in the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio may have an adverse effect on the market price of the Securities, and such adverse effect may be particularly significant if there is any indication or expectation that the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio is or may be trending towards 7.00 per cent.

The Issuer intends to publicly report on a half yearly basis (as at the period end) the Issuer's and Issuer Group's Common Equity Tier 1 Capital Ratios, the latter calculated on a consolidated basis. In addition, during each such half-yearly period, there will be no published updating of the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio and there may be no prior warning of adverse changes in the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio. However, any indication that the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio is moving towards the level of the Trigger Event may have an adverse effect on the market price of the Securities. A decline or perceived decline in the Issuer's or the Issuer's Group's Common Equity Tier 1 Capital Ratio may significantly affect the trading price of the Securities.

The circumstances surrounding or triggering a Conversion are unpredictable, and there are a number of factors that could affect the Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group.

The occurrence of a Trigger Event is inherently unpredictable and depends on a number of factors, which may be outside the control of the Issuer. Moreover, because the relevant authority may instruct the Issuer to calculate the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio as at any date, a Trigger Event could occur at any time, including if the Issuer is subject to recovery and resolution actions by the relevant Irish resolution authority, or the Issuer might otherwise determine to calculate such ratio in its own discretion. Moreover, the relevant Irish resolution authority is likely to allow a Trigger Event to occur rather than to resort to the use of public funds.

The Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio may fluctuate. The calculation of such ratio could be affected by one or more factors, including, among other things, changes in the mix of the Issuer Group's business, major events affecting its earnings, distributions payments by the Issuer, regulatory changes (including changes to definitions and calculations of the Common Equity Tier 1 Capital Ratio and its components, including Common Equity Tier 1 and Risk Weighted Assets, in each case on either an individual consolidated basis or a consolidated basis) and the Issuer Group's ability to manage Risk Weighted Assets in both its on-going businesses and those which it may seek to exit.

The calculation of the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio may also be affected by changes in applicable accounting rules, or by changes to regulatory adjustments which modify the regulatory capital impact of accounting rules. Moreover, even if changes in applicable accounting rules, or changes to regulatory adjustments which modify accounting rules, are not yet in force as of the relevant calculation date, the ECB could require the Issuer to reflect such changes in any particular calculation of the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio.

Accordingly, accounting changes or regulatory changes may have a material adverse impact on the calculations of regulatory capital, including Common Equity Tier 1 and Risk Weighted Assets and the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio.

It will be difficult to predict when, if at all, a Trigger Event and subsequent Conversion may occur. Accordingly, the trading behaviour of the Securities is not necessarily expected to follow the trading behaviour of other types of securities. Any indication that a Trigger Event and subsequent Conversion may occur can be expected to have a material adverse effect on the market price of the Securities.

The Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group will be affected by the Issuer Group's business decisions and, in making such decisions, the Issuer Group's interests may not be aligned with those of the holders of the Securities.

As discussed in "The circumstances surrounding or triggering a Conversion are unpredictable, and there are a number of factors that could affect the Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group" above, the Issuer's and Issuer Group's Common Equity Tier 1 Capital Ratios could be affected by a number of factors. The Issuer's and Issuer Group's Common Equity Tier 1 Capital Ratios will also depend on the Issuer Group's decisions relating to its

45 businesses and operations, as well as the management of its capital position. The Issuer Group will have no obligation to consider the interests of the holders of the Securities in connection with its strategic decisions, including in respect of its capital management. Holders of the Securities will not have any claim against the Issuer or any other member of the Group relating to decisions that affect the business and operations of the Group, including the Issuer Group's capital position, regardless of whether they result in the occurrence of a Trigger Event. Such decisions could cause holders of the Securities to lose all or part of the value of their investment in the Securities.

The Conversion Price is fixed and subject to adjustment in only very limited circumstances; Securityholders have limited anti-dilution protection.

The number of Parent Ordinary Shares to be issued and delivered on Conversion of the Securities shall equal the Conversion Settlement Sum divided by the Conversion Price, rounded down to the nearest whole number of Parent Ordinary Shares. The Conversion Price, as defined in the Conditions of the Securities, has been set at €3.00, subject to any adjustment pursuant to Condition 8.4. The Conversion Price was determined by reference to a theoretical reference price of approximately €4.50.

The circumstances (described in Condition 8) in which adjustments will be made to the Conversion Price are limited. There is no requirement that there should be an adjustment for every corporate or other event that may affect the value of the Parent Ordinary Shares and the adjustment events that are included are less extensive than those often included in the terms of convertible securities.

Furthermore, the Conditions do not provide for certain undertakings from the Parent which are sometimes included in convertible securities to protect investors in situations where the relevant conversion price adjustment provisions do not operate to compensate for the dilutive effect of certain corporate events or actions on the economic value of the Conversion Price. For example, the Conditions contain neither an undertaking restricting the modification of rights attaching to the Parent Ordinary Shares nor an undertaking restricting issues of new capital with preferential rights relative to the Parent Ordinary Shares.

Accordingly, corporate events or actions in respect of which no adjustment to the Conversion Price is made may adversely affect the value of the Parent Ordinary Shares and therefore the Securities.

If a Takeover Event occurs, the Securities may be convertible into shares in an entity other than the Parent or may be fully written down.

If a Qualifying Takeover Event occurs, then following Conversion, the Securities shall become convertible into ordinary shares in the share capital of the Approved Entity (as more fully described in Condition 8.3) at the New Conversion Price. There can be no assurance as to the nature of any such Approved Entity, or of the risks associated with becoming an actual or potential shareholder in such Approved Entity and accordingly a Qualifying Takeover Event may have an adverse effect on the value of the Securities.

In addition, a Qualifying Takeover Event requires the New Conversion Condition to be satisfied. For the New Conversion Condition to be satisfied, the Issuer, the Parent and the Approved Entity must, not later than seven business days following the occurrence of a Takeover Event, enter into arrangements for delivery of the Approved Entity Shares upon the occurrence of a Trigger Event. If the Issuer, the Parent and the Approved Entity are unable to enter into such arrangements within this timeframe, the New Conversion Condition would not be satisfied.

If a Non-Qualifying Takeover Event occurs then, with effect from the occurrence of such Non-Qualifying Takeover Event and unless a Trigger Event shall have occurred prior to such date, any outstanding Securities shall not be subject to Conversion at any time notwithstanding that a Trigger Event may occur subsequently but, instead, upon the occurrence of a Trigger Event subsequent to a Non-Qualifying Takeover Event the full principal amount of each Security will automatically be written down to zero, each Security will be cancelled, the Securityholders will be automatically deemed to have irrevocably waived their right to receive, and no longer have any rights against the Issuer with respect to, repayment of the aggregate principal amount of the Securities written down pursuant to this Condition and all accrued but unpaid interest and any other amounts payable on each Security will be cancelled, irrespective of whether such amounts have become due and payable prior to the occurrence of the Trigger Event. There can be no assurance that a Takeover Event will not be a Non-Qualifying Takeover Event, in which case investors may lose their investment in the Securities.

The Council of the European Union has adopted a bank recovery and resolution directive which is intended to enable a range of actions to be taken in relation to credit institutions and investment firms considered to be at risk of failing. The implementation of the directive or the taking of any action under it could materially affect the value of any Securities.

46 On 15 April 2014, the European Parliament and the Council of the European Union adopted the Resolution Directive. The Resolution Directive must be implemented in Member States by 1 January 2015 at the latest, except for the provisions on the bail-in tool, which apply from 1 January 2016 at the latest. The Resolution Directive is designed to provide relevant authorities with a credible set of tools to intervene sufficiently early and quickly in an unsound or failing institution so as to ensure the continuity of the institution's critical financial and economic functions, while minimising the impact of an institution's failure on the economy and financial system.

The Resolution Directive contains four resolution tools and powers which may be used alone or in combination where the relevant resolution authority considers that (a) an institution is considered as failing or likely to fail, (b) there is no reasonable prospect that any alternative private sector measures would prevent the failure of such institution within a reasonable timeframe, and (c) a resolution action is in the public interest:

 sale of business - which enables resolution authorities to direct the sale of the firm or the whole or part of its business on commercial terms;

 bridge institution - which enables resolution authorities to transfer all or part of the business of the firm to a "bridge institution" (an entity created for this purpose that is wholly or partially in public control);

 asset separation - which enables resolution authorities to transfer impaired or problem assets to one or more publicly-owned asset management vehicles to allow them to be managed with a view to maximising their value through eventual sale or orderly wind-down (this can be used together with another resolution tool only); and

 bail-in - which gives resolution authorities the power to write down certain claims of unsecured creditors of a failing institution and to convert certain unsecured debt claims (including subordinated notes such as the Securities) to equity (the "general bail-in tool"), which equity could also be subject to any future application of the general bail-in tool.

The Resolution Directive also provides for a Member State as a last resort, after having assessed and exploited the above resolution tools to the maximum extent possible whilst maintaining financial stability, to be able to provide extraordinary public financial support through additional financial stabilisation tools. These consist of the public equity support and temporary public ownership tools. Any such extraordinary financial support must be provided in accordance with the EU state aid framework.

An institution will be considered as failing or likely to fail when: it is, or is likely in the near future to be, in breach of its requirements for continuing authorisation; when its assets are, or are likely in the near future to be, less than its liabilities; when it is, or is likely in the near future to be, unable to pay its debts as they fall due; or when it requires extraordinary public financial support (except in limited circumstances).

In addition to the general bail-in tool, the Resolution Directive provides for resolution authorities to have the further power to permanently write-down, or convert into equity, Additional Tier 1 capital instruments (such as the Securities) and Tier 2 capital instruments at the point of non-viability of the bank and before any other resolution is taken ("non- viability loss absorption"). Any shares issued to holders of Additional Tier 1 capital instruments or Tier 2 capital instruments may also be subject to any future application of the general bail-in tool.

For the purposes of the application of any non-viability loss absorption measure, the point of non-viability under the Resolution Directive is the point at which the relevant authority determines that the institution meets the conditions for resolution (but no resolution action has yet been taken) or that the institution will no longer be viable unless the relevant capital instruments (such as the Securities) are written-down or converted or extraordinary public support is to be provided and without such support the appropriate authority determines that the institution would no longer be viable.

The powers set out in the Resolution Directive will impact how credit institutions and investment firms are managed as well as, in certain circumstances, the rights of creditors. Once the Resolution Directive is implemented, holders of Securities may be subject to write-down or conversion into equity on any application of the general bail-in tool or non- viability loss absorption, which may result in such holders losing some or all of their investment. The exercise of any power under the Resolution Directive or any suggestion of such exercise could, therefore, materially adversely affect the rights of Securityholders, the price or value of their investment in the Securities and/or the ability of the Issuer to satisfy its obligations under the Securities.

The Central Bank and the Minister have a broad range of powers under the Resolution Act. The Resolution Act sets out a permanent statutory regime comprising of mechanisms available to the Central Bank (in certain circumstances and in some cases subject to court approval) to intervene when "authorised credit institutions" are failing or likely to fail or otherwise in financial difficulty. The provisions of the Resolution Act apply to the Issuer.

47 The intervention powers of the Central Bank under the Resolution Act are similar to those under the Resolution Directive including the power to apply to court to give effect to a transfer order, to appoint special management, to petition the court for the orderly winding up of the institution, the power to establish a "Bridge Bank" to temporarily hold some or all of the assets and liabilities of the failing credit institution with a view to their transfer to a third party as soon as practicable. The Minister is also empowered under the Resolution Act, at the request of the Central Bank, to provide a financial incentive to a proposed transferee by making a payment, or providing a loan or guarantee to such a proposed transferee. The application of any of these mechanisms may serve to limit the Group's operations and could affect the Issuer's ability to perform obligations owed to creditors, including the Securityholders.

The Securities are not 'protected liabilities' for the purposes of any Government compensation scheme

The Central Bank operates the Deposit Guarantee Scheme. The Deposit Guarantee Scheme provides compensation in respect of eligible liabilities up to a maximum level of compensation payable of €100,000 per eligible liability, per institution. Holders of the Securities will not qualify under the Deposit Guarantee Scheme.

The Irish Investor Compensation Act 1998 provided for the establishment of the Investor Compensation Company Limited (the ICCL) to administer and supervise investor compensation schemes. The maximum level of compensation payable under the compensation scheme operated by the ICCL to any investor is 90 per cent. of net loss or €20,000, whichever is the lower. Holders of the Securities will not qualify under this investor compensation scheme.

The Securities are not covered by any compensation scheme operated by the Irish Government.

Accordingly, investors in the Securities should be aware that they will not be entitled to any compensation under any such schemes in relation to the Securities upon the occurrence of a Trigger Event or otherwise.

The rights of Securityholders will be limited following the occurrence of a Trigger Event.

Although the Issuer currently expects that beneficial interests in the Securities will be transferrable between the occurrence of a Trigger Event and the Conversion Settlement Date (or, in the case of transfers between accountholders in Euroclear and Clearstream, Luxembourg, the Suspension Date (as defined below)), there is no guarantee that an active trading market will exist for the Securities following the occurrence of a Trigger Event. Accordingly, the price received for the sale of any beneficial interest under a Security during this period may not reflect the market price of such Security or the Parent Ordinary Shares.

The Issuer currently expects that Euroclear and Clearstream, Luxembourg will each suspend all clearance and settlement of transactions in the Securities on a specific date (the "Suspension Date") to be notified to Securityholders in the Trigger Event Notice. As a result, holders of the Securities will not be able to settle the transfer of any Securities through Euroclear and/or Clearstream, Luxembourg following the Suspension Date, and any sale or other transfer of the Securities that a holder of the Securities may have initiated prior to the Suspension Date with respect to Euroclear or Clearstream, Luxembourg that is scheduled to match or settle after the Suspension Date will be rejected by such clearing system and will not be matched or settled through such clearing system. It is also possible that transfers of beneficial interests in the Securities may be suspended by Euroclear and/or Clearstream, Luxembourg (or by the direct participants and/or intermediaries through which beneficial interests in the Securities may be held) at an earlier time than currently expected

There is no scheduled redemption date for the Securities and Securityholders have no right to require redemption.

The Securities are undated securities in respect of which there is no fixed redemption or maturity date. The Issuer is under no obligation to redeem the Securities at any time and the Securityholders have no right to require the Issuer or any member of the Issuer Group to redeem or purchase any Securities at any time. Any redemption of the Securities and any purchase of any Securities by the Issuer or any of its subsidiaries will be subject always to the prior approval of the Supervisory Authority and to compliance with prevailing Regulatory Capital Requirements, and the Securityholders may not be able to sell their Securities in the secondary market (if at all) at a price equal to or higher than the price at which they purchases their Securities. Accordingly, investors in the Securities should be prepared to hold their Securities for a significant period of time.

The Securities are subject to early redemption upon the occurrence of certain tax and regulatory events.

Subject to the prior approval of the Supervisory Authority and to compliance with prevailing Regulatory Capital Requirements, the Issuer may, at its option, redeem all (but not some only) of the Securities at any time at their principal

48 amount plus interest accrued and unpaid from and including the immediately preceding Interest Payment Date up to but excluding the redemption date, upon the occurrence of a Tax Gross-Up Event or a Capital Disqualification Event.

An optional redemption feature is likely to limit the market value of the Securities. During any period when the Issuer may elect to redeem the Securities, the market value of the Securities generally will not rise substantially above the price at which they can be redeemed.

If the Issuer redeems the Securities in any of the circumstances mentioned above, there is a risk that the Securities may be redeemed at times when the redemption proceeds are less than the current market value of the Securities or when prevailing interest rates may be relatively low, in which latter case Securityholders may only be able to reinvest the redemption proceeds in securities with a lower yield. Potential investors should consider reinvestment risk in light of other investments available at that time.

The interest rate on the Securities will be reset on each Reset Date, which may affect the market value of the Securities.

The Securities will initially earn interest at a fixed rate of interest to, but excluding, the First Reset Date. From, and including, the First Reset Date, however, and every Reset Date thereafter, the interest rate will be reset to the Reset Interest Rate (as described in Condition 5.4). This reset rate could be less than the Initial Interest Rate and/or the Interest Rate that applies immediately prior to such Reset Date, which could affect the amount of any interest payments under the Securities and so the market value of an investment in the Securities.

The Issuer may be substituted as principal debtor in respect of the Securities.

At any time, the Trustee may (subject to the approval of the Supervisory Authority) agree to the substitution in place of the Issuer as the principal debtor under the Securities of any of its wholly-owned Subsidiaries subject to the Trustee being satisfied that such substitution is not materially prejudicial to the interests of the Securityholders and to certain other conditions set out in the Trust Deed being complied with.

The Securities are novel and complex financial instruments that involve a high degree of risk and may not be a suitable investment for all investors.

The Securities are novel and complex financial instruments that involve a high degree of risk. As a result, an investment in the Securities and the Parent Ordinary Shares issuable upon Conversion will involve certain increased risks. Each potential investor of the Securities must determine the suitability (either alone or with the help of a financial adviser) of that investment in light of its own circumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Securities, the merits and risks of investing in the Securities and the information contained or incorporated by reference in this Information Memorandum;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Securities and the impact such investment will have on its overall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Securities, including where such potential investor's financial activities are principally denominated in a currency other than euro, and the possibility that the entire principal amount of the Securities could be lost, including following the exercise of any bail-in power by the UK resolution authorities;

(iv) understand thoroughly the terms of the Securities, such as the provisions governing Conversion (including, in particular, calculation of the Issuer's or Issuer Group's Common Equity Tier 1 Capital Ratio, as well as under what circumstances the Trigger Event will occur), and be familiar with the behaviour of any relevant indices and financial markets, including the possibility that the Securities may become subject to write down or conversion if the Issuer should become non-viable; and

(v) be able to evaluate possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

Sophisticated investors generally do not purchase complex financial instruments that bear a high degree of risk as stand- alone investments. They purchase such financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Securities unless they have the knowledge and expertise (either alone or with a financial adviser) to evaluate how the Securities will

49 perform under changing conditions, the resulting effects on the likelihood of Conversion into Parent Ordinary Shares and the value of the Securities, and the impact this investment will have on the potential investor's overall investment portfolio. Prior to making an investment decision, potential investors should consider carefully, in light of their own financial circumstances and investment objectives, all the information contained in this Information Memorandum or incorporated by reference herein.

Because the Securities are held by or on behalf of Euroclear and Clearstream, Luxembourg, investors will have to rely on the clearing system procedures for transfer, payment and communication with the Issuer.

The Securities will, upon issue, be represented by a Global Certificate that will be deposited with, and registered in the name of a nominee for, a common depositary for Euroclear and Clearstream, Luxembourg. Euroclear and Clearstream, Luxembourg will maintain records of the beneficial interests in the Global Certificate. While the Securities are in global form, investors will be able to trade their beneficial interests only through Euroclear or Clearstream, Luxembourg, as the case may be.

While the Securities are in global form, the payment obligations of the Issuer under the Securities will be discharged upon such payments being made by or on behalf of the Issuer to or to the order of the nominee for the common depositary. A holder of a beneficial interest in a Security must rely on the procedures of Euroclear and/or Clearstream, Luxembourg, as the case may be, to receive payments under the Securities. The Issuer does not have any responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Certificate.

Meetings of Securityholders and modification.

The Conditions contain provisions for calling meetings of Securityholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Securityholders including Securityholders who did not attend and vote at the relevant meeting and Securityholders who voted in a manner contrary to the majority.

In addition, the Trustee may agree (other than in respect of a Reserved Matter, as defined in the Trust Deed), without the consent of the Securityholders, to make any modification to any of the Conditions or any of the provisions of the Trust Deed or the Agency Agreement that (i) in the opinion of the Trustee is not materially prejudicial to the interests of the Securityholders, or (ii) (irrespective of whether the same constitutes a Reserved Matter) in its opinion is of a formal, minor or technical nature or to correct a manifest error. Any such modification shall be binding on the Holders.

Securityholders may be subject to disclosure obligations and/or may need approval from the Issuer's regulator under certain circumstances.

As the holders of the Securities may receive Parent Ordinary Shares if a Trigger Event occurs, an investment in the Securities may result in holders having to comply with certain disclosure and/or regulatory approval requirements pursuant to applicable laws and regulations. Non-compliance with such disclosure and/or approval requirements may lead to the incurrence of substantial fines or other criminal and/or civil penalties. In particular, under the European Union (Capital Requirements) Regulations 2014, the acquisition of any direct or indirect holding which represents 10 per cent. or more of the capital or of the voting rights of a credit institution is notifiable to the ECB. Any acquisition of Parent Ordinary Shares would be considered as an indirect holding of capital in the Issuer, a credit institution. As such, if following the Conversion of the Securities a person acquires 10 per cent. or more of the issued share capital of the Parent, that person will be required to notify such shareholding to the Central Bank prior to acquiring the Parent Ordinary Shares.

Accordingly, each potential investor should consult its legal advisers as to the terms of the Securities, in respect of its existing holding and the level of holding it would have if it receives Parent Ordinary Shares following a Trigger Event.

Change of law.

The Conditions will be governed by the laws of England except for the provisions governing the subordination of the Securities which will be governed by Irish law. No assurance can be given as to the impact of any possible judicial decision or change to the laws of England or Ireland or administrative practice (including, without limitation, practices of tax, competition or supervisory authorities) after the date of this Information Memorandum.

Legality of purchase.

Neither the Issuer nor any of its affiliates has or assumes responsibility for the lawfulness of the acquisition of the Securities by a prospective investor in the Securities, whether under the laws of the jurisdiction of its incorporation or the

50 jurisdiction in which it operates (if different), or for compliance by that prospective investor with any law, regulation or regulatory policy applicable to it.

Legal investment considerations may restrict certain investments.

The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (i) Securities are legal investments for it, (ii) Securities can be used as collateral for various types of borrowing and (iii) other restrictions apply to its purchase or pledge of any Securities. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Securities under any applicable risk-based capital or similar rules.

Taxation.

Potential purchasers and sellers of the Securities should be aware that they may be required to pay taxes or documentary charges or duties in accordance with the laws and practices of the country where the Securities are transferred or other jurisdictions. In some jurisdictions, no official statements of the tax authorities or court decisions may be available in relation to the tax treatment of financial instruments such as the Securities. Potential investors are advised not to rely upon the tax summary contained in this Information Memorandum but to ask for their own tax adviser's advice on their individual taxation with respect to the acquisition, holding, sale and redemption of the Securities. This investment consideration has to be read in connection with the taxation sections of this Information Memorandum.

EU Savings Directive.

Under Council Directive 2003/48/EC on the taxation of savings income, Member States are required to provide to the tax authorities of other Member States details of certain payments of interest or similar income paid or secured by a person established in a Member State to or for the benefit of an individual resident in another Member State or certain limited types of entities established in another Member State.

On 24 March 2014, the Council of the European Union adopted a Council Directive amending and broadening the scope of the requirements described above. Member States are required to apply these new requirements from 1 January 2017. The changes will expand the range of payments covered by the Directive, in particular to include additional types of income payable on securities. The Directive will also expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported. This approach will apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union.

For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments. The changes referred to above will broaden the types of payments subject to withholding in those Member States which still operate a withholding system when they are implemented.

The end of the transitional period is dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland).

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

Investors who are in any doubt as to their position should consult their professional advisers.

Foreign Account Tax Compliance Act Withholding

Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 ("FATCA") impose a new reporting regime and, potentially, a 30 per cent. withholding tax with respect to (i) certain payments from sources within the United States, (ii) "foreign passthru payments" made to certain non-U.S. financial institutions that do not comply with this new reporting regime, and (iii) payments to certain investors that do not provide identification information with respect to interests issued by a participating non-U.S. financial institution. While the Securities are in global form and held within Euroclear and Clearstream, Luxembourg (together, the "ICSDs"), in all but the most remote circumstances, it is not expected that FATCA will affect the amount of any payment received by the ICSDs. However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment chain leading to the ultimate investor if any such custodian or

51 intermediary generally is unable to receive payments free of FATCA withholding. It also may affect payment to any ultimate investor that is a financial institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediary from which it receives payment) with any information, forms, other documentation or consents that may be necessary for the payments to be made free of FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is compliant with FATCA or other laws or agreements related to FATCA) and provide each custodian or intermediary with any information, forms, other documentation or consents that may be necessary for such custodian or intermediary to make a payment free of FATCA withholding. The Issuer's obligations under the Securities are discharged once it has made payment to, or to the order of, the common depository for the ICSDs (as registered holder of the Securities), and the Issuer has therefore no responsibility for any amount thereafter transmitted through the ICSDs and custodians or intermediaries. Notwithstanding this, there can be no assurance that the Issuer would not in the future be required to make a payment subject to FATCA witholding. Prospective investors should refer to the section "Taxation – Foreign Account Tax Compliance Act".

A Securityholder's actual yield on the Securities may be reduced from the stated yield by transaction costs.

When Securities are purchased or sold, several types of incidental costs (including transaction fees and commissions) are incurred in addition to the current price of the security. These incidental costs may significantly reduce or even exclude the profit potential of the Securities. For instance, credit institutions as a rule charge their clients for own commissions which are either fixed minimum commissions or pro-rata commissions depending on the order value. To the extent that additional – domestic or foreign – parties are involved in the execution of an order, including but not limited to domestic dealers or brokers in foreign markets, Securityholders must take into account that they may also be charged for the brokerage fees, commissions and other fees and expenses of such parties (third party costs).

In addition to such costs directly related to the purchase of securities (direct costs), Securityholders must also take into account any follow-up costs (such as custody fees). Prospective investors should inform themselves about any additional costs incurred in connection with the purchase, custody or sale of the Securities before investing in the Securities.

RISKS RELATED TO THE MARKET GENERALLY

Set out below is a brief description of certain market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk:

The secondary market generally.

The Securities represent a new security for which no secondary trading market currently exists and there can be no assurance that one will develop. If a market does develop, it may not be very liquid. Therefore, investors may not be able to sell their Securities easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Illiquidity may have a severely adverse effect on the market value of Securities.

If a market for the Securities does develop, the trading price of the Securities may be subject to wide fluctuations in response to many factors, including those referred to in this risk factor, as well as stock market fluctuations and general economic conditions that may adversely affect the market price of the Securities. Publicly traded securities from time to time experience significant price and volume fluctuations that may be unrelated to the operating performance of the companies that have issued them, and such volatility may be increased in an illiquid market. If any market in the Securities does develop, it may become severely restricted, or may disappear, if the financial condition and/or the Common Equity Tier 1 Capital Ratio of the Issuer or the Issuer Group deteriorates such that there is an actual or perceived increased likelihood of the Issuer being unable, or electing to direct the Issuer not, to pay interest on the Securities in full, or of the Securities being Converted or otherwise subject to loss absorption under the Conditions or an applicable statutory loss absorption regime. In addition, the market price of the Securities may fluctuate significantly in response to a number of factors, some of which are beyond the Issuer's control, including:

 variations in operating results in the Issuer Group's reporting periods;

 any shortfall in revenue or net profit or any increase in losses from levels expected by market commentators;

 increases in capital expenditure compared with expectations;

 any perception that the Issuer Group's strategy is or may be less effective than previously assumed or that the Issuer Group is not effectively implementing any significant projects, such as its transformation programme;

 changes in financial estimates by securities analysts;

52  changes in market valuations of similar entities;

 announcements by the Issuer Group of significant acquisitions, strategic alliances, joint ventures, new initiatives, new services or new service ranges;

 regulatory matters, including changes in regulatory regulations or Central Bank requirements;

 additions or departures of key personnel; and

 future issues or sales of Securities or other securities.

Any or all of these events could result in material fluctuations in the price of Securities which could lead to investors losing some or all of their investment.

The issue price of the Securities might not be indicative of prices that will prevail in the trading market, and there can be no assurance that an investor would be able to sell its Securities at or near the price which it paid for them, or at a price that would provide it with a yield comparable to more conventional investments that have a developed secondary market.

Moreover, although the Issuer and any subsidiary of the Issuer can (subject to Supervisory Permission and compliance with prevailing Regulatory Capital Requirements) purchase Securities at any time, they have no obligation to do so. Purchases made by the Issuer or any member of the Issuer Group could affect the liquidity of the secondary market of the Securities and thus the price and the conditions under which investors can negotiate these Securities on the secondary market.

In addition, Securityholders should be aware of the prevailing and widely reported global credit market conditions (which continue at the date of this Information Memorandum), whereby there is a general lack of liquidity in the secondary market which may result in investors suffering losses on the Securities in secondary resales even if there is no decline in the performance of the Securities or the assets of the Issuer. The Issuer cannot predict whether these circumstances will change and whether, if and when they do change, there will be a more liquid market for the Securities and instruments similar to the Securities at that time.

Although applications have been made for the Securities to be listed and admitted to trading on the Irish Stock Exchange's Global Exchange Market, there is no assurance that such application will be accepted or that an active trading market will develop.

Exchange rate risks and exchange controls.

The Issuer will pay principal and interest on the Securities in euro. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the "Investor's Currency") other than euro. These include the risk that exchange rates may significantly change (including changes due to devaluation of euro or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency or euro may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to euro would decrease (i) the Investor's Currency-equivalent yield on the Securities, (ii) the Investor's Currency-equivalent value of the principal payable on the Securities and (iii) the Investor's Currency-equivalent market value of the Securities.

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

Interest rate risks.

An investment in the Securities, which bear interest at a fixed rate (reset every five years), involves the risk that subsequent changes in market interest rates may adversely affect their value. The rate of interest will be set every five years, and as such reset rates are not pre-defined at the date of issue of the Securities; they may be different from the initial rate of interest and may adversely affect the yield of the Securities.

53 TERMS AND CONDITIONS OF THE SECURITIES

The following (excluding italicised paragraphs) is the text of the terms and conditions that, subject to completion and amendment, shall be applicable to the Securities in definitive form (if any) issued in exchange for the Global Security.

The €125,000,000 Fixed Rate Resettable Additional Tier 1 Securities (the Securities, which expression shall in these Conditions, unless the context otherwise requires, include any further Securities issued pursuant to Condition 17 which are consolidated and form a single series with the Securities) of Permanent tsb p.l.c. (the Issuer) are constituted by a trust deed dated 6 May 2015 (as amended and/or restated and/or supplemented from time to time, the Trust Deed) made between the Issuer, Permanent TSB Group Holdings plc (the Parent) and Deutsche Trustee Company Limited (the Trustee, which expression shall include all persons from time to time being trustee or trustees appointed under the Trust Deed) as trustee for the Securityholders.

For so long as any Securities are outstanding, the Parent has covenanted in the Trust Deed, inter alia, to allot, issue and deliver such number of Parent Ordinary Shares to the Securityholders on the Conversion Settlement Date in respect of each outstanding Security being converted at such time as may be required in accordance with these terms and conditions.

The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed. Copies of the Trust Deed and the agency agreement dated 6 May 2015 (as amended and/or restated and/or supplemented from time to time, the Agency Agreement) made between the Issuer, the Parent, the Registrar and other Agents and the Trustee are available for inspection by prior arrangement during normal business hours by the Securityholders at the registered office for the time being of the Trustee, being at the date of issue of the Securities at 6 May 2015. The Securityholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all of the provisions of the Trust Deed and the Agency Agreement applicable to them.

1. FORM, DENOMINATION AND TITLE

1.1 Form and denomination

The Securities are in registered form and are available and transferable in minimum principal amounts of €200,000 and integral multiples of €1,000 in excess thereof. A security certificate (Certificate) will be issued to each Securityholder in respect of its registered holding of Securities. Each Certificate will be numbered serially with an identifying number which will be recorded on the relevant Certificate and in the register of Securityholders which the Issuer will procure to be kept by the Registrar.

1.2 Title

Title to the Securities passes only by registration in the register of Securityholders (the Register). The holder of any Security will (except as otherwise required by law) be treated as its absolute owner for all purposes (regardless of any notice of ownership, trust or any interest or any writing on, or the theft or loss of, the Certificate issued in respect of it) and no person will be liable for so treating the holder. In these Conditions Securityholder and (in relation to a Security) holder means the person in whose name a Security is registered in the Register (or, in the case of a joint holding, the first named thereof).

2. TRANFERS OF SECURITIES AND ISSUE OF CERTIFICATES

2.1 Transfers

Subject as provided in Condition 2.4, a Security may be transferred by depositing the Certificate issued in respect of that Security, with the form of transfer on the back duly completed and signed, at the specified office of the Registrar together with such evidence as the Registrar may reasonably require to prove title to the Securities that are the subject of the transfer and the authority of the

54 individuals who have executed the form of transfer. Legal title to the Securities will pass upon registration of such transfer in the Register.

2.2 Delivery of new Certificates

Each new Certificate to be issued upon transfer of Securities will, within five business days of receipt by the Registrar of the duly completed form of transfer endorsed on the relevant Certificate, be mailed by uninsured mail at the risk of the holder entitled to the Security to the address specified in the form of transfer. For the purposes of this Condition, business day shall mean a day on which banks are open for business in London.

Where some but not all of the Securities in respect of which a Certificate is issued are to be transferred, a new Certificate in respect of the principal amount of Securities not so transferred will, within 10 business days of receipt by the Registrar of the original Certificate, be mailed by uninsured mail at the risk of the holder of the Securities not so transferred to the address of such holder appearing on the Register (or, in the case of a joint holding, the first named thereof).

2.3 Formalities free of charge

Registration of transfer of Securities will be effected without charge by or on behalf of the Issuer or the Registrar but upon payment (or the giving of such indemnity as the Issuer or the Registrar may reasonably require) in respect of any tax or other governmental charges which may be imposed on the Issuer or the Registrar (as the case may be) in relation to such transfer.

2.4 Closed periods

No Securityholder may require the transfer of a Security to be registered during the period of 15 days ending on the due date for any payment of principal or interest on that Security.

2.5 Regulations

All transfers of Securities and entries on the Register will be made subject to the detailed regulations concerning transfers of Securities scheduled to the Agency Agreement. The regulations may be changed by the Issuer with the prior written approval of the Registrar and the Trustee and subject to Supervisory Permission being obtained. A copy of the current regulations will be mailed (free of charge) by the Registrar to any Securityholder who requests one.

3. STATUS AND SUBORDINATION AND COVENANT TO DELIVER PARENT ORDINARY SHARES

3.1 Status of the Securities

The Securities constitute direct, unsecured and subordinated obligations of the Issuer and rank pari passu, without any preference among themselves.

3.2 Solvency Condition

Subject to Condition 4, payments in respect of or arising from (including any damages awarded for breach of any obligation under) the Securities are, in addition to the right or obligation of the Issuer to cancel payments under Condition 5.1 and Condition 8.1, conditional upon the Issuer being solvent at the time of payment by the Issuer and no payments shall be due and payable in respect of or arising from the Securities except to the extent that the Issuer could make such payment and still be solvent immediately thereafter (the Solvency Condition).

In these Conditions, the Issuer shall be considered to be solvent at a particular time if (x) the Issuer is able to pay its debts to its Senior Creditors as they fall due and (y) the Issuer's Assets exceed its Liabilities. A report as to the solvency of the Issuer by two Authorised Signatories shall, in the

55 absence of manifest error, be treated and accepted by the Issuer, the Trustee and the Securityholders as correct and sufficient evidence thereof.

3.3 No set-off

Subject to applicable law, no Securityholder may exercise or claim or plead any right of set-off, compensation or retention in respect of any amount owed to it by the Issuer in respect of, or arising under or in connection with, the Securities and each Securityholder will, by virtue of their holding of any Security, be deemed to have waived all such rights of set-off, compensation or retention. Notwithstanding the preceding sentence, if any of the amounts owing to any Securityholder by the Issuer in respect of, or arising under or in connection with the Securities is discharged by set-off, such Securityholder shall, subject to applicable law, immediately pay an amount equal to the amount of such discharge to the Issuer (or, in the event of its Winding-Up, the liquidator of the Issuer) and, until such time as payment is made, shall hold an amount equal to such amount in trust for the Issuer (or the liquidator of the Issuer) and accordingly any such discharge shall be deemed not to have taken place.

3.4 Covenant to deliver Parent Ordinary Shares

Under the Trust Deed, the Parent, as the holding company of the Issuer, has covenanted to allot, issue and deliver such number of Parent Ordinary Shares to the Settlement Shares Depositary to be held for the Securityholders on the Conversion Settlement Date in respect of each outstanding Security being converted at such time in accordance with these terms and conditions and to comply with the covenants set out in Condition 8.16 which apply to it.

4. WINDING-UP

In the event of a Winding-Up prior to Conversion in accordance with Condition 8, there shall be payable by the Issuer in respect of each Security (in lieu of any other payment by the Issuer, but subject as provided in this Condition 4), such amount, if any, as would have been payable to the Securityholder if, on the day prior to the commencement of the Winding-Up and thereafter, such Securityholder were the holder of one of a class of preference shares in the capital of the Issuer (Notional Preference Shares) ranking pari passu as to a return of assets on a Winding-Up with the holders of Other Tier 1 Instruments and the holders of that class or classes of preference shares (if any) from time to time issued or which may be issued by the Issuer which have a preferential right to a return of assets in the Winding-Up over, and so rank ahead of, the holders of all other classes of issued shares for the time being in the capital of the Issuer, but ranking junior to the claims of Senior Creditors, on the assumption that the amount that such Securityholder was entitled to receive in respect of each Notional Preference Share on a return of assets in such Winding-Up was an amount equal to the principal amount of the relevant Security, any accrued but unpaid interest thereon (to the extent not cancelled in accordance with these Conditions) and any damages awarded for breach of any obligations.

5. INTEREST

5.1 Cancellation of interest

The Issuer may elect at its full discretion at any time to cancel permanently (in whole or in part) the Interest Amount otherwise scheduled to be paid on an Interest Payment Date. The Issuer may use such cancelled payments without restriction, including to make distributions or any other payments to the holders of its shares or any other securities issued by the Issuer's Group.

Under the Regulatory Capital Requirements the Issuer may elect to pay interest only to the extent that it has Distributable Items. Accordingly in addition to the right to cancel at any time, the Issuer will cancel any Interest Amount otherwise scheduled to be paid on an Interest Payment Date to the extent that such Interest Amount, when aggregated together with any interest payments or distributions which have been paid or made or which are required to be paid or made during the then current financial year on all other own funds items of the Issuer (excluding any such interest payments or

56 distributions which (i) are not required to be made out of Distributable Items or (ii) have already been provided for, by way of deduction, in calculating the amount of Distributable Items), exceeds the amount of the Distributable Items of the Issuer as at such Interest Payment Date.

In addition, the Issuer will also be required to cancel any interest otherwise scheduled to be paid on an Interest Payment Date if and to the extent that payment of such interest would cause, when aggregated together with other distributions of the kind referred to in Article 141(2) of the CRD IV Directive (or any provision of applicable law transposing or implementing Article 141(2) of the CRD IV Directive, as amended or replaced), the Maximum Distributable Amount (if any) then applicable to the Issuer or the Issuer Group to be exceeded.

Interest will also be cancelled in the event of a Trigger Event (in accordance with Condition 8.1(b)) or if the Solvency Condition is not satisfied in respect of such interest (in accordance with Condition 3.2.

The Issuer shall be responsible for determining compliance with the restriction above and neither the Trustee nor any Agent shall be required to monitor such compliance or to perform any calculations in connection therewith.

To the extent practicable, notice of any cancellation of payment of a scheduled Interest Amount must be given to Securityholders (in accordance with Condition 13), the Trustee, the Agents and, if and for so long as the Securities are listed on the Irish Stock Exchange, to the Irish Stock Exchange as soon as possible prior to the relevant Interest Payment Date (provided that any failure to give such notice shall not affect the cancellation of any Interest Amount in whole or in part by the Issuer and shall not constitute a default for any purpose).

The cancellation of any Interest Amount in accordance with Condition 3.2, Condition 8.1 or this Condition 5.1 shall not constitute a default for any purpose on the part of the Issuer. For the avoidance of doubt, any cancellation of interest payments will be permanent and on a non-cumulative basis and such cancellation will not give rise to or impose any restriction on the Issuer. The Securityholders shall have no right to any cancelled Interest Amount, whether under the Securities or the Trust Deed, on a Winding-Up or otherwise, or to receive any additional interest or other compensation as a result of any such cancelled Interest Amount.

5.2 Interest Rate and Interest Payment Dates

Subject to Conditions 3.2, 5.1 and 8, the Securities bear interest on their outstanding principal amount:

(a) from and including the Issue Date to but excluding 1 April 2021 (the First Reset Date), at the rate of 8.625 per cent. per annum (the Initial Interest Rate); and

(b) thereafter, at the relevant Reset Interest Rate,

in each case, payable annually in arrear on 1 April of each year (each an Interest Payment Date). The first payment for the period from and including the Issue Date to, but excluding, 1 April 2016 and amounting to €78.00 per Calculation Amount shall be made on 1 April 2016.

The period beginning on (and including) the Issue Date and ending on (but excluding) the next succeeding Interest Payment Date and each successive period beginning on (and including) an Interest Payment Date and ending on (but excluding) the next succeeding Interest Payment Date is called an Interest Period.

5.3 Calculation of interest

When interest is required to be calculated in respect of any period, the relevant day-count fraction (the Day-Count Fraction) shall be calculated on the basis of (a) the actual number of days in the period from and including the date from which interest begins to accrue (the Accrual Date) to but excluding

57 the date on which it falls due divided by (b) the actual number of days from and including the Accrual Date to but excluding the next following Interest Payment Date.

Interest in respect of any Security shall be calculated per Calculation Amount. The amount of interest payable (subject to Conditions 3.2, 5.1 and 8) in respect of a Security for a relevant period shall be calculated by (i) determining the product of the Calculation Amount, the relevant Interest Rate and the Day-Count Fraction for the relevant period, (ii) rounding the resultant figure to the nearest cent (half a cent being rounded upwards) and (iii) multiplying that rounded figure by a fraction the numerator of which is the principal amount of such Security and the denominator of which is the Calculation Amount.

Subject to Conditions 3.2, 5.1, 5.2 and 8, the Interest Amount payable for each Interest Period commencing prior to the First Reset Date will (if paid in full) amount to €86.25 per Calculation Amount.

5.4 Reset Interest Rate

(a) The Reset Interest Rate in respect of any Reset Period will be the sum of the 5-year Mid- Swap Rate in relation to that Reset Period and the Margin, as determined by the Agent Bank at approximately 11.00 a.m. (Central European time) on the Reset Determination Date.

(b) In these Conditions (except where otherwise defined), the expression:

(i) 5-year Mid-Swap Rate means, in relation to a Reset Period and the Reset Determination Date in relation to such Reset Period:

(A) the annual mid-swap rate for euro swaps with a term of five years which appears on the Screen Page as of 11:00 a.m. (Central European time) on such Reset Determination Date; or

(B) if such rate does not appear on the Screen Page at such time on such Reset Determination Date, the Reset Reference Bank Rate on such Reset Determination Date;

(ii) 5-year Mid-Swap Rate Quotations means the arithmetic mean of the bid and ask rates for the annual fixed leg (calculated on a 30/360 day count basis) of a fixed-for- floating euro interest rate swap which:

(A) has a term of five years commencing on the relevant Reset Date;

(B) is in an amount that is representative of a single transaction in the relevant market at the relevant time with an acknowledged dealer of good credit in the swap market; and

(C) has a floating leg based on 6-month EURIBOR rate (calculated on an Actual/360 day count basis);

(iii) Business Day means a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in London and (ii) a TARGET2 Settlement Day;

(iv) Margin means 8.356 per cent. per annum;

(v) Reset Determination Date means, in relation to a Reset Period, the day falling two TARGET2 Settlement Days prior to the Reset Date on which such Reset Period commences;

58 (vi) Reset Reference Bank Rate means, in relation to a Reset Period and the Reset Determination Date in relation to such Reset Period, the percentage rate determined on the basis of the 5-year Mid-Swap Rate Quotations provided by the Reset Reference Banks to the Agent Bank at approximately 12:00 p.m. (Central European time) on such Reset Determination Date. If at least three quotations are provided, the Reset Reference Bank Rate will be the arithmetic mean of the quotations provided, eliminating the highest quotation (or, in the event of equality, one of the highest) and the lowest quotation (or, in the event of equality, one of the lowest). If only two quotations are provided, the Reset Reference Bank Rate will be the arithmetic mean of the quotations provided. If only one quotation is provided, the Reset Reference Bank Rate will be the quotation provided. If no quotations are provided, the Reset Reference Bank Rate for the relevant Reset Period will be (i) in the case of each Reset Period other than the Reset Period commencing on the First Reset Date, the 5-year Mid-Swap Rate in respect of the immediately preceding Reset Period or (ii) in the case of the Reset Period commencing on the First Reset Date, an amount equal to the Initial Interest Rate less the Margin;

(vii) Reset Reference Banks means six leading swap dealers in the interbank market selected by the Agent Bank (excluding the Agent Bank or any of its affiliates) in its discretion after consultation with the Issuer;

(viii) Screen Page means Reuters page "ISDAFIX2" or such other page as may replace it on Reuters or, as the case may be, on such other information service that may replace Reuters, as may be nominated by the person providing or sponsoring the information appearing there for the purpose of displaying rates comparable to the 5-year Mid- Swap Rate; and

(ix) TARGET2 Settlement Day means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer (TARGET2) System or any successor thereto is open for the settlement of payments in euro.

5.5 Publication of Reset Interest Rate

The Issuer shall cause the Agent Bank to give notice of the relevant Reset Interest Rate to the Issuer, the Agents and the Trustee (by no later the relevant Reset Determination Date) and to be notified to Securityholders in accordance with Condition 13 as soon as possible after their determination, but in no event later than the relevant Reset Date. The Reset Interest Rate so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) in the event of manifest error.

5.6 Determination by the Trustee

The Trustee (or an agent appointed by the Trustee at the expense of the Issuer) shall be entitled but shall not be obliged, if the Agent Bank defaults at any time in its obligation to determine the Reset Interest Rate in accordance with the above provisions, to determine the Reset Interest Rate, at such rate as, in its absolute discretion (having such regard as it shall think fit to the procedure described above), it shall deem fair and reasonable in all the circumstances and the determination shall be deemed to be a determination by the Agent Bank.

5.7 Notifications, etc. to be final

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 5, whether by the Reset Reference Banks (or any of them) or the Agent Bank or the Trustee (or any agent appointed by the Trustee), will (in the absence of manifest error) be binding on the Issuer, the Trustee, the Agent Bank and all Securityholders and (in the absence of gross negligence, wilful default or fraud) no liability to the Issuer or the Securityholders shall attach to the Reset Reference Banks (or any of

59 them), the Agent Bank or, if applicable, the Trustee in connection with the exercise or non-exercise by it of its powers, duties and discretions under this Condition.

5.8 Agent Bank

The Issuer shall procure that, from the First Reset Date and for so long as any of the Securities remains outstanding, there is at all times an Agent Bank for the purposes of the Securities and the Issuer may terminate the appointment of the Agent Bank. In the event of the appointed office of any bank being unable or unwilling to continue to act as the Agent Bank or failing duly to determine the Reset Interest Rate for any Reset Period, the Issuer shall, subject to the prior written approval of the Trustee, appoint the London office of another leading investment, merchant or commercial bank or financial institution engaged in the London interbank market to act in its place. The Agent Bank may not resign its duties or be removed without a successor having been appointed.

5.9 Interest accrual

Each Security will cease to bear interest from and including the earliest of the date of its redemption or the Conversion Date unless, in the case of redemption only, upon due presentation, payment of the principal in respect of the Security is improperly withheld or refused or unless default is otherwise made in respect of payment. In such event, interest will continue to accrue on the principal amount of the Securities (both before and after any judgment or other order of a court of competent jurisdiction) at the rate set out in these Conditions (or, if higher, the rate of interest on judgment debts for the time being provided by English law) up to and including the date which the Trustee determines to be the date on and after which payment is to be made to the Securityholders in respect thereof as stated in a notice given to the Securityholders in accordance with Condition 13 (such date to be not later than 30 days after the day on which the whole of such principal amount, together with an amount equal to the interest which has accrued and is to accrue pursuant to this proviso up to and including that date, has been received by the Trustee or the Principal Paying Agent).

6. PAYMENTS

6.1 Payments in respect of Securities

Payments of principal and interest in respect of each Security will be by transfer to the registered account of the Securityholder. Payments of principal and payments of interest due otherwise than on an Interest Payment Date will only be made against surrender (in the case of payments of principal) or presentation (in respect of payments of interest) of the relevant Certificate at the specified office of any Agent. Interest on Securities due on an Interest Payment Date will be paid to the holder shown on the register of Securityholders at the close of business on the date (the record date) being the fifteenth day before the due date for the payment of interest.

For the purposes of this Condition 6.1, a Securityholder's registered account means the euro account maintained by or on behalf of it with a bank that processes payments in euro, details of which appear on the register of Securityholders at the close of business, in the case of principal, on the second Business Day before the due date for payment and, in the case of interest, on the relevant record date, and a Securityholder's registered address means its address appearing on the register of Securityholders at that time.

6.2 Payments subject to applicable laws

Payments in respect of principal and interest on the Securities are subject in all cases to (i) any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 9 and (ii) any withholding or deduction required pursuant to an agreement described in Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the Code) or otherwise imposed pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any official interpretations thereof, or (without prejudice to the provisions of Condition 9) any law implementing an intergovernmental approach thereto.

60 6.3 No commissions

No commissions or expenses shall be charged to the Securityholders in respect of any payments made in accordance with this Condition 6.

6.4 Payment on Business Days

Where payment is to be made by transfer to a registered account, payment instructions (for value the due date or, if that is not a Business Day, for value the first following day which is a Business Day) will be initiated on the Business Day preceding the due date for payment or, in the case of a payment of principal or a payment of interest due otherwise than on an Interest Payment Date, if later, on the Business Day on which the relevant Certificate is surrendered at the specified office of the Registrar.

Securityholders will not be entitled to any interest or other payment for any delay after the due date in receiving the amount due if the due date is not a Business Day, if the Securityholder is late in surrendering or presenting its Certificate (if required to do so) or if a cheque mailed in accordance with this Condition arrives after the due date for payment.

6.5 Partial Payments

Without prejudice to the provisions of Condition 5.1, if any amount on the Securities is not paid in full, the Issuer shall procure that the Registrar will annotate the register of Securityholders with a record of the amount in fact paid.

6.6 Agents

The names of the initial Agents and their initial specified offices are set out in the Agency Agreement. The Issuer reserves the right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any Agent and to appoint additional or other Agents provided that:

(a) there will at all times be a Paying Agent having a specified office in a European city;

(b) the Issuer undertakes that it will ensure that it maintains an Agent in a Member State of the European Union that is not obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive; and

(c) there will at all times be a Registrar and a Transfer Agent.

Notice of any termination or appointment and of any changes in specified offices given to the Securityholders promptly by the Issuer in accordance with Condition 13.

7. REDEMPTION AND PURCHASE

7.1 No fixed redemption date

The Securities are perpetual securities in respect of which there is no fixed redemption date and the Issuer shall only have the right to redeem or purchase them in accordance with the following provisions of this Condition 7.

7.2 Redemption at the option of the Issuer

The Issuer may, in its sole discretion but subject to Condition 7.6, having given not less than 30 nor more than 60 days' notice to the Securityholders in accordance with Condition 13, the Trustee and the Agents (which notice shall, subject to Condition 7.6, be irrevocable and shall specify the date fixed for redemption), redeem all (but not some only) of the Securities on the First Reset Date or on any Interest Payment Date thereafter at their principal amount together with interest accrued and unpaid

61 from and including the immediately preceding Interest Payment Date up to but excluding the date of redemption.

7.3 Redemption for regulatory reasons

If at any time a Capital Disqualification Event has occurred and is continuing, the Issuer may, in its sole discretion but subject to Condition 7.6, having given not less than 30 nor more than 60 days' notice to the Securityholders in accordance with Condition 13, the Trustee and the Agents (which notice shall, subject to Condition 7.6, be irrevocable and shall specify the date fixed for redemption), redeem all (but not some only) of the Securities at their principal amount together with interest accrued and unpaid from and including the immediately preceding Interest Payment Date up to but excluding the date of redemption.

A Capital Disqualification Event shall occur if, as a result of any change (which the Supervisory Authority considers to be sufficiently certain) in the regulatory classification of the Securities under the Regulatory Capital Requirements the Securities are (or would be) fully excluded from the Issuer's and/or Issuer Group's Tier 1 Capital.

Prior to the publication of any notice of redemption pursuant to this Condition 7.3, the Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer stating that /a Capital Disqualification Event has occurred and the Trustee shall accept the certificate as sufficient evidence of the occurrence of a Capital Disqualification Event, in which event it shall be conclusive and binding on the Securityholders.

7.4 Redemption for tax reasons

Upon the occurrence of a Tax Gross-Up Event, the Issuer may, at its sole discretion (but subject to the provisions of Condition 7.6), subject to having given no less than 30 nor more than 60 calendar days' notice to the Securityholders (in accordance with Condition 13), the Trustee and the Paying Agent, redeem all, but not some only, of the Securities at their principal amount together with interest accrued and unpaid from and including the immediately preceding Interest Payment Date up to but excluding the date of redemption.

Prior to the publication of any notice of redemption pursuant to this Condition 7.4, the Issuer shall deliver to the Trustee a certificate signed by two Authorised Signatories of the Issuer stating that a Tax Gross-Up Event has occurred and the Trustee shall accept the certificate as sufficient evidence of the occurrence of a Tax Gross-Up Event, in which event it shall be conclusive and binding on the Securityholders.

7.5 Purchases

The Issuer or any of its Subsidiaries may, at its option but subject to prior Supervisory Permission, purchase or otherwise acquire any of the outstanding Securities at any price in the open market or otherwise at any time in accordance with the Regulatory Capital Requirements (including, for the avoidance of doubt, the requirements set out in Article 78.1 (and Article 78.2 as applicable) of the CRD IV Regulation).

If the Issuer or any agent on its behalf purchases the Notes at any time for market making purposes such purchase shall be conditional upon: (a) the prior Supervisory Permission having been obtained; and (b) the total principal amount of the Notes so purchased not exceeding the lower of (i) 10 per cent. of the aggregate outstanding principal amount of the Notes and (ii) 3 per cent of the Additional Tier 1 Capital of the Issuer from time to time outstanding.

7.6 Conditions to redemption

Any redemption under Conditions 7.2, 7.3 or 7.4 is subject to the following conditions:

62 (a) the Supervisory Authority having given the Supervisory Permission; and

(b) the Issuer having complied with the requirements set out in Article 78.1 (and Article 78.2 as applicable) of the CRD IV Regulation;

(c) in the case of redemption pursuant to Condition 7.3, the Issuer having demonstrated to the satisfaction of the Supervisory Authority that such exclusion or regulatory reclassification was not reasonably foreseeable as at the Issue Date; or

(d) in the case of redemption pursuant to Condition 7.4, the Issuer having demonstrated to the satisfaction of the Supervisory Authority that such change in the applicable tax treatment is material and was not reasonably foreseeable as at the Issue Date.

In addition, if the Issuer has elected to redeem the Securities and:

(a) the Solvency Condition is not satisfied in respect of the relevant payment on the date scheduled for redemption; or

(b) prior to the redemption a Trigger Event occurs,

the relevant redemption notice shall be automatically rescinded and shall be of no force and effect and the Issuer shall give notice thereof to the Securityholders (in accordance with Condition 13), the Trustee and the Agents as soon as practicable.

The Trustee shall not be under any duty to investigate whether any condition precedent to redemption under this Condition 7 has occurred and shall not be responsible to Securityholders for any loss arising from any failure by it to do so. The Trustee shall rely without further investigation and without liability as aforesaid on any certificate delivered to it in connection with this Condition 7.

7.7 Cancellations

All Securities which are redeemed by the Issuer pursuant to this Condition 7 will be cancelled. All Securities purchased by or on behalf of the Issuer or any of its Subsidiaries may be held, reissued, resold or, at the option of the Issuer or any such Subsidiary, cancelled.

7.8 Notices final

Upon the expiry of any notice as is referred to in Condition 7.2, 7.3 or 7.4, the Issuer shall be bound (subject only to Condition 7.6) to redeem the Securities to which the notice refers in accordance with the terms of such paragraph.

8. CONVERSION

8.1 Conversion on a Trigger Event

(a) If a Trigger Event occurs at any time while the Securities are outstanding and the Issuer is not in Winding-up, the Issuer shall immediately notify the Supervisory Authority and each Security shall, subject to and as provided in this Condition 8 and in the Trust Deed, be immediately and mandatorily redeemed as of the Conversion Date and settled (such redemption and settlement being the Conversion and the term converted shall be construed accordingly) by the allotment, issue and delivery by the Parent on the date specified in the Trigger Event Notice (as defined below), which date shall be no later than a month following the Conversion Date (or such shorter period as the Supervisory Authority may then require)(the Conversion Settlement Date) of fully paid Parent Ordinary Shares to the Settlement Shares Depositary to be held for the Securityholders. Conversion shall occur in accordance with the provisions of Condition 8.2. The allotment of the Parent Ordinary Shares on the Conversion Settlement Date shall be conditional upon the allotment of ordinary shares

63 in the Issuer (the Issuer Shares) on the Conversion Settlement Date in accordance with the provisions of Condition 8.2.

(b) Any interest which is accrued and unpaid up to (and including) the Conversion Date (whether or not such interest has become due for payment) shall be cancelled. Subject to Condition 8.2, the Issuer's obligations in respect of the Securities and those of the Parent under the Trust Deed shall be irrevocably discharged and satisfied by the Parent's issuance and delivery of the relevant Parent Ordinary Shares to the Settlement Shares Depositary on the Conversion Settlement Date. Fractions of Parent Ordinary Shares will not be delivered in connection with any Conversion and no cash payment or other adjustment will be made in lieu thereof, whether on a Winding-Up or otherwise.

(c) As soon as reasonably practicable following the occurrence of the Trigger Event, the Issuer shall give notice thereof to Securityholders (the Trigger Event Notice) in accordance with Condition 13. The Trigger Event Notice shall specify the circumstances giving rise to the Trigger Event, the Conversion Price, the Conversion Settlement Date, details of the Settlement Shares Depositary and the procedures Securityholders will need to follow to receive the Parent Ordinary Shares from the Settlement Shares Depositary pursuant to Condition 8.2. Not later than the giving of the Trigger Event Notice, the Issuer shall deliver to the Trustee on behalf of the Securityholders a certificate signed by two Authorised Signatories of the Issuer confirming that the Trigger Event has occurred and the Trustee shall accept the certificate as sufficient evidence of the occurrence of the Trigger Event.

(d) If a Trigger Event occurs, the Securities will be converted in whole and not in part as provided in accordance with this Condition 8.1. Securities so converted shall be automatically cancelled by the Issuer and may not be held, reissued or resold.

(e) In the circumstances where these Conditions contemplate the appointment of a Settlement Shares Depositary, the Issuer shall use all reasonable endeavours promptly to appoint such Settlement Shares Depositary. If, however, the Issuer has been unable to appoint a Settlement Shares Depositary, the Issuer and the Parent shall make such other arrangements for the allotment, issuance and delivery of the Parent Ordinary Shares to be allotted, issued and delivered upon Conversion to the Securityholders as they shall consider reasonable in the circumstances, which may include allotting, issuing and delivering the Parent Ordinary Shares to another independent nominee to be held for the Securityholders or to the Securityholders directly, which allotment, issuance and delivery shall irrevocably discharge and satisfy all of the Issuer's and Parent's obligations under the Securities as if the relevant Parent Ordinary Shares had been allotted, issued and delivered to the Settlement Shares Depositary and, in which case, where the context so admits, references in these Conditions to the allotment, issue and delivery of Parent Ordinary Shares to the Settlement Shares Depositary shall be construed accordingly and apply mutatis mutandis.

(f) Provided that the Parent allots, issues and delivers the relevant Parent Ordinary Shares in accordance with these Conditions, with effect from the Conversion Settlement Date no Securityholder will have any rights against the Issuer or the Parent with respect to the repayment of the principal amount of the Securities or the payment of interest or any other amount on or in respect of such Securities and the principal amount of the Securities shall be reduced to, and at all times thereafter equal, zero until the Securities are cancelled as provided herein.

(g) The Parent Ordinary Shares to be allotted, issued and delivered on Conversion shall (except where the Issuer has been unable to appoint a Settlement Shares Depositary as contemplated in Condition 8.1(e)) initially be registered in the name of the Settlement Shares Depositary, which shall hold such Parent Ordinary Shares for the Securityholders. By virtue of its holding of any Security, each Securityholder shall be deemed to have irrevocably directed the Issuer to allot, issue and deliver such Parent Ordinary Shares to the Settlement Shares Depositary.

64 Provided that the Parent so issues and delivers the Parent Ordinary Shares to be issued and delivered on Conversion to the Settlement Shares Depositary as aforesaid, with effect on and from the Conversion Settlement Date, Securityholders shall have recourse only to the Settlement Shares Depositary for the delivery to them of such Parent Ordinary Shares to which they are entitled. Subject to Condition 8.1(a), if the Parent fails to issue and deliver the Parent Ordinary Shares to be allotted, issued and delivered on Conversion to the Settlement Shares Depositary on the Conversion Settlement Date, a Securityholder's only right under the Securities against the Parent for any such failure will be to claim to have such Parent Ordinary Shares so allotted, issued and delivered. Following the allotment, issuance and delivery of the Parent Ordinary Shares to be delivered on Conversion to the Settlement Shares Depositary on the Conversion Settlement Date as aforesaid, the Securities shall remain in existence until the applicable Settlement Date (or, if earlier, the Long-Stop Date) for the purpose only of evidencing the Securityholders' right as aforesaid to receive such Parent Ordinary Shares to be delivered by the Settlement Shares Depositary.

(h) Subject to and as provided in Condition 8.1(g), the Settlement Shares Depositary shall hold the Parent Ordinary Shares to be issued and delivered on Conversion for the Securityholders. Such holders shall, for so long as such Parent Ordinary Shares are held by the Settlement Shares Depositary, be entitled to receive from the Settlement Shares Depositary any ordinary dividends paid on such Parent Ordinary Shares but shall not otherwise be entitled to direct the Settlement Shares Depositary to exercise on their behalf any rights of an ordinary shareholder (including voting rights). Such holders shall not be entitled to otherwise exercise such rights unless and until such time as the relevant Parent Ordinary Shares have been delivered to Securityholders in accordance with Condition 8.12.

(i) The Securities are not convertible into Parent Ordinary Shares at the option of Securityholders at any time and are not redeemable in cash as a result of a Trigger Event.

8.2 Conversion Mechanism

(a) Upon Conversion, the Issuer shall redeem the Securities at a price (the Conversion Settlement Sum) equal to their principal amount. The Securityholders shall be deemed irrevocably to have directed and authorised the Issuer to pay the Conversion Settlement Sum to the Parent in consideration of the Issuer and the Parent's agreement to allot, issue and deliver Parent Ordinary Shares pursuant to the Trust Deed to the Settlement Shares Depositary for the Securityholders and the obligation of the Issuer to pay the Conversion Settlement Sum to the Parent shall discharge in full the Issuer's obligation to pay the principal on the relevant Securities to the Securityholders.

(b) The Parent has agreed in the Trust Deed that, in consideration of the Issuer's agreement to pay the Conversion Settlement Sum, it will allot, issue and deliver Parent Ordinary Shares as provided therein.

(c) The number of Parent Ordinary Shares to be delivered to the Settlement Shares Depositary for the Securityholders shall equal the Conversion Settlement Sum divided by the Conversion Price rounded down to the nearest whole number of Parent Ordinary Shares.

(d) On, and as condition of, Conversion the Parent shall subscribe for the Issuer Shares. The number of Issuer Shares subscribed will equal the amount of the Conversion Settlement Sum divided by the €0.32 nominal value per share of the Issuer Shares. The Issuer Shares shall be allotted and issued by the Issuer to the Parent on the Conversion Settlement Date and the Parent agrees to pay to the Issuer the subscription amount for the Issuer Shares (the Issuer Shares Subscription Amount) on the Conversion Settlement Date.

(e) The allotment of the Issuer Shares on the Conversion Settlement Date shall occur simultaneously with the allotment and issue of the Parent Ordinary Shares on the Conversion Settlement Date in accordance with the provisions of Conditions 8.1(a) and 8.2(a).

65 (f) The Parent and the Issuer shall set off in full on the Conversion Settlement Date the Conversion Settlement Sum payable by the Issuer to the Parent against the equal amount of the Issuer Shares Subscription Amount payable by the Parent to the Issuer.

(g) Upon Conversion, each Securityholder shall be deemed to have accepted the conversion of its holding of Securities into Parent Ordinary Shares at the Conversion Price and that the Issuer and the Parent shall effect such Conversion on behalf of such Securityholder. Such Parent Ordinary Shares will be deemed to be credited as fully paid up and allotted, issued and delivered as of the Conversion Date, whereupon each Securityholder shall cease as a matter of English and Irish law to be treated for all purposes under English and Irish law as a Securityholder and shall instead as of such date be treated for all purposes under English and Irish law as a Shareholder.

(h) The Conversion Price shall be subject to adjustment in the circumstances provided in Condition 8.4 (with such modifications and amendments as an Independent Financial Adviser acting in good faith shall determine to be appropriate) and the Issuer shall give notice to Securityholders of the adjusted Conversion Price and of any such modifications and amendments thereafter.

(i) The Parent and the Issuer agree that the allotment and issue of the Issuer Shares and the Parent Ordinary Shares, respectively, shall be carried out and settled solely in accordance with the provisions of this Condition 8. The Conversion Settlement Sum and the Issuer Shares Subscription Amount shall not be settled otherwise than in accordance with the provisions of Condition 8.2(f).

(j) In order to obtain delivery from the Settlement Shares Depositary of Parent Ordinary Shares following a Conversion, Securityholders will be required to deliver to the Settlement Shares Depositary (or an agent designated for the purpose in the Trigger Event Notice) a Conversion Notice and the relevant Certificate representing the relevant Security in accordance with Condition 8.12.

The relevant Parent Ordinary Shares will be delivered by or on behalf of the Settlement Shares Depositary in accordance with the instructions given in the relevant Conversion Notice.

(k) If not previously cancelled on the relevant Settlement Date, the relevant Securities shall be cancelled on the Long-Stop Date and any Securityholder seeking to obtain Parent Ordinary Shares thereafter shall be required to provide such evidence as to entitlement to such Parent Ordinary Shares as the Settlement Shares Depositary may reasonably require in its sole discretion.

(l) Any determination as to whether any Conversion Notice has been properly completed and delivered together with the relevant Certificate(s) as provided in these Conditions shall be made by the Settlement Shares Depositary in its sole discretion and shall be conclusive and binding on the relevant Securityholder(s).

8.3 Conversion on a Takeover Event

(a) If a Qualifying Takeover Event occurs then the Securities shall, where the Conversion Date falls on or after the Takeover Event Date, be convertible into Approved Entity Shares upon the occurrence of the Trigger Event, mutatis mutandis as provided in accordance with this Condition 8, at a Conversion Price that shall be the New Conversion Price.

(b) The New Floor Price shall be subject to adjustment in the circumstances provided in Condition 8.4 for the adjustment of the Conversion Price (if necessary with such modifications and amendments as an Independent Financial Adviser acting in good faith shall

66 determine to be appropriate) and the Issuer shall give notice to Securityholders of the New Floor Price and of any such modifications and amendments thereafter.

(c) If a Non-Qualifying Takeover Event occurs then, with effect from the occurrence of such Non-Qualifying Takeover Event and unless the Trigger Event shall have occurred prior to such date, any outstanding Securities shall not be subject to Conversion at any time notwithstanding that the Trigger Event may occur subsequently but, instead, upon the occurrence of the Trigger Event subsequent to a Non-Qualifying Takeover Event the full principal amount of each Security will automatically be written down to zero, each Security will be cancelled, the Securityholders will be automatically deemed to have irrevocably waived their right to receive, and no longer have any rights against the Issuer with respect to, repayment of the aggregate principal amount of the Securities written down pursuant to this Condition and all accrued but unpaid interest and any other amounts payable on each Security will be cancelled, irrespective of whether such amounts have become due and payable prior to the occurrence of the Trigger Event.

(d) In the case of a Qualifying Takeover Event:

(i) the Issuer shall and will procure that the Parent shall, and the Parent has covenanted in the Trust Deed that it shall, on or prior to the Takeover Event Date, enter into such agreements and arrangements (which may include deeds supplemental to these Conditions and the Trust Deed and amendments and modifications to these Conditions and the Trust Deed) as may be required to ensure that, with effect from the Takeover Event Date, the Securities will be convertible into Approved Entity Shares, mutatis mutandis in accordance with, and subject to, this Condition 8 (as may be so supplemented, amended or modified) at a price equal to the New Conversion Price and that subject to such Conversion the Securities shall remain the obligations of the Issuer and, to the extent provided for in the Trust Deed, the Parent; and

(ii) the Issuer shall, where the Conversion Date falls on or after the Takeover Event Date, procure the allotment and issue and/or delivery of the relevant number of Approved Entity Shares in the manner provided in this Condition 8, as may be amended or modified as provided above.

The Trustee shall (at the expense of the Issuer and provided that the Trustee has satisfied itself that the effect of such amendments will be only that the Securities shall be convertible into, or exchangeable for, the Approved Entity Shares as provided in Condition 8.3(d)(i) above) concur with the Issuer in making any such amendments to the Trust Deed and these Conditions, and execute any such deeds supplemental to the Trust Deed, provided further that the Trustee shall not be bound to do so if any such amendments, modifications or deeds would, in the opinion of the Trustee, have the effect of (i) exposing the Trustee to any liability against which it is not indemnified and/or secured and/or pre-funded to its satisfaction, (ii) changing, increasing or adding to the obligations or duties of the Trustee or (iii) removing or amending any protection or indemnity afforded to, or any other provision in favour of, the Trustee under the Trust Deed, the Conditions and/or the Securities.

(e) Within 10 Business Days following the occurrence of a Takeover Event, the Issuer shall give notice thereof in accordance with Condition 13 to the Securityholders (a Takeover Event Notice), which shall specify:

(i) the identity of the Acquirer;

(ii) whether the Takeover Event is a Qualifying Takeover Event or a Non- Qualifying Takeover Event;

(iii) in the case of a Qualifying Takeover Event, if determined at such time, the New Conversion Price; and

67 (iv) in the case of a Qualifying Takeover Event, the Takeover Event Date.

8.4 Adjustments to the Conversion Price

Upon the happening of any of the events described below, the Conversion Price shall be adjusted as follows:

(i) Increase of share capital by means of capitalisation of reserves, profits or premia by distribution of Parent Ordinary Shares, or division or consolidation of Parent Ordinary Shares

Subject to Condition 8.5, in the event of a change in the Parent's share capital as a result of the capitalisation of reserves, profits or premia by means of the distribution of Parent Ordinary Shares or as a result of the division or consolidation of the Parent Ordinary Shares, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such change by the result of the following formula:

Nold / Nnew

where:

Nold is the number of Parent Ordinary Shares existing before the change in share capital;

and

Nnew is the number of Parent Ordinary Shares existing after the change in share capital;

provided, however, that no such adjustment shall be made if Parent Ordinary Shares are issued in lieu of the whole or any part of a Cash Dividend, or another cash distribution made in lieu of a dividend, which the Shareholders concerned would or could otherwise have received. Such adjustment shall become effective on the date on which such Parent Ordinary Shares are traded ex-the relevant entitlement on the Primary Stock Exchange.

(ii) Issues of Parent Ordinary Shares or Other Securities to Shareholders by way of conferring subscription or purchase rights

Subject to Condition 8.5, if (a) the Parent issues or grants to Shareholders any rights or options, warrants or other rights to subscribe for or acquire Parent Ordinary Shares, Other Securities or securities convertible or exchangeable into Parent Ordinary Shares or Other Securities or (b) any third party, with the agreement of the Parent, issues to holders of Parent Ordinary Shares any rights, options or warrants to purchase any Parent Ordinary Shares, Other Securities or securities convertible or exchangeable into Parent Ordinary Shares or Other Securities (the rights referred to in (a) and (b) collectively and individually being the Purchase Rights), the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to such issue or grant by the result of the following formula:

(Pcum – R) / Pcum

where:

Pcum is the VWAP of one Parent Ordinary Share on whichever is the later of (x) the last dealing day immediately preceding the first date on which the Parent Ordinary Shares are first traded ex-the relevant Purchase Rights on the Primary Stock Exchange or (y) the dealing day when the price for the relevant Purchase Rights is announced, or if the day the subscription or purchase price is announced is not a dealing day, the next following dealing day; and

68 R is the value of the relevant Purchase Rights relating to one Parent Ordinary Share or Other Security, such value to be calculated as follows:

(1) if the Purchase Rights relate to Parent Ordinary Shares

R = Pcum – TERP

where:

TERP = (Nold x Pcum + Nnew x (Prights + Div)) / (Nold + Nnew)

and:

TERP is the theoretical ex-rights price; and

Nold is the number of Parent Ordinary Shares existing before the change in share capital; and

Nnew is the number of Parent Ordinary Shares being newly issued; and

Prights is the price at which one new Parent Ordinary Share can be subscribed, exercised or purchased for; and

Div is the amount (in euro) by which the dividend entitlement per Parent Ordinary Share exceeds the dividend entitlement per new Parent Ordinary Share, (x) if dividends have already been proposed to the general meeting of shareholders but not yet paid, based on the proposed dividend amount, or (y) if dividends have not yet been proposed based on the last paid dividend;

provided, however, that no such adjustment shall be made if the subscription or purchase price at which one new Parent Ordinary Share can be subscribed or purchased is at least 95 per cent. of Pcum (as defined above);

(2) if the Purchase Rights relate to Other Securities or to securities convertible or exchangeable into Parent Ordinary Shares or Other Securities and where such Purchase Rights, or Other Securities are traded on a regulated stock exchange in the European Union, the United States of America, Canada or Japan:

R = Nrights x Prights

where:

Nrights is the number of Purchase Rights granted per Parent Ordinary Share; and

Prights is the average of the last paid prices on the Primary Stock Exchange (in euro) (or, if no dealing is recorded, the arithmetic mean of the bid and offered prices) on a spot basis of one Purchase Right on each dealing day during the period the Purchase Rights are traded or, if such period is longer than ten dealing days, the arithmetic average of the last paid prices (or, if no dealing is recorded, the arithmetic mean of the bid and offered prices) on a spot basis on the first ten such dealing days; or

(3) in all other cases where neither of the previous paragraphs (1) or (2) is applicable:

R will be determined by an Independent Financial Adviser.

69 Such adjustment shall become effective:

(i) where the provisions of Condition8.5(ii)(1) apply, on the date on which the Parent Ordinary Shares are traded ex-Purchase Rights on the Primary Stock Exchange or, if the subscription or exercise price is announced only at a later time, one dealing day after the announcement of the price of the Purchase Right;

(ii) where the provisions of Condition8.5(ii)(2) apply, five dealing days after (x) the end of the subscription or purchase period or (y) the tenth day of the subscription or purchase period, whichever is the sooner; and

(iii) where the provisions of Condition 8.4(ii)(3) apply, on the date determined by an Independent Financial Adviser.

(iii) Capital Distributions

Subject to Condition 8.5, if and whenever any Capital Distribution shall be made or paid to Shareholders, the Conversion Price shall be adjusted by multiplying the Conversion Price in force immediately prior to the Effective Date by the following fraction:

(Pcum – D) / Pcum

where:

Pcum is the VWAP of one Parent Ordinary Share on whichever is the later of (x) the last dealing day immediately preceding the Effective Date or (y) the dealing day when the relevant Dividend is announced (or, if the day on which the amount of the relevant Dividend is announced is not a dealing day, the next following dealing day); and

D is the portion of the Fair Market Value of the aggregate Capital Distribution attributable to one Parent Ordinary Share, with such portion being determined by dividing the Fair Market Value of the aggregate Capital Distribution on the Effective Date by the number of Parent Ordinary Shares entitled to receive the relevant Dividend (or, in the case of a purchase, redemption or buy back of Parent Ordinary Shares (or any depositary or other receipts or certificates representing Parent Ordinary Shares) by or on behalf of the Parent or any Subsidiary of the Parent, by the number of Parent Ordinary Shares in issue immediately following such purchase, redemption or buy back, and treating as not being in issue any Parent Ordinary Shares (or any Parent Ordinary Shares represented by depositary or other receipts or certificates) so purchased, redeemed or bought back).

Such adjustment shall become effective on the Effective Date or, if later, the first date upon which the Fair Market Value of the relevant Capital Distribution is capable of being determined as provided herein.

(iv) Other Events

If the Issuer or the Parent determines that, notwithstanding paragraphs (i) to (iii) of this Condition 8.4, in order to maintain the relative rights and ownership interests of the Securityholders and the Shareholders at that time, an adjustment should be made to the Conversion Price as a result of one or more of the events or circumstances not referred to in this Condition 8.4 or circumstances have arisen which might have an adverse effect on the right of the Securityholders upon Conversion of the Securities and no adjustment of the Conversion Price under this Condition 8.4 would otherwise arise, the Issuer or the Parent may choose to engage the advice or services of an Independent Financial Adviser to determine what adjustment, if any, to the Conversion Price or amendment, if any, to the terms of this Condition 8 is fair and reasonable to take into account thereof and the date on which such adjustment should take effect. The Independent Financial Adviser shall have no responsibility to make

70 any enquiries as to whether or not any event has occurred which might require an adjustment to the Conversion Price or amendment, if any, to the terms of this Condition 8.

Any adjustment in accordance with this paragraph (iv) will be subject to Supervisory Permission and will only be made to the extent it maintains the relative rights and ownership interests of the Securityholders.

(v) General provisions relating to adjustments

At any time when the Parent Ordinary Shares are not admitted to trading on a Recognised Stock Exchange, the Conversion Price shall be adjusted as provided above save that for the purposes thereof the Current Market Price, the VWAP of a Parent Ordinary Share and the date upon which any adjustment becomes effective shall be determined in good faith by an Independent Financial Adviser in such manner as it considers appropriate to ensure that an adjustment to the Conversion Price is made which gives the intended same result as if the Parent Ordinary Shares were so admitted to trading.

Notice of any adjustments to the Conversion Price pursuant to this Condition 8.4 shall be given by the Issuer in accordance with Condition 13 to Securityholders promptly after the determination thereof.

The Conversion Price shall not in any event be reduced to below the prevailing nominal value of the Parent Ordinary Shares at the effective date of such adjustment. The Issuer shall not and shall procure that the Parent shall not, and the Parent has covenanted in the Trust Deed that it shall not, take any action, and procure that no action is taken, that would otherwise result in an adjustment to the Conversion Price to an amount below such nominal value.

8.5 Events Not Giving Rise To Adjustments

Notwithstanding the provisions of Condition 8.4, no adjustment to the Conversion Price will be made:

(i) as a result of any issue or distribution of new Parent Ordinary Shares or Other Securities if the pre-emptive right in respect thereof has been validly excluded by a non-routine resolution of the general meeting of Shareholders unless a pre-emptive right in respect thereof is granted indirectly to the Shareholders by a third party with the agreement of the Issuer. For the purpose of these Conditions, the annual disapplication of pre-emption rights conferred by way of special resolution proposed at each annual general meeting of the Parent shall not constitute a non-routine resolution; or

(ii) as a result of any public issue of bonds convertible into Parent Ordinary Shares or bonds with options to subscribe for Parent Ordinary Shares, such issue being in connection with a conditional increase of the share capital of the Parent, irrespective of whether in respect of such issue the advance subscription rights to acquire such bonds have been excluded or not, unless advance subscription rights have been granted and are traded on the Primary Stock Exchange; or

(iii) if an increase in the Conversion Price would result from such adjustment, except in case of an exchange of the Parent Ordinary Shares for Other Securities or a consolidation of Parent Ordinary Shares.

8.6 Decision of an Independent Financial Adviser

(i) If any doubt shall arise as to whether an adjustment falls to be made to the Conversion Price or as to the appropriate adjustment to the Conversion Price, and following consultation between the Issuer and an Independent Financial Adviser, a written opinion of such Independent Financial Adviser in respect thereof shall be conclusive and binding on the Issuer, the Parent and the Securityholders, save in the case of manifest error.

71 (ii) If the Independent Financial Adviser does not at any time for any reason make any determination or calculate any adjustment in the circumstances provided for in this Condition 8 then the Securityholders shall, at the expense of the Issuer, be entitled to appoint an agent to do so, and such determination or calculation shall be deemed to have been made by the Independent Financial Adviser. In doing so, the Securityholders' agent shall apply the foregoing provisions of Condition 8, with any necessary consequential amendments, to the extent that, in its opinion, it can do so, and in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances.

(iii) The Issuer shall notify the Securityholders in accordance with Condition 13 and the Trustee of any such written opinion or, as applicable, such determination or calculation referred to in this Condition 8.6 and the Trustee shall (without liability or further enquiry) accept such written opinion or, as applicable, such determination or calculation.

8.7 Share Option Schemes

No adjustment will be made to the Conversion Price if Parent Ordinary Shares or Other Securities (including pre-emptive rights, options or warrants in relation to Parent Ordinary Shares or Other Securities) are issued, offered or granted to, or for the benefit of, directors or employees, or former directors or employees, of the Issuer, the Parent or any of its Subsidiaries or any associated company or to trustees to be held for the benefit of any such person in any such case pursuant to any employee share or option scheme which, if required, has been approved by Shareholders.

8.8 Rounding Down

On any adjustment, the resultant Conversion Price, if a number that is of more decimal places than the initial Conversion Price, shall be rounded to such decimal place. No adjustment shall be made to the Conversion Price where such adjustment (rounded down if applicable) would be less than one per cent. of the Conversion Price then in effect. Any adjustment not required to be made, and/or any amount by which the Conversion Price has been rounded down, shall be carried forward and taken into account in any subsequent adjustment, and such subsequent adjustment shall be made on the basis that the adjustment not required to be made had been made at the relevant time and/or, as the case may be, that the relevant rounding down had not been made.

8.9 No other Trigger Events

Other than a Conversion in accordance with this Condition 8, the Securities are not subject to any other conversion event. In particular, the Securities are not convertible into Parent Ordinary Shares at the option of the Securityholders.

8.10 Procedure for Settlement and Delivery of Parent Ordinary Shares on Conversion

Parent Ordinary Shares to be issued upon a Conversion in respect of the Securities shall be allotted, issued and delivered subject to and as provided in these Conditions, the Agency Agreement and the Parent's memorandum and articles of association.

8.11 Fractions

Fractions of Parent Ordinary Shares will not be issued or delivered pursuant to these Conditions upon a Conversion and no cash payment will be made in lieu thereof.

8.12 Delivery of Parent Ordinary Shares

(i) The Issuer shall and shall procure that the Parent shall, and the Parent has covenanted in the Trust Deed that it shall, on or prior to the Conversion Settlement Date, allot, issue and deliver to the Settlement Shares Depositary for the Securityholders such number of Parent Ordinary Shares as is required to satisfy in full the Issuer's and the Parent's obligation to deliver Parent

72 Ordinary Shares in respect of the Conversion of the aggregate amount of Securities as at the Conversion Date. Receipt by the Settlement Shares Depositary of such Parent Ordinary Shares shall be a good and complete discharge of the Issuer's obligations in respect of the Securities and the Parent's obligations under the Trust Deed.

(ii) The Issuer and, pursuant to the terms of the Trust Deed, the Parent shall procure that Parent Ordinary Shares to be created, issued and delivered following the Trigger Event will be delivered in uncertificated form through CREST Ireland, unless at the relevant time the Parent Ordinary Shares are not a participating security in CREST Ireland in which case the Parent Ordinary Shares will be delivered in certificated registered form. Where the Parent Ordinary Shares are to be delivered to Securityholders by the Settlement Shares Depositary through CREST Ireland, they will be delivered to the account specified by the relevant Securityholder in the relevant Conversion Notice, on the relevant Settlement Date. Where the Parent Ordinary Shares are to be delivered in certificated form, the Issuer shall procure that the Parent dispatch a certificate in respect thereof by mail free of charge (but uninsured and at the risk of the recipient) to the relevant Securityholder at such address as is specified by the Securityholder in the relevant Conversion Notice, on the relevant Settlement Date.

8.13 Taxes and Duties

A Securityholder must pay any taxes and capital, stamp, issue and registration and transfer taxes or duties owed by it arising on Conversion (including any taxes and capital, stamp, issue and registration and transfer taxes or other duties payable in Ireland in respect of the issue and delivery of the Parent Ordinary Shares delivered pursuant to these Conditions which the Issuer is required to pay by law) and such Securityholder must pay all, if any, taxes arising by reference to any disposal or deemed disposal of a Security or interest therein.

8.14 Parent Ordinary Shares

The Parent Ordinary Shares issued and delivered on Conversion will be fully paid and non-assessable, free from any Encumbrance and will in all respects rank pari passu with the fully paid Parent Ordinary Shares in issue on the Conversion Date except in any such case for any right excluded by mandatory provisions of applicable law, and except that the Parent Ordinary Shares so issued or delivered will not rank for (or, as the case may be, the relevant Securityholder shall not be entitled to receive) any rights, distributions or payments the record date or other due date for the establishment of entitlement for which falls prior to the Conversion Date.

8.15 Covenants

For so long as any Security remains outstanding, the Issuer shall, and shall procure that the Parent shall, and the Parent has covenanted in the Trust Deed that it shall (in each case save with the prior written approval of the Securityholders):

(a) use all reasonable endeavours to ensure that any Parent Ordinary Shares issued upon the Trigger Event will, as soon as is practicable, be admitted to the Official List or ESM of the Irish Stock Exchange and trading on its regulated market or will be listed, quoted or dealt in, as soon as is practicable, on any other stock exchange or securities market on which the Parent Ordinary Shares are then listed or quoted or dealt in;

(b) use all reasonable endeavours to ensure that its issued and outstanding Parent Ordinary Shares continue to be admitted to listing on the Official List or ESM of the Irish Stock Exchange (and, in the case of listing on that Official List, also admitted to trading on its main Market or its other EEA Regulated Market for the time being) or listed, admitted to trading, quoted or dealt in on such other principal stock exchange or securities market on which the Parent Ordinary Shares are currently listed, admitted to trading or quoted or dealt in; and

73 (c) at all times keep available for issue, free from pre-emptive or other preferential rights, a sufficient number of Parent Ordinary Shares to enable the conversion of the Securities, and any other rights of subscription and exchange for Parent Ordinary Shares arising pursuant to the Securities, to be satisfied in full.

In addition, for so long as any Security remains outstanding, the Issuer shall at all times keep available for issue, free from pre-emptive or other preferential rights, a sufficient number of Issuer Shares to be subscribed for by the Parent in accordance with the provisions of Condition 8.2.

9. TAXATION

9.1 Payment without withholding

All payments by or on behalf of the Issuer in respect of the Securities shall be made free and clear of, and without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (Taxes) imposed or levied, collected, withheld or assessed by or on behalf of Ireland or any political subdivision or any authority thereof or therein having power to tax, unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer will make such payment after the withholding or deduction of such tax, duty or charge has been made, shall account to the relevant authorities for the amount required to be withheld or deducted and the Issuer will, subject to certain limitations and exceptions (set forth below), pay such additional amounts (Additional Amounts) as will result (after such withholding and/or deduction) in the receipt by the holders of the Securities of such sums which would have been receivable (in the absence of such withholding and/or deduction) from it in respect of their Securities except that no such Additional Amounts shall be payable in respect of any Security:

(a) to, or to a third party on behalf of, a Securityholder who is liable to any such tax, duty, assessment or charge in respect of such Security by reason of having some connection with Ireland other than the mere holding or ownership of such Security; and/or

(b) presented for payment more than 30 days after the Relevant Date (as defined below) except to the extent that the holder thereof would have been entitled to such Additional Amounts on presenting the same for payment on the last day of such period of 30 days (assuming, whether or not such is in fact the case, such last day to be a Payment Business Day); and/or

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

(d) presented for payment by or on behalf of a holder who would be able to avoid such withholding or deduction by presenting the relevant Security to another Paying Agent in a Member State of the European Union; and/or

(e) in respect of any Taxes payable otherwise than by deduction or withholding from a payment on a Security.

As used in these Conditions, Relevant Date in respect of any Security means the date on which payment in respect of it first becomes due or (if any amount of the money payable is improperly withheld or refused) the date on which such payment first becomes due, or, if the full amount of the moneys payable has not been duly received by the Agent or the Trustee on or prior to such due date, the date on which, the full amount of such moneys having been so received, notice to that effect is duly given to the Securityholders in accordance with Condition 13.

If any Additional Amounts are paid by the Issuer and a Securityholder obtains a relief or remission for, or a repayment of any Taxes in respect of which such Additional Amounts were paid, such

74 Securityholder shall pay to the Issuer an amount equal to such relief, remission or repayment of Taxes.

9.2 Additional Amounts

Any references in these Conditions to any amount payable in respect of the Securities shall be deemed also to refer to any Additional Amounts which may be payable under this Condition 9.

10. PRESCRIPTION

Securities will become void unless presented for payment within periods of 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date in respect of the Securities, subject to the provisions of Condition 6.

11. ENFORCEMENT

The Trust Deed contains provisions entitling the Trustee to claim from the Issuer, inter alia, the fees, expenses and liabilities incurred by it in carrying out its duties under the Trust Deed. The restrictions on commencing proceedings described below will not apply to any such claim.

(a) In the event of a Winding-Up, or if the Issuer , subject to Condition 5.1,has not made payment of any amount in respect of the Securities for a period of seven days or more after the date on which such payment is due, the Issuer shall be deemed to be in default under the Securities and, unless proceedings for a Winding-Up have already commenced, the Trustee may institute proceedings for a Winding-Up. The Trustee may prove in a Winding-Up (whether or not instituted by the Trustee) such claim as is set out in Condition 4.

(b) Without prejudice to Condition 11(a), the Trustee may, at its discretion, and without notice, institute such proceedings and/or take any other steps or action against the Issuer and/or the Parent as it may think fit to enforce any term or condition binding on the Issuer and/or the Parent (including, without limitation, proceedings, actions or steps to enforce obligations of the Issuer and/or the Parent in connection with a Conversion) under the Trust Deed (other than any payment obligation of the Issuer under or arising from the Securities or the Trust Deed, including, without limitation, payment of any principal or interest in respect of the Securities, including any damages awarded for breach of any obligations but excluding any amount due to the Trustee, other than amounts due to the Trustee on behalf of Securityholders, in accordance with the Trust Deed) provided that in no event shall the Issuer, by virtue of the institution of any such proceedings, be obliged to pay any sum or sums, in cash or otherwise, sooner than the same would otherwise have been payable by it pursuant to these Conditions or the Trust Deed. Nothing in this Condition 11(b) shall, however, prevent the Trustee instituting proceedings for the Winding-Up, proving in any Winding-Up or exercising rights under Condition 4 in respect of any payment obligations of the Issuer arising from or in respect of the Securities or the Trust Deed (including any damages awarded for breach of any obligations).

(c) The Trustee shall not be bound to take any of the actions referred to in Condition 11(a) or 11(b) against the Issuer and/or the Parent to enforce the terms of the Securities or the Trust Deed or any other action under or pursuant to the Trust Deed unless (i) it shall have been so requested by an Extraordinary Resolution of the Securityholders or in writing by the holders of at least one-quarter in principal amount of the Securities then outstanding and (ii) it shall have been indemnified and/or secured and/or prefunded to its satisfaction.

(d) No Securityholder shall be entitled to proceed directly against the Issuer or the Parent or to institute proceedings for a Winding-Up or to prove in a Winding-Up unless the Trustee, having become bound so to do, fails to do so within a reasonable period and such failure shall be continuing, in which case the Securityholder shall have only such rights against the Issuer or the Parent as those which the Trustee is entitled to exercise as set out in this Condition 11.

75 (e) No remedy against the Issuer or the Parent, other than as referred to in this Condition 11, shall be available to the Trustee or the Securityholders, whether for the recovery of amounts owing in respect of the Securities or under the Trust Deed or in respect of any breach by the Issuer or the Parent of any of their other obligations under or in respect of the Securities or the Trust Deed.

12. REPLACEMENT OF CERTIFICATES

If any Certificate is lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Registrar or any Agent, subject to all applicable laws and stock exchange requirements, upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer and/or the Registrar may reasonably require. Mutilated or defaced Certificates must be surrendered before replacements will be issued.

13. NOTICES

All notices regarding the Securities shall be valid if sent by post to the Securityholders at their respective addresses in the Register. The Issuer shall also ensure that notices are duly given or published in a manner which complies with the rules and regulations of any stock exchange or other relevant authority on which the Securities are for the time being listed. Any notice shall be deemed to have been given on the second day after being so mailed or on the date of publication or, if so published more than once or on different dates, on the date of the first publication.

14. MEETINGS OF SECURITYHOLDERS, MODIFICATION AND WAIVERS

14.1 Meetings of Securityholders

The Trust Deed contains provisions for convening meetings of Securityholders to consider any matter affecting their interests, including the modification or abrogation by Extraordinary Resolution of any of these Conditions or any of the provisions of the Trust Deed. The quorum at any meeting of Securityholders for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per cent. of the aggregate principal amount of the Securities for the time being outstanding, or at any adjourned meeting one or more persons present whatever the principal amount of the Securities held or represented by him or them, except that at any meeting the business of which includes Reserved Matters, the necessary quorum for passing an Extraordinary Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned meeting not less than one-third, of the aggregate principal amount of the Securities for the time being outstanding. An Extraordinary Resolution passed at any meeting of the Securityholders will be binding on all Securityholders, whether or not they are present at the meeting and whether or not they voted on the resolution.

In addition, a resolution in writing signed by or on behalf of the holders of at least 75 per cent. in aggregate principal amount of the outstanding Securities who for the time being are entitled to receive notice of a meeting of Securityholders under the Trust Deed will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Securityholders. The Trust Deed also provides that consent given by of electronic consents through the relevant clearing system(s) (in a form satisfactory to the Trustee) by or on behalf of the holders of not less than 75 per cent. in nominal amount of the Notes for the time being outstanding shall for all purposes be as valid and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and held.

14.2 Modification

Except where the Trustee is bound pursuant to Condition 8.3(d)(i) and 8.4 to give effect to the amendments described therein and subject to Supervisory Permission being obtained, the Trustee may agree (other than in respect of a Reserved Matter), without the consent of the Securityholders, to any

76 modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Conditions or any of the provisions of the Trust Deed or the Agency Agreement (provided that, in any such case, it is not, in the opinion of the Trustee, materially prejudicial to the interests of the Securityholders) or may agree, without any such consent as aforesaid and irrespective of whether the same constitutes a Reserved Matter, to any modification which, in its opinion, is of a formal, minor or technical nature or is to correct a manifest error.

14.3 Trustee to have regard to interests of Securityholders as a class

In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation or substitution), the Trustee shall have regard to the general interests of the Securityholders as a class but shall not have regard to any interests arising from circumstances particular to individual Securityholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Securityholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Securityholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Securityholders except to the extent already provided for in Condition 9 and/or any undertaking given in addition to, or in substitution for, Condition 9 pursuant to the Trust Deed.

14.4 Notification to the Securityholders

Any modification, abrogation, waiver, authorisation or substitution shall be binding on the Securityholders and, unless the Trustee agrees otherwise, notified by the Issuer to the Securityholders as soon as practicable thereafter in accordance with Condition 13.

15. SUBSTITUTION OF THE ISSUER

The Trustee may, without the consent of the Securityholders but subject to Supervisory Permission, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition 15) as the principal debtor under the Securities and the Trust Deed of any member of the Issuer Group or any successor in business to the Issuer, subject to:

(a) the Trustee being satisfied that such substitution is not materially prejudicial to the interests of the Securityholders; and

(b) certain other conditions set out in the Trust Deed being complied with.

Any substitution pursuant to this Condition 15 shall be binding on the Securityholders and shall be notified by the Issuer to the Securityholders in accordance with Condition 13 not less than 30 nor more than 60 days' prior to such substitution taking effect.

16. INDEMNIFICATION AND PROTECTION OF THE TRUSTEE AND ITS CONTRACTING WITH THE ISSUER

16.1 Indemnification and protection of the Trustee

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility and liability towards the Issuer and the Securityholders, including (i) provisions relieving it from taking action unless indemnified and/or secured and/or pre-funded to its satisfaction and (ii) provisions limiting or excluding its liability in certain circumstances. The Trust Deed provides that, when determining whether an indemnity or any security or pre-funding is satisfactory to it, the Trustee shall be entitled (i) to evaluate its risk in any given circumstance by considering the worst-case scenario and (ii) to require that any indemnity or security given to it by the Securityholders or any of them be given on a joint and several basis and be supported by evidence satisfactory to it as

77 to the financial standing and creditworthiness of each counterparty and/or as to the value of the security and an opinion as to the capacity, power and authority of each counterparty and/or the validity and effectiveness of the security.

16.2 Trustee Contracting with the Issuer

The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (a) to enter into business transactions with the Issuer, the Parent and/or any of their respective Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer, the Parent and/or any of their respective Subsidiaries, (b) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Securityholders, and (c) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

16.3 Reliance by Trustee on reports, confirmations, certificates and advice

The Trustee may rely without liability to Securityholders on a report, confirmation or certificate or any advice of any accountants, financial advisers, financial institutions or any other expert, whether or not addressed to it and whether their liability in relation thereto is limited (by its terms or by any engagement letter relating thereto entered into by the Trustee or in any other manner) by reference to a monetary cap, methodology or otherwise. The Trustee may accept and shall be entitled to rely on any such report, confirmation or certificate or advice in which event such report, confirmation or certificate or advice shall be binding on the Issuer, the Parent, the Trustee and the Securityholders.

16.4 Mandatory modifications

When implementing any modification pursuant to Condition 8.3(d)(i) or 8.44 , the Trustee shall not consider the interests of the Securityholders or any other person. The Trustee shall not be liable to the Securityholders or any other person for so acting, irrespective of whether any such modification is or may be materially prejudicial to the interests of any such person and/or is or may be a Reserved Matter.

17. FURTHER ISSUES

The Issuer may from time to time without the consent of the Securityholders create and issue further securities (subject to Supervisory Permission if such securities are to be included in the Issuer's and/or Issuer Group's Tier 1 Capital) having the same terms and conditions as the Securities in all respects (or in all respects except for the first payment of interest, if any, on them and/or the issue price thereof) so that the same shall be consolidated and form a single series with the Securities. Any further securities which are to form a single series with the Securities constituted by the Trust Deed or any supplemental deed shall be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Securityholders and the holders of notes or bonds of other series in certain circumstances where the Trustee so decides.

18. GOVERNING LAW AND SUBMISSION TO JURISDICTION

18.1 Governing law

The Trust Deed and the Securities and any non-contractual obligations arising out of or in connection with them are governed by, and will be construed in accordance with, English law except for the provisions governing the subordination of the Securities or the allotment, issue or registration of the Parent Ordinary Shares or the Issuer Shares, which are governed by and construed in accordance with Irish law.

78 18.2 Jurisdiction of English courts

The Issuer and the Parent have, in the Trust Deed, irrevocably agreed for the benefit of the Trustee and the Securityholders that the courts of England are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with the Trust Deed or the Securities (including a dispute relating to any non-contractual obligations arising out of or in connection with the Trust Deed or the Securities) and accordingly has submitted to the exclusive jurisdiction of the English courts.

The Issuer and the Parent have, in the Trust Deed, waived any objection to the courts of England on the grounds that they are an inconvenient or inappropriate forum. The Trustee and the Securityholders may take any suit, action or proceeding arising out of or in connection with the Trust Deed or the Securities respectively (including any suit, action or proceedings relating to any non- contractual obligations arising out of or in connection with the Trust Deed or the Securities) (together referred to as Proceedings) against the Issuer or the Parent in any other court of competent jurisdiction and concurrent Proceedings in any number of jurisdictions.

19. RIGHTS OF THIRD PARTIES

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

20. DEFINITIONS AND INTERPRETATION

20.1 Definitions

In these Conditions:

5-year Mid-Swap Rate has the meaning given to it in Condition 5.4(b)(i).

5-year Mid-Swap Rate Quotations has the meaning given to it in Condition 5.4(b)(ii).

Accrual Date has the meaning given to it in Condition 5.3.

Acquirer means the person which, following a Takeover Event, controls the Parent.

Additional Tier 1 means, as at any date, the sum, expressed in euro, of all amounts that constitute additional tier 1 capital (as that term is used in the CRD IV Regulation) of the Issuer (on an individual consolidated basis as referred to in Article 9 of the CRD IV Regulation) or of the Issuer Group (calculated on a consolidated basis) as at such date, in each case less any deductions from additional tier 1 capital required to be made as of such date and as calculated by the Issuer in accordance with the CRD IV Regulation (including, for the avoidance of doubt, any transitional provisions set out in Part Ten of the CRD IV Regulation).

Agency Agreement has the meaning given to it in the preamble to these Conditions.

Agent means the Registrar and each of the other agents appointed pursuant to the Agency Agreement.

Agent Bank means an independent investment bank or financial institution to be appointed by the Issuer no later than the First Reset Date (unless the Securities are to be redeemed on that date pursuant to Condition 7.2) to perform the functions expressed to be performed by the Agent Bank under these Conditions.

Approved Entity means a body corporate that is incorporated or established under the laws of an OECD member state and which, on the occurrence of the Takeover Event, has in issue Approved Entity Shares. On and after the date of a Takeover Event, references herein to Parent Ordinary Shares shall be read as references to Approved Entity Shares.

79 Approved Entity Shares means ordinary shares in the capital of the Approved Entity which constitute equity share capital or the equivalent which is listed and admitted to trading on a Recognised Stock Exchange. In relation to any Conversion in respect of which the Conversion Date falls on or after the Takeover Event Date, where the Takeover Event is a Qualifying Takeover Event, references herein to Parent Ordinary Shares shall be deemed to be references to Approved Entity Shares;

Assets means the unconsolidated gross assets of the Issuer, as shown in its latest published audited balance sheet, but adjusted for subsequent events in such manner as the directors of the Issuer may determine.

Authorised Signatory has the meaning given to it in the Trust Deed.

Business Day has the meaning given to it Condition 5.4(b)(iii).

Calculation Amount means €1,000 in principal amount of Securities.

Capital Disqualification Event has the meaning given to it in Condition 7.3.

Capital Distribution means any Dividend which is expressed by the Issuer and/or the Parent or declared by the board of directors of the Issuer and/or the Parent to be an extraordinary dividend, extraordinary distribution or special dividend or any analogous or similar term, in which case the Capital Distribution for the purpose of these Conditions shall be the Fair Market Value of such Dividend;

Cash Dividend means (i) any Dividend which is to be paid or made in cash (in whatever currency) and (ii) any Dividend determined to be a Cash Dividend pursuant to paragraph (i) of the definition of Dividend.

Certificate has the meaning given to it in Condition 1.1.

Code has the meaning given to it in Condition 6.2.

Common Equity Tier 1 means, as at any date, the sum, expressed in euro, of all amounts that constitute common equity tier 1 capital (as that term is used in the CRD IV Regulation) of the Issuer (on an individual consolidated basis as referred to in Article 9 of the CRD IV Regulation) or of the Issuer Group (calculated on a consolidated basis) as at such date, in each case less any deductions from common equity tier 1 capital required to be made as of such date and as calculated by the Issuer in accordance with the CRD IV Regulation (including, for the avoidance of doubt, any transitional provisions set out in Part Ten of the CRD IV Regulation).

Common Equity Tier 1 Capital Ratio means each of (i) the ratio of Common Equity Tier 1 of the Issuer as at any date of calculation to the Risk Weighted Assets of the Issuer as of the same date, in each case calculated on an individual consolidated basis as referred to in Article 9 of the CRD IV Regulation, or, as the context requires, (ii) the ratio of the Common Equity Tier 1 Capital of the Issuer Group as of any date of calculation to the Risk Weighted Assets of the Issuer Group as at the same date, in each case calculated on a consolidated basis and, in the case of each of (i) and (ii) above, expressed as a percentage and calculated by the Issuer in accordance with the CRD IV Regulation (including, for the avoidance of doubt, any transitional provisions set out in Part Ten of the CRD IV Regulation).

Conditions means these terms and conditions of the Securities, as amended from time to time.

Conversion has the meaning given to it in Condition 8.1.

Conversion Date means the date upon which the Trigger Event occurs.

80 Conversion Notice means a notice in the form for the time being currently available from the specified office of any Agent and which is required to be delivered by a Securityholder to the Settlement Shares Depositary (or its agent(s) designated for the purpose in the Trigger Event Notice) in connection with a Conversion of the Securities held by the relevant Securityholder and which may contain a representation that the relevant Securityholder is entitled to take delivery of the Parent Ordinary Shares in the manner contemplated in these Conditions and has obtained all (if any) consents needed in order to do so.

Conversion Price means €3.00, subject to any adjustment pursuant to Condition 8.4.

Conversion Settlement Date has the meaning given to it in Condition 8.1.

Conversion Settlement Sum has the meaning given to it in Condition 8.2.

Converted has the meaning given to it in Condition 8.1.

CRD IV Directive means Directive (2013/36/EU) of the European Parliament and of the Council on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms dated 26 June 2013, as amended or replaced from time to time.

CRD IV Regulation means Regulation (EU) No 575/2013 of the European Parliament and of the Council on prudential requirements for credit institutions and investment firms dated 26 June 2013, as amended or replaced from time to time.

Current Market Price means, in respect of a Parent Ordinary Share at a particular date, the average of the daily VWAP of a Parent Ordinary Share on each of the five consecutive dealing days ending on the dealing day immediately preceding such date; provided that, if the VWAP of a Parent Ordinary Share is not available on one or more of the said five dealing days (disregarding for this purpose the proviso to the definition of VWAP), then the average of such VWAPs which are available in that five- dealing-day period shall be used (subject to there being a daily VWAP available for a minimum of two such days) and if only one, or no, such VWAP is available in the relevant period, the Current Market Price shall be determined in good faith by an Independent Financial Adviser.

Day-Count Fraction has the meaning given to it in Condition 5.3. dealing day means a day on which the Primary Stock Exchange or relevant stock exchange or securities market is open for business and on which Parent Ordinary Shares or Other Securities may be dealt in (other than a day on which the Primary Stock Exchange or relevant stock exchange or securities market is scheduled to or does close prior to its regular weekday closing time);

Distributable Items means, subject as otherwise defined in the Regulatory Capital Requirements, in relation to interest otherwise scheduled to be paid on an Interest Payment Date, the amount of the profits of the Issuer as at the end of the financial year immediately preceding such Interest Payment Date plus:

(i) any profits brought forward and reserves available for that purpose before distributions to holders of other own funds items of the Issuer; less

(ii) any losses brought forward, profits which are non-distributable pursuant to provisions in legislation or the Issuer's articles of association and sums placed to non- distributable reserves in accordance with the Companies Acts 1963 to 2013 of Ireland or the articles of association of the Issuer, those profits, losses and reserves being determined on the basis of the individual accounts of the Issuer and not on the basis of its consolidated accounts.

81 Dividend means any dividend or distribution in respect of the Parent Ordinary Shares to Shareholders whether of cash, assets or other property, and however described and whether payable out of share premium account, profits, retained earnings or any other capital or revenue reserve or account, and including a distribution or payment to holders upon or in connection with a reduction of capital, provided that:

(i) where a Dividend in cash is announced which is to be, or may at the election of a Shareholder or Shareholders be, satisfied by the issue or delivery of Parent Ordinary Shares or other property or assets, then the Dividend in question shall be treated as a Cash Dividend of an amount equal to the greater of (i) the Fair Market Value of such cash amount and (ii) the Current Market Price of such Parent Ordinary Shares as at the first date on which the Parent Ordinary Shares are traded ex-the relevant Dividend on the Primary Stock Exchange or, as the case may be, the Fair Market Value of such other property or assets as at the date of the first public announcement of such Dividend on the Primary Stock Exchange or, if later, the date on which the number of Parent Ordinary Shares (or amount of such other property or assets, as the case may be) which may be issued or delivered is determined;

(ii) any issue of Parent Ordinary Shares falling within Condition 8.4(i) or Condition 8.4(ii) shall be disregarded;

(iii) a purchase or redemption or buy back of share capital of the Parent by or on behalf of the Parent or any of its Subsidiaries shall not constitute a Dividend unless, in the case of a purchase or redemption or buy back of Parent Ordinary Shares by or on behalf of the Parent or any of its Subsidiaries, the VWAP per Parent Ordinary Share (before expenses) on any one day (a Specified Share Day) in respect of such purchases or redemptions or buy backs exceeds by more than 5 per cent. the average of the daily VWAP of a Parent Ordinary Share on the five dealing days immediately preceding the Specified Share Day or, where an announcement (excluding, for the avoidance of doubt for these purposes, any general authority for such purchases, redemptions or buy backs approved by a general meeting of Shareholders or any notice convening such a meeting of Shareholders) has been made of the intention to purchase, redeem or buy back Parent Ordinary Shares at some future date at a specified price or where a tender offer is made, on the five dealing days immediately preceding the date of such announcement or the date of first public announcement of such tender offer (and regardless of whether or not a price per Parent Ordinary Share, a minimum price per Parent Ordinary Share or a price range or formula for the determination thereof is or is not announced at such time), as the case may be, in which case such purchase, redemption or buy back shall be deemed to constitute a Dividend in euro in an amount equal to the amount by which the aggregate price paid (before expenses) in respect of such Parent Ordinary Shares purchased, redeemed or bought back by the Parent or, as the case may be, any of its Subsidiaries exceeds the product of (i) 105 per cent. of the daily VWAP of a Parent Ordinary Share determined as aforesaid and (ii) the number of Parent Ordinary Shares so purchased, redeemed or bought back;

(iv) if the Parent or any of its Subsidiaries shall purchase, redeem or buy back any depositary or other receipts or certificates representing Parent Ordinary Shares, the provisions of paragraph (iii) above shall be applied in respect thereof in such manner and with such modifications (if any) as shall be determined in good faith by an Independent Financial Adviser; and

(v) where a dividend or distribution is paid or made to Shareholders pursuant to any plan implemented by the Parent for the purpose of enabling Shareholders to elect, or which may require Shareholders, to receive dividends or distributions in respect of the Parent Ordinary Shares held by them from a person other than, or in addition to, the Parent, such dividend or distribution shall for the purposes of Condition 8 be treated as a

82 dividend or distribution made or paid to Shareholders by the Parent, and the foregoing provisions of this definition and the provisions of Condition 8, including references to the Parent paying or making a dividend, shall be construed accordingly, and any such determination shall be made on a gross basis and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit.

EEA Regulated Market means a market as defined by Article 4.1(14) of Directive 2004/39/EC of the European Parliament and of the Council on markets on financial instruments.

Effective Date means, in respect of Condition 8.4, the first date on which the Parent Ordinary Shares are traded ex-the relevant Dividend on the Primary Stock Exchange or, in the case of a purchase, redemption or buy back of Parent Ordinary Shares (or any depositary or other receipts or certificates representing Parent Ordinary Shares), the date on which such purchase, redemption or buy back is made.

Encumbrance means any pledge, lien, option, security interest, claim, equity, trust, mortgage, charge, encumbrance or third party right or interest of any nature whatsoever and including for the avoidance of doubt any pre-emptive or similar right.

ESM means the Enterprise Securities Market operated by the Irish Stock Exchange;

Exempt Reorganisation means a Reorganisation where, immediately after completion of the relevant proceedings, the ordinary shares or units or equivalent of Newco (or depositary or other receipts or certificates representing ordinary shares or units or equivalent of Newco) are (i) admitted to trading on the Primary Stock Exchange or (ii) admitted to listing on such other regulated, regularly operating, recognised stock exchange or securities market as the Issuer or Newco may determine;

Existing Shareholders has the meaning given to it in the definition of "Reorganisation".

Extraordinary Resolution has the meaning given to it in the Trust Deed.

Fair Market Value means, with respect to any property on any date, the fair market value of that property as determined by an Independent Financial Adviser in good faith, provided that:

(i) the Fair Market Value of any cash amount shall be the amount of such cash;

(ii) where Parent Ordinary Shares or Other Securities are publicly traded on a stock exchange or securities market of adequate liquidity (as determined in good faith by an Independent Financial Adviser), the Fair Market Value of such Parent Ordinary Shares or Other Securities shall equal the arithmetic mean of the daily VWAP of such Parent Ordinary Shares or Other Securities (or the arithmetic mean of the daily closing prices should daily VWAP not be available), during the period of five dealing days on the relevant stock exchange or securities market commencing on such date (or, if later, the first such dealing day such Parent Ordinary Shares or Other Securities) or such shorter period as such Parent Ordinary Shares or Other Securities are publicly traded;

(iii) where Parent Ordinary Shares or Other Securities are not publicly traded on a stock exchange or securities market of adequate liquidity (as aforesaid), the Fair Market Value of such Parent Ordinary Shares or Other Securities shall be determined in good faith by an Independent Financial Adviser, on the basis of a commonly accepted market valuation method and taking account of such factors as it considers appropriate, including the market price per Parent Ordinary Share, the dividend yield of a Parent Ordinary Share, the volatility of such market price, prevailing interest rates and the terms of such Parent Ordinary Shares or Other Securities, including as to the expiry date and exercise price (if any) thereof; and

83 (iv) the Fair Market Value shall be determined on a gross basis and disregarding any withholding or deduction required to be made on account of tax, and disregarding any associated tax credit.

First Reset Date has the meaning given to it in Condition 5.2(a).

Independent Financial Adviser means any independent investment bank of international standing, the identity of which has been approved by the Trustee, appointed by the Issuer or the Parent at its own expense from time to time for the purposes of carrying out the duties described in one or more of these Conditions and in performing such role such entity shall have regard to the interests of the Issuer and the Securityholders alike.

Initial Interest Rate has the meaning given to it in Condition 5.2(a).

Interest Amount means the amount due on each Security on an Interest Payment Date.

Interest Payment Date has the meaning given to it in Condition 5.2.

Interest Period has the meaning given to it in Condition 5.2.

Interest Rate means the Initial Interest Rate and/or the applicable Reset Interest Rate, as the case may be.

Issue Date means 6 May 2015.

Issuer has the meaning given to it in the preamble to these Conditions.

Issuer Group means the Issuer and each entity which is part of the prudential consolidation group (as that term, or its successor, is used in the Regulatory Capital Requirements) of which the Issuer is part from time to time.

Issuer Shares has the meaning given to it in Condition 8.1.

Issuer Shares Subscription Amount has the meaning given to it in Condition 8.2.

Liabilities means the unconsolidated gross liabilities of the Issuer, as shown in its latest published audited balance sheet, but adjusted for contingent liabilities and for subsequent events in such manner as the directors of the Issuer may determine.

Long-Stop Date means the date on which any Securities in relation to which no duly completed Conversion Notice has been received by the Settlement Shares Depositary (or its designated agent(s)) shall be cancelled, which date is expected to be no more than 60 Business Days following the date of the Trigger Event Notice and which will be notified to Securityholders in the Trigger Event Notice.

Margin has the meaning given to it in Condition 5.4(b)(iv).

Maximum Distributable Amount means any applicable maximum distributable amount relating to the Issuer or the Issuer Group required to be calculated in accordance with Article 141 of the CRD IV Directive (or, as the case may be, any provision of applicable law transposing or implementing the CRD IV Directive, as amended or replaced).

New Conversion Condition means, where by no later than seven Business Days following the occurrence of a Takeover Event where the Acquirer is an Approved Entity, the Issuer and the Parent shall have entered into such agreements and arrangements with the Approved Entity pursuant to which the Approved Entity irrevocably undertakes to the Trustee, for the benefit of the Securityholders, to deliver the Approved Entity Shares to the Securityholders upon the occurrence of a Trigger Event on terms mutatis mutandis identical to the provisions of Condition 8.

84 New Conversion Price means, in respect of any Conversion Date falling on or after the Takeover Event Date, where the Takeover Event is a Qualifying Takeover Event, the New Floor Price on the Business Day prior to such Conversion Date.

New Floor Price means the amount determined in accordance with the following formula:

NFP = EFP X VWAPAES VWAPOS

where:

NFP is the New Floor Price;

EFP is the Conversion Price in effect on the dealing day immediately prior to the Takeover Event Date;

VWAPAES means the average of the VWAP of the Approved Entity Shares on each of the five dealing days ending on the dealing day prior to the closing date of the Takeover Event (and where references in the definition of "VWAP" to "Parent Ordinary Shares" shall be construed as a reference to the Approved Entity Shares and in the definition of "dealing day", references to the "Primary Stock Exchange"' shall be to the relevant Recognised Stock Exchange); and

VWAPOS is the average of the VWAP of the Parent Ordinary Shares on each of the five dealing days ending on the dealing day immediately prior to the Takeover Event Date;

Newco has the meaning given to it in the definition of "Reorganisation".

Non-Qualifying Takeover Event means a Takeover Event that is not a Qualifying Takeover Event.

Notional Preference Share has the meaning given to it in Condition 4.

Other Securities means any equity securities including, without limitation, shares in the capital of the Parent, or options, warrants or other rights to subscribe for or purchase or acquire shares in the capital of the Parent other than the Parent Ordinary Shares;

Other Tier 1 Instruments means any obligations of the Issuer which rank or are expressed to rank on a Winding-Up or in respect of a distribution or payment of dividends or any other payments thereon pari passu with the Issuer's obligations in respect of the Securities (for the avoidance of doubt, excluding any ordinary share capital of the Issuer).

Parent Ordinary Shares means registered ordinary shares of the Parent of €0.50 nominal value (Bloomberg Code: IPM) which are listed on the Official List or ESM of the Irish Stock Exchange. The Parent Ordinary Shares deliverable upon Conversion of the Securities will be shares newly issued from the authorised capital of the Parent. Parent Ordinary Shares will rank pari passu with all other ordinary registered shares of the Parent for any and all distributions payable on them on or after the Conversion Date.

Paying Agent means each entity appointed as a paying agent from time to time pursuant to the Agency Agreement.

Primary Stock Exchange means the Irish Stock Exchange or, if at the relevant time the Parent Ordinary Shares are not at that time listed and admitted to trading on the Irish Stock Exchange, the principal stock exchange or securities market on which the Parent Ordinary Shares, if listed, are then listed, admitted to trading or quoted or accepted for dealing;

Proceedings has the meaning given to it in Condition 18.2.

85 Qualifying Takeover Event means a Takeover Event where (i) the Acquirer is an Approved Entity and (ii) the New Conversion Condition is satisfied.

Recognised Stock Exchange means a regulated, regularly operating and recognised stock exchange or securities market. record date has the meaning given to it in Condition 6.1.

Register has the meaning given to it in Condition 1.2.

Registrar means Deutsche Bank Luxembourg S.A. or such other registrar appointed by the Issuer from time to time in respect of the Securities in accordance with these Conditions.

Regulatory Capital Requirements means any requirements contained in the regulations, requirements, guidelines and policies of the Supervisory Authority, or of the European Parliament and Council or of the European Commission (including, for the avoidance of doubt, the CRD IV Directive and the CRD IV Regulation), then in effect in Ireland relating to capital adequacy and applicable to the Issuer and/or the Issuer Group.

Relevant Date means whichever is the later of: (1) the date on which the payment in question first becomes due; and (2) if the full amount payable has not been received by the Registrar or another Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Securityholders.

Reorganisation means proceedings which effect the interposition of a limited liability company (Newco) between the Shareholders immediately prior to such proceedings (the Existing Shareholders) and the Parent; provided that:

(a) only ordinary shares or units or equivalent of Newco (or depositary or other receipts or certificates representing ordinary shares or units or equivalent of Newco) are issued to Existing Shareholders;

(a) immediately after completion of such proceedings the only holders of ordinary shares, units or equivalent of Newco (or, as the case may be, the only holders of depositary or other receipts or certificates representing ordinary shares or units or equivalent of Newco) are Existing Shareholders holding in the same proportions as immediately prior to completion of such proceedings;

(b) immediately after completion of such proceedings, Newco is (or one or more wholly owned Subsidiaries of Newco are) the only Shareholder;

(c) all Subsidiaries immediately prior to such proceedings (other than Newco, if Newco is then a Subsidiary of the Parent) are Subsidiaries of the Parent (or of Newco) immediately after completion of such proceedings; and

(d) immediately after completion of such proceedings, the Parent (or Newco) holds, directly or indirectly, the same percentage of the ordinary share capital and equity share capital of those Subsidiaries as was held by the Parent immediately prior to such proceedings;

Reset Date means the First Reset Date and each date that falls five, or a multiple of five, years following the First Reset Date.

Reset Determination Date has the meaning given to it Condition 5.4(b)(v).

Reset Interest Rate has the meaning given to it in Condition 5.4(a).

86 Reset Period means the period from and including the First Reset Date to but excluding the next Reset Date, and each successive period from and including a Reset Date to but excluding the next succeeding Reset Date.

Reset Reference Bank Rate has the meaning given to it in Condition 5.4(b)(vi).

Reset Reference Banks has the meaning given to it in Condition 5.4(b)(vii).

Reserved Matter has the meaning given to it in the Trust Deed.

Risk Weighted Assets means, as at any date, the aggregate amount, expressed in euro, of the risk weighted assets of the Issuer (calculated on an individual consolidated basis as referred to in Article 9 of the CRD IV Regulation) or, as the context requires, of the Issuer Group (calculated on a consolidated basis) as at such date, in each case as calculated by the Issuer in accordance with the then prevailing Regulatory Capital Requirements.

Screen Page has the meaning given to it in Condition 5.4(b)(viii).

Securities has the meaning given to it in the preamble to these Conditions.

Securityholder has the meaning given to it in Condition 1.2.

Senior Creditors means creditors of the Issuer: (a) who are unsubordinated creditors of the Issuer; (b) whose claims are, or are expressed to be, subordinated (whether only in the event of a Winding-Up or otherwise) to the claims of unsubordinated creditors of the Issuer but not further or otherwise; or (c) whose claims are, or are expressed to be, junior to the claims of other creditors of the Issuer, whether subordinated or unsubordinated, other than those whose claims rank, or are expressed to rank, pari passu with, or junior to, the claims of the Securityholders in a Winding-Up occurring prior to the Trigger Event (and, for the avoidance of doubt, Senior Creditors shall include holders of Tier 2 Capital instruments). Settlement Date means, with respect to a Securityholder seeking to obtain Parent Ordinary Shares from the Settlement Shares Depositary (or its agent), the second Business Day after the day on which such Securityholder delivers the relevant Conversion Notice to the Settlement Shares Depositary (or its agent). Settlement Shares Depositary means a reputable financial institution, trust company, account manager, nominee entity, depositary entity or similar entity (which in each such case is wholly independent of the Issuer) to be appointed by the Issuer and the Parent on or prior to any date when a function ascribed to the Settlement Shares Depositary in these Conditions is required to be performed, to perform such functions and that will hold the Parent Ordinary Shares on trust for the Securityholders in one or more segregated accounts and otherwise on terms consistent with these Conditions.

Shareholders means the holders of Parent Ordinary Shares for the time being (and Shareholder shall be construed accordingly).

Solvency Condition has the meaning given to it in Condition 3.2.

Subsidiary means a subsidiary within the meaning of Section 155 of the Companies Act 1963.

Supervisory Authority means the European Central Bank and any successor or replacement thereto or such other authority having primary responsibility for the prudential oversight and supervision of the Issuer and/or the Issuer Group for the purposes of the CRD IV Directive and CRD IV Regulation.

Supervisory Permission means such approval, consent or non-objection from, or notification required within prescribed periods to, the Supervisory Authority, or such waiver of the then prevailing

87 Regulatory Capital Requirements from the Supervisory Authority, as is required under the then prevailing Regulatory Capital Requirements.

Takeover Event shall occur if any person or persons acting in concert acquires control of the Parent (other than as a result of an Exempt Reorganisation). For the purposes of the definition of "Takeover Event", acting in concert has the meaning given to such term in the Irish Takeover Panel Act 1997 and control means the acquisition or holding of legal or beneficial ownership of more than 95 per cent. of the issued Parent Ordinary Shares and the Parent Ordinary Shares are not admitted to trading, or are no longer admitted to trading, as the case may be, on any Recognised Stock Exchange, and controlled shall be construed accordingly.

Takeover Event Date means the date with effect from which the New Conversion Condition shall have been satisfied.

Tax Gross-Up Event means that, as a result of any change in, or amendment to, the laws or regulations of Ireland or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation or administration of such laws or regulations, becoming effective on or after the Issue Date, on the occasion of the next payment due in respect of the Securities, the Issuer would be obliged to pay Additional Amounts as provided or referred to in Condition 9 and such obligation cannot be avoided by the Issuer taking reasonable measures available to it.

Taxes has the meaning given to it in Condition 9.1.

Tier 1 Capital has the meaning given to it (or any successor term) from time to time in the Regulatory Capital Requirements.

Tier 2 Capital has the meaning given to it (or any successor term) from time to time in the Regulatory Capital Requirements.

Trading Day means any day (other than a Saturday or a Sunday) on which the primary stock exchange on which the Parent Ordinary Shares are listed is open for business and the Parent Ordinary Shares may be traded.

Transfer Agent means Deutsche Bank Luxembourg S.A.or such other transfer agent appointed by the Issuer from time to time in respect of the Securities in accordance with the Conditions.

Trigger Event means the Common Equity Tier 1 Capital Ratio of the Issuer or the Common Equity Tier 1 Capital Ratio of the Issuer Group falls below 7.00 per cent.

Trigger Event Notice has the meaning given to it in Condition 8.1.

Trustee means Deutsche Trustee Company Limited or such other trustee appointed by the Issuer from time to time in respect of the Securities in accordance with the Conditions.

Trust Deed has the meaning given to it in the preamble to these Conditions.

VWAP means, in respect of a Parent Ordinary Share or Other Security, as the case may be, for any dealing day, the order book volume-weighted average price of a Parent Ordinary Share or Other Security, as the case may be, published by or derived (in the case of a Parent Ordinary Share) from the relevant Bloomberg page or (in the case of an Other Security) from the principal stock exchange or securities market on which such Other Securities are then listed or quoted or dealt in, if any or, in any such case, such other source as shall be determined in good faith to be appropriate by an Independent Financial Adviser on such dealing day, provided that if on any such dealing day such price is not available or cannot otherwise be determined as provided above, the VWAP of a Parent Ordinary Share or Other Security in respect of such dealing day shall be the VWAP, determined as provided above, on

88 the immediately preceding dealing day on which the same can be so determined or determined as an Independent Financial Adviser might otherwise determine in good faith to be appropriate.

Winding-Up means:

(a) an order is made, or an effective resolution is passed, for the winding-up of the Issuer (except, in any such case, a solvent winding-up solely for the purposes of a reorganisation, reconstruction or amalgamation, the terms of which reorganisation, reconstruction or amalgamation have previously been approved in writing by the Trustee or an Extraordinary Resolution and do not provide that the Securities thereby become redeemable or repayable in accordance with these Conditions); or

(b) liquidation or dissolution of the Issuer or any procedure similar to that described in paragraph (a) of this definition is commenced in respect of the Issuer.

20.2 Interpretation

In these Conditions all references to any statute, directive, regulation or other law or to any provision of any statute, directive, regulation or other law shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under any such modification or re-enactment.

89 SUMMARY OF PROVISIONS RELATING TO THE SECURITIES WHILE REPRESENTED BY THE GLOBAL CERTIFICATE

The following is a summary of the provisions to be contained in the Trust Deed and in the Global Certificate which will apply to, and in some cases modify the effect of, the Conditions while the Securities are represented by the Global Certificate:

1. EXCHANGE OF THE GLOBAL CERTIFICATE AND REGISTRATION OF TITLE

Registration of title to Securities in a name other than that of the nominee of the common depository for Euroclear and Clearstream, Luxembourg, BT Globenet Nominees Limited, (the "Nominee") will be permitted only if either Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) or announces an intention permanently to cease business or does in fact do so and no alternative clearing system satisfactory to the Registrar is available. References herein to "Accountholders" are to each person (other than Euroclear and Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear and/or Clearstream, Luxembourg as the holder of a particular principal amount of Securities (in which regard any certificate or other document issued by that clearing system as to the principal amount of Securities standing to the account of any person shall be conclusive and binding for all purposes).

Thereupon, the Nominee (acting on the instructions of one or more of the Accountholders) may give notice to the Issuer of its intention to exchange the Global Certificate for definitive Certificates on or after the Exchange Date (as defined below).

On or after the Exchange Date, the Nominee may surrender the Global Certificate to, or to the order of, the Registrar. In exchange for the Global Certificate, the Registrar will deliver, or procure the delivery of, definitive Certificates in minimum principal amounts of €200,000 and integral multiples of €1,000 in excess thereof printed in accordance with any applicable legal and stock exchange requirements and in or substantially in the form set out in the Trust Deed. On exchange of the Global Certificate, the Issuer will procure that it is cancelled and, if the Nominee so requests, returned to the Nominee together with any relevant definitive Certificates.

For these purposes, "Exchange Date" means a day specified in the notice requiring exchange falling not less than 10 days after that on which such notice is given and being a day on which banks are open for general business in the place in which the specified office of the Registrar is located.

2. CANCELLATION

Cancellation of any Securities following their redemption, purchase by the Issuer or any of the Issuer's subsidiaries or following their Conversion will be effected by reduction in the aggregate principal amount of the Securities in the register of Securityholders, and a corresponding reduction in the principal amount of Securities represented by the Global Certificate will be made accordingly.

3. PAYMENTS

Payments due in respect of Securities represented by the Global Certificate shall be made by the Registrar or the Principal Paying Agent to, or to the order of, the Nominee. A record of each payment made in respect of Securities represented by the Global Certificate will be endorsed on the appropriate part of the schedule to the Global Certificate by or on behalf of the Registrar, which endorsement shall be prima facie evidence that such payment has been made in respect of the Securities.

Payment by the Registrar or the Principal Paying Agent to or to the order of the Nominee will discharge the obligations of the Issuer in respect of the relevant payment under the Securities. Each Accountholder must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, for its share of each payment made to or to the order of the Nominee, and each beneficial owner of Securities who is not itself an Accountholder must look solely to the relevant Accountholder through which it holds its Securities for its share of each payment made to such Accountholder.

4. CALCULATION OF INTEREST

For so long as all of the Securities are represented by the Global Certificate and such Global Certificate is held on behalf of Euroclear and Clearstream, Luxembourg, interest shall be calculated on the basis of the aggregate principal amount of the Securities represented by the Global Certificate, and not per Calculation Amount as provided in Condition 5.3.

90 5. TRANSFERS

Transfers of book-entry interests in the Securities will be effected through the records of Euroclear and Clearstream, Luxembourg and their respective participants in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg and their respective direct and indirect participants.

6. NOTICES

For so long as the Securities are represented by the Global Certificate and such Global Certificate is held on behalf of Euroclear and Clearstream, Luxembourg, notices may be given to the Securityholders by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg (as the case may be) for communication to the relevant Accountholders and beneficial owners in substitution for notification as required by Condition 13 except that, so long as the Securities are listed on the Irish Stock Exchange and the rules of that Exchange so require, notices shall also be published on the Irish Stock Exchange's website, www.ise.ie. Such notice shall be deemed to have been given on the date of delivery of the notice to Euroclear and/or Clearstream, Luxembourg (as the case may be) for such communication.

7. MEETINGS

For the purposes of any meeting of Securityholders, the holder of the Securities represented by the Global Certificate shall be treated as one person for the purposes of any quorum requirements and as being entitled to one vote in respect of each €1 in principal amount of the Securities.

8. ELECTRONIC CONSENT AND WRITTEN RESOLUTION

For so long as the Securities are in the form of a Global Certificate registered in the name of any nominee for one or more of Euroclear and Clearstream, Luxembourg, then, in respect of any resolution proposed by the Issuer or the Trustee:

(i) where the terms of the proposed resolution have been notified to the Securityholder through the relevant clearing system(s), each of the Issuer and the Trustee shall be entitled to rely upon approval of such resolution proposed by the Issuer or the Trustee (as the case may be) given by way of electronic consents communicated through the electronic communications systems of the relevant clearing system(s) in accordance with their operating rules and procedures by or on behalf of the holders of not less than 75 per cent. in principal amount of the Securities outstanding ("Electronic Consent"). Neither the Issuer nor the Trustee shall be liable or responsible to anyone for such reliance; and

(ii) where Electronic Consent is not being sought, for the purpose of determining whether a written resolution has been validly passed, the Issuer and the Trustee shall be entitled to rely on consent or instructions given in writing directly to the Issuer and/or the Trustee, as the case may be, by accountholders in the clearing system(s) with entitlements to such Global Certificate or, where the accountholders hold any such entitlement on behalf of another person, on written consent from or written instruction by the person for whom such entitlement is ultimately beneficially held, whether such beneficiary holds directly with the accountholder or via one or more intermediaries and provided that, in each case, the Issuer and/or the Trustee (as the case may be) have obtained commercially reasonable evidence to ascertain the validity of such holding and have taken reasonable steps to ensure that such holding does not alter following the giving of such consent or instruction and prior to the effecting of such amendment. Any resolution passed in such manner shall be binding on all Securityholders, even if the relevant consent or instruction proves to be defective. As used in this paragraph, "commercially reasonable evidence" includes (without limitation) any certificate or other document issued by Euroclear, Clearstream, Luxembourg or any other relevant clearing system, or issued by an accountholder of them or an intermediary in a holding chain, in relation to the holding of interests in the Securities. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records provided by the relevant clearing system (including Euroclear's EUCLID or Clearstream, Luxembourg's CreationOnline system) in accordance with its usual procedures and in which the accountholder of a particular principal or nominal amount of the Securities is clearly identified together with the amount of such holding. Neither the Issuer nor the Trustee shall be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by any such person and subsequently found to be forged or not authentic.

9. CONVERSION

Any Conversion of Securities held in Euroclear or Clearstream, Luxembourg will be effected in accordance with the procedures set out in the Trigger Event Notice referred to in Condition 8.1 and otherwise in accordance with the relevant procedures of Euroclear and Clearstream, Luxembourg.

91 10. PRESCRIPTION

Claims against the Issuer in respect of any amounts payable in respect of the Securities represented by the Global Certificate will be prescribed after 10 years (in the case of principal) and five years (in the case of interest) from the due date.

11. RECORD DATE

For so long as all Securities are held in Euroclear and Clearstream, Luxembourg, the "record date" shall be determined in accordance with Condition 6.1 except that the words "fifteenth day" shall be deemed to be replaced with "ICSD Business Day" (where "ICSD Business Day" means a day on which Euroclear and Clearstream, Luxembourg are open for business).

12. EUROCLEAR AND CLEARSTREAM, LUXEMBOURG

References in the Global Certificate and this summary to Euroclear and Clearstream, Luxembourg shall be deemed to include references to any other clearing system approved for the purposes of the Securities by the Trustee and the Registrar.

92 USE OF PROCEEDS

The Securities are being issued to strengthen the Issuer's capital and the Issuer intends to apply the net proceeds from the issue of the Securities to meet part of its general financing requirements.

93 DESCRIPTION OF THE ISSUER

The Issuer was incorporated on 21 September, 1994 and is registered at the Companies Registration Office Dublin, under the laws of Ireland, as a public limited company, with registration number 222332. The Issuer's principal executive offices are located at 56-59 Saint Stephen's Green, Dublin 2, Ireland, with telephone number +353 1 669 5000.

Activities of the Issuer

The objects for which the Issuer is established include, but are not limited to, carrying on the business of banking in all its forms, providing any services carried on or provided by building societies, and carrying on all or any of the business of investment managers, fund managers, and providers of financial, investment, management, business and other advice, assistance and services of all kinds. Further details may be found in Section 3 of the Memorandum of Association of the Issuer.

Group Overview

The Issuer is a 100% direct subsidiary of the Parent and is the Parent's sole direct subsidiary. The Group includes the Issuer and its 4 wholly owned principal subsidiaries, being Capital Home Loans Limited (which is currently contracted for sale), Permanent Bank International Limited (PBI), Irish Permanent (IOM) Limited (PIOM) and Irish Permanent International (Isle of Man) Limited (PIL). The Group operates in the markets of ROI, the UK and the Isle of Man.

The Issuer is a significant provider of retail financial services in the Irish domestic banking market. It offers a broad range of banking products and financial services to its customers including current accounts, retail and corporate and institutional deposits, residential mortgages, term loans, credit cards and overdrafts as well as general insurance, pensions, investments and life insurance (through a bancassurance arrangement).

As at 31 December 2014, the Group held €36.3b of assets, with €31.8b gross loans (€28.2b net including assets held for sale), including €6.8b of UK mortgages on its balance sheet. Funding for the Group, as at 31 December 2014, comprised a mix of sources including €14.9b of retail deposits and current accounts (including Isle of Man deposits), €5.5b of corporate and institutional deposits (including deposits placed by an Irish Government institution), €4.9b Eurosystem Funding, and €7.7b wholesale funding (substantially comprised of medium term notes and funding sources secured on both Republic of Ireland and UK mortgages), €1.0b of subordinated and other liabilities, together with €2.3b of equity. The Group produced net interest income of €329m before ELG fees in the year ending 31 December 2014 with a pre- provision loss of €81m. The Group reported a loss before taxation of €48m for the year ended 31 December 2014 compared to a loss before taxation of €668m for the year ended 31 December 2013.

The Issuer estimated that it holds the third largest customer market share in the Republic of Ireland for its key products: deposits and residential mortgages (Source: 2014 annual reports of the Group, BOI, AIB, Ulster Bank and KBC), and is supported by a track record of product innovation, including deposits with upfront interest payment and multiple LTV- linked pricing points for mortgages. The Group has a customer franchise built over more than a hundred years, with an established consumer brand.

The Issuer has 78 branches in the Republic of Ireland, distributed widely to provide national coverage, and serving approximately 1.1m individual customers (out of a population of approximately 4.6m). In addition to its branch services, the Issuer operates through four other channels: telephony, online, automated teller machines and a network of intermediaries. As at 31 December 2014, the Group had 2,321 full time equivalent employees in Ireland.

The Group CEO, Jeremy Masding, took office in February 2012 and a new executive committee was appointed between February and December 2012. All current executive committee members were appointed at this time, with the exception of the Chief Risk Officer, Jerold Williamson, and Group Treasurer, Paul Byrne, who replaced outgoing executive committee members during 2014. Since 2012, the Group has undergone a transformation, including taking steps to increase financial resilience such as improving provision coverage, taking measures aimed at reducing reliance on Eurosystem Funding and increasing stable deposit funding, streamlining the cost base and closing the pension funding gap. Furthermore, the Group has rebuilt its corporate governance foundation, strengthened its credit risk capabilities, created a highly effective arrears management capability, re-launched the 'permanent tsb' brand with new products and returned to lending which has enabled the Group to re-establish market share.

The Group is structured into two operational units which reflect the internal financial and operational reporting structure. They are:

 The Core Bank, predominantly comprising the Issuer's ROI retail business and related assets and liabilities (including the core commercial part of the Group which offers a comprehensive range of retail banking products through multiple channels, in addition to taking corporate and institutional deposits) and incorporating the AMU

94 platform (the Group's retail debt management platform).

As at 31 December 2014, the Core Bank (comprising the core commercial part of the Group and the AMU platform) held €27.5b of assets, with €22.5b of gross loans to customers (€20.1b net) on its balance sheet and produced net interest income of €275m and an operating profit before exceptional items of €5m.

 The second operational unit, the Non-Core Business, comprises two separate businesses: Non-Core Ireland and Non-Core UK.

Non-Core UK (i) comprises a sterling residential mortgage portfolio of mostly buy-to-let loans (predominantly tracker) originated by CHL, which at 31 December 2014 had a gross outstanding loan balance of €6.5b. CHL also administers a smaller legacy portfolio of mostly residential buy-to-let loans on behalf of two wholly owned Isle of Man based Group subsidiaries, PIOM and PIL; (ii) a legacy portfolio of residential mortgages which at 31 December 2014 a gross outstanding loan balance of €0.3b, held by PIOM, an Isle of Man based subsidiary; and (iii) a deposit business in the Isle of Man operated through PBI. On 11 March 2015, the Group announced that it had entered into an agreement to sell approximately €3.5b (£2.5b) of the gross outstanding loan balances of the CHL mortgage book together with the sale of CHL and the CHL loan servicing platform. The agreement is subject to certain conditions being fulfilled prior to completion at which point the final consideration will be payable. Under the terms of the agreement the acquirer of CHL will, on behalf of the Group, service on commercial terms, the residual UK assets that will be retained by the Group, of which the remaining CHL assets are are expected to be deleveraged in the future. The Group is currently examining the possibility of securing purchasers for the remaining elements of the CHL Mortgage Book.

Non-Core Ireland comprises a commercial real estate portfolio, including both performing and non-performing components. As at 31 December 2014, the Non-Core Ireland business held a gross outstanding loan balance of €2b of non-performing loans and a gross outstanding loan balance of €0.6b of performing loans (which included a gross outstanding loan balance of c.€575m of residential home and buy-to-let mortgages in which either the relevant borrower(s) under the facilities are the same (or are connected), or the CRE mortgage and the corresponding residential mortgage are otherwise pooled for credit management purposes). On 11 March 2015, the Group announced that it had entered into an agreement in respect of the sale of approximately €3.5b (£2.5b) of the gross outstanding loan balances of the CHL Mortgage Book (the completion of which is subject to regulatory approval) together with the sale of the CHL loan servicing platform of the Group; and (ii) €1.5b of the gross outstanding loan balance comprised within the Irish commercial real estate portfolio (the "Non-Core Ireland Sale Portfolios"). The portfolios comprise approximately €1.5b of loans spread across Ireland. The agreement is subject to certain conditions. The Group intends to pursue the sale of a further tranche (c.€500m) of this portfolio of non-core loans linked to commercial real estate in Ireland which would conclude the Group's deleveraging programme for Non-Core Ireland assets.

All portfolios comprised within the Non-Core Business are closed for new business, with the exception of PBI, which is included within the Non-Core Business (specifically the UK element thereof) as it facilitates the Group in hedging its foreign exchange exposure more efficiently.

Subject to the Group achieving its deleveraging commitments under the Restructuring Plan Term Sheet, the Group will comprise the Core Bank only from 2016 onwards.

As further discussed below in this section on 9 April 2015 the European Commission approved the final decision clearing all State aid granted to the Group. The Restructuring Plan Term Sheet sets out the terms for the restructuring of the Parent Group which Ireland has committed to implement and requires the Parent Group to complete a number of disposals, including the disposal of the CHL Mortgage Book and the Non-Core Ireland commercial real estate (CRE) portfolio.

History and Development of the Group

The Issuer has a long history of supporting savers and borrowers in Ireland, having been part of the Irish banking landscape for 130 years. The Issuer 's origin traces back to the formation in 1884 of the mutually owned institution that became known as Irish Permanent Building Society. Over a century later, in 1994, the Irish Permanent Building Society demutualised and converted to a public company called Irish Permanent p.l.c and was listed on the Irish and London Stock Exchanges. In 1999, Irish Permanent p.l.c acquired Irish Life Group Limited, a life assurance and pension provider, to form Irish Life & Permanent Group. As both a bank and holding company for the new group, Irish Permanent p.l.c. changed its name to Irish Life & Permanent p.l.c. Irish Life & Permanent p.l.c. acquired TSB Bank in 2001, and the Issuer's rebranded retail banking operation, 'permanent tsb', was launched in 2002.

From 2003 to 2008, the Group's lending book grew quickly, in line with the rapidly expanding market. However, in

95 response to increased competition and a fall in market share in 2004 and 2005, the Group reduced mortgage margins, including on trackers linked to the ECB base rate, in order to regain market share. The mortgages were funded predominantly through the wholesale funding markets.

As the global financial system, including in Ireland and the UK, started experiencing difficulties, the Group began to experience severe funding and liquidity challenges. As access to international credit tightened and corporate and institutional deposits were lost, the Group needed to replace wholesale funding with a substantial amount of Eurosystem Funding to cover its funding shortfall.

From 30 September 2008, the Issuer's liabilities were covered by the CIFS Scheme, a guarantee of domestic Irish bank liabilities provided by the Irish Government. Subsequent to the implementation of the CIFS Scheme, the Issuer was also classed as a covered institution under the ELG Scheme which came into effect on 9 December 2009. The ELG Scheme provided a guarantee for certain Group liabilities (including retail deposits above €100,000 in value) in return for a fee. The ELG Scheme was closed to new liabilities in March 2013, and the fees payable by the Issuer under the ELG Scheme have since been sharply declining.

On 15 January 2010, by means of the 2010 Restructuring Scheme, the Parent became the holding company of the Parent Group. This saw the Issuer become a wholly owned subsidiary of the Parent.

Following the PCAR and PLAR assessments carried out by the Central Bank in 2011, a capital shortfall of €4b for the Group was identified. This capital shortfall was addressed by the Irish Government by way of a €2.7b capital investment (including its investment of €400m by way of the Contingent Capital Notes). In addition to this, the Issuer also conducted a liability management exercise on the Issuer's subordinated liabilities in 2011 resulting in a gain of €1b which increased the reserves of the Group, however, this did not increase the total regulatory capital as these subordinated liabilities were already part of the Group's regulatory capital). The Group then disposed of its life assurance and investment management business, Irish Life Group Limited, to the Irish Government for €1.3b which provided the remaining capital required to satisfy the Group's €4b regulatory capital requirement. This capital injection resulted in 99.2 per cent. Irish Government ownership of the Parent.

Thereafter, the Group reduced its reliance on Eurosystem Funding by increasing the Group's retail deposits. The Issuer acquired €3.6b of retail deposits from INBS in February 2011 and an additional €474m of retail deposits from Northern Rock's Irish business in January 2012. Furthermore, to maintain and attract depositors the Group set its retail deposit pricing at a premium to the market average. This was effective, but drove an increase in funding costs, which negatively impacted profitability. This profitability impact was further compounded by reductions in base rates which reduced the yield from the Group's tracker mortgage books.

During the three year period between 2011 and 2013 the Group reported cumulative loan impairments of €3.2b, including a charge of €1.4b in 2011. This followed total impairment charges of €0.9b arising from increasing charges between 2008 and 2010. This substantial increase was driven by the prolonged period of economic recession, which led to a sustained fall in house prices, and a large increase in the Issuer's Irish residential mortgage default cases (these rose from 3,711 at 31 December 2008 to 26,357 at 31 December 2013).

As at 31 December 2011, the Group had €4.4b of ROI residential non-performing home loans, and there were new defaults of €160m per month on average (in the 12 months to 31 December 2011). The existing arrears management function of the Group at that time was inadequate to manage the quantum of NPLs. In order to address these legacy shortfalls in capabilities, processes and technology in the collections function of the Group, and in order to effectively manage its backlog of non-performing loans, the Group put significant effort and investment into creating its specialist AMU platform in 2012. The Group invested approximately €41m in establishing and optimising the AMU platform during the period from its inception in 2012 to 31 December 2014 (including deploying improved technology solutions and establishing a dedicated contact centre). Further expenditure by the Group in respect of the AMU platform includes payroll expenses ranging from €7.6m in 2012 to c.€12m per annum since then. The AMU platform capability has a clear strategy which is focused on maximising the value of NPLs through cash collections, treatments and restructuring and recoveries. The Group also made investments in employing appropriately qualified staff to further improve the performance and capabilities of the AMU platform.

As a result of these investments, the Group now possesses a well-defined, end-to-end system for interacting with customers (including the use of robust processes, standard scripts and customer correspondence templates). This platform has also enabled the Group to meet all of the targets set by the Central Bank's MARS programme. As at 31 December 2014, the AMU platform had received approximately 37,000 'standard financial statements' from borrowers experiencing financial difficulties. A 'standard financial statement' is completed by a borrower that is experiencing financial difficulty (with the assistance of specially trained employees in the Issuer's branch network); it includes detailed financial information on the borrower's income and expenditure and assists the lender in assessing the borrower's repayment capacity.

96 In conjunction with strategic investments in the AMU, the Group has also made a number of important investments in products, marketing and distribution to enable the Group to position itself as a full service retail bank. In terms of products, the Group moved from limited lending and a limited range of products in the period prior to 2012 to being in a position where it offers innovative products and service, is acquiring new customers and offering additional products to existing customers, is targeting undeveloped business areas and is expanding its participation in the SME lending and deposit markets. In terms of marketing, the Group has re-launched its brand with an emphasis on 'easy' ways to do banking and its successful 'Back to Basics' campaign. Regarding distribution, the Issuer right-sized its branch footprint and implemented digital channel improvements which so far have included a mobile application, a re-designed website and increased digital channel user functionality.

On 29 June 2012, the Irish Government purchased the Group's life assurance and investment management businesses, Irish Life Group Limited, for €1.3b, and in December 2012 the Group sold its motor car financing business for net consideration of €129m. In September 2014 the Group further deleveraged its balance sheet through the sale of a tranche of loans held by CHL, comprising €222m of buy to let mortgages secured against properties in the UK. In October 2014, the Group contracted to sell its Springboard Non-Conforming Specialised Mortgage portfolio, comprising loans with a net value of €302m. In March 2015, the Group agreed the sale of two portfolios of non-core loans backed largely by Irish commercial real estate and a portfolio of loans held by CHL.

In 2014, the Group's financial performance demonstrated strong signs of improvement (evidenced by increased net interest margin (NIM), improved arrears figures, and reduced impairment provisions), as a result of several factors, including improvements in its commercial results, progress treating a substantial proportion of NPLs and an Irish economy undergoing a recovery. The Group's reliance on Eurosystem Funding has also reduced from €19.5b in December 2011 to €4.9b as at 31 December 2014 (Source: ptsb group annual report 2014).

On 26 October 2014, the results of the comprehensive assessment conducted by the ECB prior to its assumption of full responsibility for the supervision of the Issuer under the SSM in November 2014 (the SSM CA) were announced. The SSM CA , which covered 130 European banks in total, including the Issuer, comprised two key elements: an asset quality review to enhance the transparency of bank exposures by reviewing the quality of each bank's assets, including the adequacy of asset and collateral valuation and related provisions; and a stress test to examine the resilience of each bank's balance sheet to stress scenarios comprising a baseline scenario and an adverse scenario.

The outcome of the SSM CA for the Group confirmed that it continues to meet all of its minimum capital requirements, with no capital shortfalls identified in the asset quality review or, in relation to the stress test, under the baseline scenario. However, under the adverse scenario of the stress test, a requirement for the Group to have an additional capital buffer of €855m for the balance sheet at 31 December 2013, was identified.

In compliance with the requirements of the ECB, the Group submitted the Capital Plan to the ECB through the Joint ECB/CBI Supervisory Team on 21 November 2014 which set out how the Group proposed to address the capital shortfall identified. The Capital Plan principally comprised two elements, being (i) an issuance of new capital (through a combination of new equity and additional Tier 1 capital); and (ii) a number of other allowable capital measures which included recognition of the difference between the Group's reported pre-provision loss for 2014 and the equivalent forecast value and the impact of certain asset disposals. The Capital Plan has been formally noted by the Joint ECB/CBI Supervisory Team in its letter dated 20 February 2015.

Recent Developments

On 3 March 2015, the Issuer obtained from the High Court of Ireland an order of court confirming the cancellation and reduction of €2,300,000,000 out of the amount of €2,833,400,350 standing to the credit of the Issuer's share premium account pursuant to Section 72 of the Irish Companies Act 1963. The resulting reserve has been applied in the elimination of an existing and prospective deficit on Issuer's profit and loss account, and in the creation of positive distributable reserves and was undertaken to facilitate the issuance of the Securities.

On 11 March 2015, and as part of the Group's overall strategy to deleverage non-core assets, the Group announced that it had entered into an agreement to sell approximately €3.5b (£2.5b) of the gross outstanding loan balances of the CHL mortgage book together with the sale of CHL and the CHL loan servicing platform. The agreement is subject to certain conditions being fulfilled prior to completion at which point the final consideration will be payable. The transaction is expected to give rise to a loss on disposal, with the resulting capital usage being within the Group's capital planning parameters. Under the terms of the agreement, the purchaser of CHL will, on behalf of the Group, service on commercial terms, the residual UK assets that will be retained by the Group.

On 11 March 2015, the Group announced that it had agreed the sale of the Non-Core Ireland Sale Portfolios. These portfolios comprise approximately €1.5b of loans spread across Ireland. The transaction is profitable by reference to the carrying value of the portfolios at year end and is capital accretive to the Group. At 31 December 2014, Irish CRE loans

97 together with certain associated residential loans were presented on the statement of financial position as assets held for sale. The UK mortgages were not classified as assets held for sale as it only became probable after 31 December 2014 that the sale of these assets would be completed within 12 months.

On 14 April 2015 the Parent announced its intention to raise at least €400m (before commissions and expenses) through a combination of a placing and an open offer, involving an issue of new Parent Ordinary Shares, and its intention to issue the Securities (the Capital Raise).

Completion of this Capital Package will contribute to the further optimisation of the Parent Group's capital structure (and the proposed repurchase of the Contingent Capital Notes), supporting the maintenance of appropriate capital in the Parent Group and securing the final amount of the capital shortfall identified under the adverse scenario stress test applied by the ECB as part of the SSM CA details of the results of which were announced on 26 October 2014. The Capital Package will also support the Issuer in its position as a significant retail bank in Ireland; in the continued orderly deleveraging of its non-core assets; and in its objectives of maintaining ongoing commercial growth across key categories and a return to sustainable profitability.

In conjunction with the Capital Package, the Parent will seek a listing of the Parent Ordinary Shares on the Official Lists and admission to trading on the main markets for listed securities of the Irish Stock Exchange and the London Stock Exchange, respectively.

On 23 April 2015 the Parent Group announced that the Issuer had agreed terms for the repurchase of the Contingent Capital Notes from the Minister. The Contingent Capital Notes are to be repurchased for a clean purchase price of 102.636 per cent., representing a premium of €10.544m over the €400m principal amount plus accrued interest. The repurchase is conditional upon the successful completion of the Capital Raise.

Restructuring Plan Term Sheet

The recapitalisation of the Group in 2011, together with other aspects of the Irish Government's response to the banking crisis, was considered by the European Commission to involve the provision of State aid by Ireland, within the meaning of Article 107 of the Treaty on the Functioning of the European Union, to the Parent Group. This resulted in the requirement for the submission of an EU restructuring plan to the European Commission for approval under EU State aid rules. Since July 2011, the Parent Group has held discussions with the European Commission which did not lead to an approved restructuring plan. Following the outcome of the SSM CA and the finalisation of the Parent Group's Capital Plan, the Parent Group submitted an updated EU restructuring plan. On 9 April 2015, the European Commission approved the final decision clearing all State aid granted to the Parent Group. The Restructuring Plan Term Sheet sets out the terms for the restructuring of the Parent Group which Ireland has committed to implement. The Restructuring Plan Term Sheet imposes certain restrictions which may restrict the Parent Group's ability to operate its business as it would otherwise have done so and includes.

A. Disposals

The Parent Group will commit to dispose of the following loan portfolios, which are briefly described below:

1) Subject to achieving a price that represents a discount not in excess of 10 per cent. of the gross asset value, the CHL mortgage book, which is a sterling residential mortgage portfolio of mostly buy-to-let loans comprised mainly of tracker mortgages with interest rates linked to the Bank of England base rate. The CHL mortgage book, which has been closed to new business since 2008 and is in run-off, had mortgage loans of approximately €6.5b (£5.b) (gross) outstanding and had 85 staff as at 31 December 2014.

2) The non-performing element of the Issuer's Irish commercial real estate portfolio. As at 31 December 2014, the relevant portfolio comprised of 2,846 loans, with a total balance sheet value of approximately €2b.

Both portfolios form the majority of the Non-Core Business and have been clearly and formally designated as non-core by the Group for the past number of years. On 11 March 2015, the Group announced the signing of agreements to sell approximately €3.5b (£2.5b) of the gross outstanding loan balances of the CHL Mortgage Book together with the sale of CHL and the CHL loan servicing platform; and to sell the Non-Core Ireland Sale Portfolios. The Group is currently examining the possibility of securing purchasers for the remaining elements of the CHL Mortgage Book and for a further amount of the Irish commercial real estate portfolio.

B. Defaulted Irish Tracker Mortgages

The Parent Group has committed to reduce the value of the Defaulted Irish Tracker Mortgages by way of cures, closures, writeoffs and asset sales (or a combination thereof) by a pre-determined date and according to a pre-

98 determined schedule. There is a restriction which provides that writeoffs cannot exceed a pre-determined level.

C. Behavioural Commitments

Certain behavioural commitments, including:

 Restructuring of the Group: The Parent Group has committed to maintain the reporting split of its balance sheet in respect of, and monitor the performance of, the Core Bank and the Non-Core Business separately (and this is consistent with the Group's current structure);

 Portfolio Restructuring: The Parent Group has committed to deliver on mortgage treatments for NPLs relating to residential mortgages (which measures are broadly consistent with those prescribed by the Central Bank, as set out in the CCMA);

 Balance Sheet Limitation: The Parent Group has committed to limit the maximum size of its balance sheet to pre-determined limits;

 Capital Raise: The Parent Group has committed to completing the Capital Package within a defined timeframe, consistent with the Capital Plan and ECB requirements;

 Marketing and Advertising: The Group has committed not to use the granting of State aid measures, the Minister 's shareholding in the Group or any advantages arising therefrom for advertising purposes, and has agreed to a pre-determined maximum level of marketing and advertising expenditure per annum;

 Acquisition and Scope of Business Restrictions: The Parent Group has committed not to acquire any stake in any undertaking (with specific limited exceptions or with the explicit consent of the European Commission);

 Exposure to Irish Sovereign Bonds: The Parent Group has committed to limit its holding of Irish sovereign bonds to pre-determined limits;

 Cost to Income Ratio: The Parent Group has committed that, subject to certain exceptions, the Parent Group's cost to income ratio and Annual Operating Expenses will not exceed pre-determined limits;

 Competition Measures: The Parent Group has committed to make available a services package to other banks and financial institutions that meet specified criteria comprising a range of clearing and related operational services and a customer mobility package to facilitate relevant competitors communicating with some of the Issuer's customers directly including by the provision of advertising material where the Issuer's market share exceeds pre-determined thresholds in relation to specified products;

 Geographical Participation: The Parent Group has committed to restrict its activities outside of Ireland (other than its activities in relation to CHL and the Isle of Man) to pre-determined activities (which is consistent with the strategy of the Group);

 Payment of Dividends: The Parent Group has committed to pay any equity dividends until the Contingent Capital Notes are converted, repaid or repurchased or sold by the State (whichever is earliest) or which will compromise the ability of the Parent Group to meet its commitments under the Restructuring Plan Term Sheet; and

 Diversification: The Parent Group has committed not to deviate materially from its current activities in any way which would be damaging to the Group.

D. Implementation

The measures will be required to be implemented over various time-frames between 9 April 2015 and 31 December 2018. The implementation of the Restructuring Plan Term Sheet may also require various external approvals which may include approvals from financial regulators, shareholders or other approvals required under law, including competition law. A monitoring trustee, and if needed, a divestiture trustee, will be appointed (subject to approval by the European Commission) to report to the European Commission on the Parent Group's adherence to the approved Restructuring Plan Term Sheet commitments and, in the case of a divestiture trustee, to divest specified assets. The Parent Group will have to comply with all of the terms and conditions of the approval by the European Commission or risk the opening of a new investigation and

99 procedure by the European Commission under EU State aid rules.

Variable Mortgage Interest Rates

There has been heightened scrutiny in connection with the setting of variable mortgage interest rates in Ireland recently. The Central Bank has confirmed that the fair treatment of mortgage holders is a key priority for the Central Bank, and has stated that it is examining the manner in which lenders are treating existing variable rate PDH mortgage holders when determining and implementing rate changes. The Issuer is examining its strategy in this regard. It is possible that the standard or managed variable rates may reduce in the future. The Issuer notes that there is both political and regulatory focus on the pricing of variable rate mortgages with significant pressure both to align new and existing pricing levels and to bring pricing in line with selected European mortgage markets. However, while the Issuer is fully cognisant that its mortgage pricing decision framework should take account of all stakeholders, it will continue to review its pricing and product strategies on a commercial basis with full consideration of long-term sustainable shareholder value creation and will do so across a range of considerations (including legal and regulatory considerations) both in the short term and throughout the Group’s strategic plan.

While changes to either pricing or product strategies can and may impact on key financial metrics of the business, the Issuer is confident that it targets for the Core Bank are achievable, albeit subject to the risks by which the Group may be affected.

See also the Risk Factors "The Group is exposed to risk in respect of the manner in which it determines and implements interest rate changes" and "The implementation of interest rate changes in the Irish mortgage market is subject to heightened scrutiny".

Participation in the ELG scheme

The Group joined the ELG Scheme on 4 January 2010. The ELG Scheme provided for an unconditional and irrevocable guarantee from the Irish Government for certain eligible liabilities (including deposits) of up to five years in maturity incurred by participating institutions. Pursuant to the ELG Scheme, the Group's customers benefit from an Irish Government guarantee on their applicable deposits, which was important in retaining and growing deposits in the Group's banking business at the height of the banking crisis. The Scheme also enabled the Group to secure longer-term funding, including the issuance of a 3-year U.S. $1.75b bond in January 2010, a 5-year €2b bond in March 2010 and a 3- year €1.25b bond in April 2010, all of which were guaranteed by the ELG Scheme and have since matured.

On 26 February 2013, the Minister announced the termination of the ELG Scheme from 29 March 2013. The guarantee on demand deposits under the ELG Scheme terminated at midnight on 28 March 2013. However, term deposits of over €100,000 placed with ELG participating institutions prior to 29 March 2013 are covered by the ELG up to their maturity date, subject to a maximum term of 5 years. The Minister also announced on that date that the Deposit Guarantee Scheme, which covers deposits up to €100,000, would continue, and this scheme is still in place. Deposits covered by the Deposits Guarantee Scheme at 31 December 2014 amounted to c.€10.8b.

The Group pays fees to participate in the ELG Scheme, which are calculated as a percentage of covered liabilities. ELG fees for the year ended 31 December 2013 decreased to €105m from €165m for the year ended 31 December 2012, primarily due to the reduction in the value of the liabilities covered under the scheme, which decreased to €7.4b as at 31 December 2013 from €14.5b as at 31 December 2012.

The ELG fees for the year ended 31 December 2014 decreased by 44 per cent. to €59m, compared to €105m for the year ended 31 December 2013. The liabilities covered under the scheme decreased to €2.8b (of which c.€1.3b were deposits) as at 31 December 2014 from €7.4b at 31 December 2013. The ELG fee is expected to continue to decrease to immaterial levels by 2016 as covered liabilities mature further.

High Court of Ireland Capitalisation Direction Order

On 26 July 2011, the High Court of Ireland made a direction order (on the application of the Minister under the Credit Institutions (Stabilisation) Act 2010) (the "Direction Order"), directing, as soon as possible after the making of the Direction Order and by no later than 29 July 2011, inter alia, that the Issuer and the Parent enter into the 2011 Placing Agreement (as defined below) with the Minister and the NTMA, the 2011 Subscription (as defined below) be made and the 2011 Contingent Capital Notes be issued.

On 27 July 2011, the Minister, the NTMA, the Issuer and the Parent entered into the 2011 Placing Agreement pursuant to the Direction Order to facilitate the issue of ordinary shares to the Minister. The 2011 Placing Agreement provided for the allotment and issue by the Parent of 36,249,014,972 ordinary shares of €0.031 each in the capital of the Parent at a price of €0.06345 per share to the Minister in consideration of the subscription by the Minister of €2.3b for such shares

100 (the "2011 Subscription"). Under Clause 10.1 of the 2011 Placing Agreement, the Parent has undertaken to the Minister that the Parent will comply with the covenants set out in Schedule 3 of the 2011 Placing Agreement. The covenants prescribe how the Company will manage its activities under a range of headings, including but not limited to, related party transactions, dividends, maintenance of reserves, corporate governance, information disclosures and confidentiality, matters of public interest, equity transactions, acquisitions, disposals and investments, and a prohibition on the use of "cash box structures". The covenants also provide that the Parent will submit a restructuring plan to the European Commission under EU State aid rules. A version of the Restructuring Plan Term Sheet was submitted to the European Commission on 22 October 2014 and a further version was submitted on 30 March 2015. The 2011 Placing Agreement is of indefinite duration.

Amended Relationship Framework

Pursuant to the terms of the 2011 Placing Agreement, the Parent Group agreed to be bound by and to comply in all respects with the terms of any relationship framework regulating the relationship between the Minister on the one hand and the Parent Group on the other hand specified by the Minister in the context of EU competition law matters. On 29 March 2012, a relationship framework was specified by the Minister (the "Relationship Framework"), which provides the basis under which the relationship between the Minister and the Parent Group is governed. It provides for safeguards as to the separate management of each of the State's interests in Irish credit institutions (including its interest in the Issuer through the Parent Group) in order to ensure that those interests, and the management of those interests, do not lead to a prevention, restriction or distortion of competition in contravention of merger control or competition law rules.

The Minister has pursuant to the relationship framework specified by the Minister in respect of the relationship between the Parent and the Minister dated 29 March 2012 and amended and restated as of 23 April 2015 (the Amended Relationship Framework), specified that these certain amendments to the existing relationship framework will take effect from the date of the Capital Raise with the amended restrictions incorporated in the Amended Relationship Framework.

Under the terms of the Amended Relationship Framework, the Minister expects the board and management team of the Parent Group to conduct the Parent Group's commercial operations in a prudent and sustainable manner which seeks to create a commercially oriented credit institution that recognises the need to encourage and enforce implementation of lessons learned from the financial crisis. The Minister recognises that the Parent Group remains a separate economic unit with independent powers of decision and that its Board and management team retain responsibility and authority for determining the Parent Group's strategy and commercial policies (including business plans and budgets) and conducting its day-to-day operations. The Minister will ensure that the investment in the Parent Group is managed on a commercial basis and will not intervene in day-to-day management decisions of the Parent Group (including with respect to pricing and lending decisions). Transactions and arrangements between the Parent Group and the Minister will be conducted at arm's-length and on normal commercial terms. The Minister will not, in his capacity as shareholder in the Parent, take any action that would have the effect of preventing the Parent from complying with its obligations under applicable law and regulations, including, but not limited to, the Listing Rules and will not propose or procure the proposal of a shareholder resolution which is intended to circumvent the proper application of regulatory requirements. The Minister will engage with the Parent, including in respect of the manner in which he exercises his voting rights, in accordance with best institutional practice in a manner proportionate to the shareholding interest of the State in the Parent. The views of the Minister and the Department of Finance are expected to be appropriately considered by the Parent Group as part of any consultation process under the Amended Relationship Framework. However, the Board and management team have full responsibility and authority for determining the Parent Group's strategy and commercial policies.

The Amended Relationship Framework also provides that the Minister and the Parent Group will review the Amended Relationship Framework from time to time when either party reasonably considers that changes to the Amended Relationship Framework or to the State Agreements (as defined therein) would be necessary or desirable to ensure that the Amended Relationship Framework continues to reflect certain principles specified in the Amended Relationship Framework and to enable the Parent Group to continue to comply with its obligations under applicable law and regulations, including, but not limited to, the Listing Rules.

The Amended Relationship Framework also imposes restrictions on the Parent Group undertaking certain actions without, where specified providing information to, consulting with, or obtaining the consent of the Minister. The principal restrictions are as follows:

(i) the Issuer is required to provide a copy of its draft business plan to the Minister before the business plan is finalised but it is noted that ultimate and final responsibility for the contents of the business plan rests with the board;

(ii) the board is required to consult with the Minister before appointing, removing or reappointing a chairman or a CEO of the Parent Group or the Issuer. The board is also required to consult with the Minister in respect of any

101 proposed board appointments;

(iii) the CEO of the Parent Group is required to notify the Minister in writing of any senior executive (as defined in the Amended Relationship Framework) appointments prior to announcement;

(iv) the Parent Group is required to procure that up to two nominees of the Minister are appointed as directors of the Parent upon receipt of written notice from the Minister naming the proposed nominees ("Minister's Nominees"). The appointment of a Minister's Nominee shall be deemed to take effect on the date of the next board meeting of the Parent following the date of receipt of the notice from the Minister. If any of the Minister's Nominees are removed by a shareholder's resolution or fails to be re-elected by shareholders at a general meeting of the Parent, the Parent is required to procure that a replacement Minister's Nominee is appointed to the board in accordance with the articles of association of the Parent. The Parent is required to ensure that there are sufficient vacancies on the board at all times to permit the appointment of the Minister's Nominees save where a resolution of the shareholders of the Parent ("shareholder appointment resolution") cause the maximum number of directors permitted by the articles of association of the Parent to be exceeded. In these circumstances, the board shall not recommend the aforementioned shareholder appointment resolution and shall propose a shareholder resolution to increase the maximum number of directors provided for in the articles of association to accommodate the appointment of the Minister's nominee. The Minister's Nominees shall be entitled to the same remuneration as the non-executive directors of the Parent receive for performing the role of non-executive director and shall be permitted, subject to compliance with any regulatory requirements, to share confidential information they receive in their capacity as directors of the Parent with the Minister on a confidential basis;

(v) subject to any applicable regulatory requirements, the Parent Group is required to keep the Minister informed promptly in writing of developments, including the terms of any settlement, in relation to any material litigation. The Parent is required to consult with the Minister prior to the conclusion of and/or before agreeing to the terms of any settlement in relation to material litigation to which the Minister is a party;

(vi) the Parent Group is required to ensure that the remuneration of its executives does not breach any of the provision of the Minister's Letter the terms of which are set out below;

(vii) the Parent Group is required to consult in writing with the Minister in respect of the following matters: (a) any material acquisitions, disposals, investments, realisations, reorganisations, restructurings or other transactions, (b) the declaration or payment of dividends, (c) the redemption or repurchase of any shares or securities unless such a redemption or repurchase of securities is undertaken at a redemption date or repurchase date in accordance with the terms of those securities, (d) the initiation by the Parent Group of any liquidation, receivership, examinership or analogous statutory process in respect of the Parent Group, (e) the entry into or variation of any transaction between the Parent Group and a former director or senior executive (as defined in the Amended Relationship Framework) (a "Key Person") on terms other than on normal commercial arm's– length terms, (f) all important actions in respect of the commencement, defence, conduct or settlement of legal proceedings to which a Key Person or any connected person of a Key Person is party, and (g) any transaction or arrangement which may be classified by the Parent Group as a "related party transaction" under the Listing Rules involving or for the benefit of any State entity;

(viii) the Parent Group is required to provide all documents circulated for board meetings of the Parent and the Issuer to the Minister at the same time they are provided to the board. The Parent Group is also required to provide the Minister with information and documentation which has been reasonably requested by the Minister from time to time;

(ix) the Parent Group is required to notify the Minister in writing of any public statement relating to a material matter at the earliest possible opportunity prior to making the public statement, except where the Parent is required to make the public statement in advance of such notification in order to meet the Parent's legal or regulatory requirements;

(x) senior management from the Parent are required to meet with Department of Finance officials on a monthly basis to discuss the achievement of the Parent Group's business plan; and

(xi) the Parent Group is required to keep the Minister informed of its lending plans, including in particular SME lending and any changes thereof by means of regular updates to the Department of Finance. The views of the Minister will be considered by the Issuer in the context of the board's responsibility for the assessment of credit risk and the board's responsibility for the determination of a credit risk appetite but it is noted that the responsibility for individual lending decisions and the pricing of loans will remain with the Group.

The Minister may from time to time specify any amendments to, or revoke or replace, the Amended Relationship

102 Framework, provided that such amendments, revocations or replacements do not conflict with regulatory requirements. Any such amendment, revocation or replacement of the Amended Relationship Framework will be specified or made following consultation with the Parent Group and upon the instruction, or with the agreement, of the Directorate-General for Competition of the European Commission, and once specified will be notified to the Parent Group in writing.

Minister's Letter

In his position as majority shareholder, the Minister wrote to the board of the Parent on 27 June 2011 and outlined certain restrictions on executive remuneration within the Parent Group. Under the terms of this letter the Parent Group is required to ensure that the total annual remuneration of any director, senior executive or employee of the Parent Group shall not exceed €500,000 without the consent of the Minister. In addition the consent of the Minister is also required in respect of any proposed introduction of a performance related element to the remuneration package of any director, senior executive or employee of the Parent Group.

Capital Adequacy and Capital Management

Capital adequacy, and its effective management, is critical to the Group's ability to operate its businesses and to pursue its strategy. The Group's business and financial condition could be materially adversely affected if the amount of capital available to the Group is insufficient to cover its business risks and support its market strategy and regulatory requirements. This could arise due to a number of factors including, without limitation (i) materially worse than expected financial performance (for example reductions in earnings as a result of impairment charges); (ii) increases in Risk Weighted Assets; (iii) an increase in the minimum regulatory capital requirements imposed on the Group or an amendment to the manner in which existing regulatory capital is calculated; and/or (iv) amendments to the regulatory criteria for instruments that qualify as regulatory capital and/or the capital to which those instruments are allocated.

The Issuer carries out the banking activities of the Group and is regulated with respect to matters which are within the scope of the SSM Regulation by the ECB with assistance from the Central Bank under the SSM and in respect of other matters, such as consumer protection, by the Central Bank. While there are a number of regulated entities within the Group which have individual regulatory capital requirements and are regulated by their local regulators, the Issuer is the principal regulated entity.

Regulatory Capital Requirements – CRD IV

In December 2010 (revised in June 2011 and January 2013), the Basel Committee on Banking Supervision issued its guidance on a number of fundamental reforms to the regulatory capital framework for credit institutions (such reforms being commonly referred to as Basel III), including new capital requirements, higher capital ratios, more stringent eligibility requirements for capital instruments, a new leverage ratio and liquidity requirements intended to reinforce capital standards and the establishment of minimum liquidity standards.

The Basel III reform package has been implemented in the EU by way of the CRD IV. The Capital Requirements Regulation, which forms part of CRD IV, establishes a single set of harmonised regulatory capital related prudential rules which apply directly to all credit institutions in the EU. The CRD IV provisions were transposed into Irish law by the European Union (Capital Requirements) Regulations 2014 and the European Union (Capital Requirements) (No.2) Regulations 2014. Implementation of CRD IV began from 1 January 2014, with particular elements being phased in over a period of time, to be fully effective by 2024.

Key elements of the Capital Requirements Regulation include the following:

 Capital requirements – higher minimum capital ratios and the introduction of conservation, countercyclical and systemic risk buffers, which in general are expected to be phased in over the period to January 2019 where applicable;

 Definition of capital – changes to regulatory capital recognition criteria that are designed to increase the quantum and quality of regulatory capital;

 Increased capital requirements – increases to the risk weights of counterparty credit exposures relating to derivatives transactions entered into with certain financial institutions (although these will be lower in respect of cleared transactions) and introducing requirements for institutions to set aside regulatory capital to cover credit valuation adjustment risk (in addition to counterparty default risk);

 Common Equity Tier 1 ratio – a risk-based ratio calculated as CET1 capital divided by Risk Weighted Assets, as calculated on the basis set out in CRD IV;

103  Securitisation exposures – from 2014 certain securitisation exposures can either be deducted from Common Equity Tier 1 capital or risk weighted 1,250 per cent.;

 Deductions from capital – expected losses less provisions will be deducted in full from CET1 capital, gross of tax. Under Basel II, only 50 per cent. of the deduction was from Core Tier 1 Capital. In addition, deferred tax assets will be deducted from CET1, subject to a 10 year transition period for Irish banks;

 New liquidity metrics – two new liquidity ratios will be introduced. These are a short-term liquidity stress ratio, referred to as the LCR, and a longer-term ratio, referred to as the NSFR. Both ratios will be required to be maintained at levels in excess of 100 per cent., when fully implemented in January 2018; and

 New leverage ratio – a new ratio, calculated by dividing Tier 1 capital by gross balance sheet exposure (the leverage ratio), is required to be maintained at a level of at least 3 per cent. This requirement will be harmonised at EU level from January 2018.

Capital Management

The core objective of the Issuer's capital management policy is to ensure it complies with regulatory capital requirements and maintains sufficient capital to cover its business risks and support its market strategy. The Issuer goes through a rigorous process of Internal Capital Adequacy Assessment Process ("ICAAP") to ensure that it is adequately capitalised against the inherent risks to which its business operations are exposed and to maintain an appropriate level of capital to meet the ECB minimum regulatory capital requirements. The ICAAP is subject to the review and evaluation by the ECB through the Joint ECB/CBI Supervisory Team.

Capital Adequacy

On 31 March 2011, the Central Bank published the results of the PCAR and PLAR as part of the the financial measures programme (FMP) which was one of the conditions of the Irish EU/IMF Programme. The aim of the FMP was to place the Irish banking system in a position where it could fund itself and generate capital without further reliance on Irish or European public sources. This identified a total gross capital requirement of €4b for the Parent Group.

On 27 July 2011, the Parent Group received €2.3b in share capital from the Irish Government and €400 million by the issue of the Contingent Capital Notes by the Issuer to the Irish Government. The remaining capital requirement was funded through the disposal of Irish Life Group Limited to the Irish Government for a consideration of €1.3b which concluded on 29 June 2012, a liability management exercise and other internal resources, all of which resulted in the Group's capital requirements under the PCAR and PLAR being achieved.

As part of the FMP, the Central Bank announced a new minimum capital target for the Parent Group of 10.5 per cent. Core Tier 1 Capital Ratio in a base scenario and 6 per cent. Core Tier 1 Capital Ratio in a stressed scenario.

Further, in the second half of 2013 the Central Bank conducted the balance sheet assessment (BSA), incorporating a review of impairment provisioning, credit risk models used for capital measurement and the changes arising from new capital requirements under CRD IV. This led to an additional amount of Risk Weighted Assets being added of €3.4b. The Central Bank has adopted a capital benchmark of 8 per cent. for Common Equity Tier 1 as its minimum capital target for the Group. The Group and its individually regulated operations have complied with all regulatory capital ratios during the period 2012 to 2014.

Following the creation of the SSM, the ECB announced on 23 October 2013 that it was to perform the SSM CA prior to its assumption of full responsibility for the supervision of credit institutions under the SSM in November 2014. The SSM CA comprised of:

 a supervisory risk assessment to review, quantitatively and qualitatively, key risks, including liquidity, leverage and funding;

 an asset quality review to enhance the transparency of bank exposures by reviewing the quality of banks' assets as at 31 December 2013, including the adequacy of asset and collateral valuation and related provisions; and

 a stress test to examine the resilience of banks' balance sheet to baseline and adverse stress scenarios.

These three elements are closely interlinked. The SSM CA was based on a capital benchmark of 8 per cent. Common Equity Tier 1, within the meaning of Common Equity Tier 1 under CRD IV, including transitional arrangements, for both the asset quality review and the baseline stress test scenario.

104 The results of the SSM CA were announced on 26 October 2014 and were as follows for the Parent Group:

 Asset Quality Review: Passed – The SSM CA asset quality review validated the Parent Group's provisioning levels as at 31 December 2013.

 Baseline Stress Scenario: Passed – The Parent Group successfully met the requirements of the SSM CA baseline stress test scenario with no additional capital requirement (adjusted CET1 Ratio under baseline scenario of 8.82 per cent. as against 8 per cent. CET1 required).

 Adverse Stress Scenario: Under the SSM CA adverse stress test scenario the Parent Group's balance sheet at 31 December 2013 would not have met the 5.5 per cent. CET1 ratio required under the SSM CA (adjusted CET1 Ratio in the adverse scenario was 0.97 per cent.). This equates to a requirement for additional capital of €855m for the Parent Group's balance sheet at 31 December 2013 under the adverse stress test scenario.

The Capital Plan

Following the announcement of the SSM CA results on 26 October 2014, which identified a capital shortfall of €855m under the adverse scenario stress test, the Parent Group submitted the Capital Plan to the ECB through the Joint ECB/CBI Supervisory Team on 21 November 2014 which set out how the Parent Group proposed to address the capital shortfall identified. The Capital Plan principally comprised two elements, being (i) an issuance of new capital (through a combination of new equity and additional Tier 1 capital); and (ii) a number of other allowable capital measures which included recognition of the difference between the Parent Group's reported pre-provision loss for 2014 and the equivalent forecast value and the impact of certain asset disposals. The Capital Plan has been formally noted by the Joint ECB/CBI Supervisory Team in its letter dated 20 February 2015. Under the terms of the process, the Parent Group has nine months from the date of the announcement of the SSM CA results to implement the Capital Plan (being by 26 July 2015).

Annual Supervisory Review and Evaluation Process

Under Article 4(1) (f) of the Council Regulation (EU) No 1024/2013 the ECB is the competent authority responsible for the supervision of the Issuer, and is authorised to carry out supervisory reviews of credit institutions in order to determine whether the arrangements, strategies, processes and mechanisms put in place by credit institutions and the own funds held by these institutions ensure a sound management and coverage of their risks. The ECB is also empowered to impose on credit institutions specific additional own funds requirements, specific distribution requirements, specific publication requirements, specific liquidity requirements and other measures where specifically provided for under European law.

The Joint ECB/CBI Supervisory Team in their letter to the Parent Group dated 20 February 2015 imposed minimum regulatory capital requirements on the Parent Group, to be complied with following the successful implementation of the Capital Plan. Once the capital shortfall identified under the SSM CA has been fully remedied, the Parent Group is thereafter required to satisfy the following capital requirements, subject to certain adjustments:

(i) subject to an overall minimum of 10.25 per cent. , maintain a CET1 Ratio of 15.75 per cent., reduced in line with realised post-provision losses, including losses on deleveraging, and

(ii) maintain a Tier 1 Capital Ratio of 16.75 per cent., reduced in line with realised post-provision losses, including losses on deleveraging.

The Joint ECB/CBI Supervisory Team have stated that it is their intention to review capital requirements annually. As such, the Group anticipates that the capital requirement levels referred to above will be reviewed by the end of 2015 and annually thereafter.

In addition, the Joint ECB/CBI Supervisory Team also stipulated that:

(i) Paying dividends to Parent shareholders would not be possible without Joint ECB/CBI Supervisory Team approval; and

(ii) the Issuer should introduce a firm-specific ICAAP review more than once per year and with a view to ensuring that the Group arrives at an appropriate Pillar 2 capital charge.

The ECB also imposed certain additional liquidity requirements on the Group. A liquidity coverage ratio requirement of 102 per cent. will apply to the Group once the LCR requirement specified under Article 460 of the Capital Requirements Regulation takes effect which is currently expected to be 1 October 2015. Until Article 460 takes effect, the Issuer is required to report, on a monthly basis, its LCR to the Joint ECB/CBI Supervisory Team. If the Issuer experiences a fall in

105 its LCR below 102 per cent. during that period, or expects to do so, it is required to (i) communicate this to the Joint ECB/CBI Supervisory Team; (ii) prepare and submit an executable and sufficiently detailed plan for achieving a LCR above 102 per cent. within an appropriate period; and (iii) seek supervisory approval from the ECB before taking any actions that may have a materially adverse effect on its LCR.

Future Stress Tests

The EBA decided in its meeting on 24 February 2015 not to carry out an EU-wide stress test in 2015 but to start preparations for the next stress test in 2016. Instead of a stress test, a transparency exercise will be run in 2015 similar to the one carried out by the EBA in 2013. Details of this exercise remain to be decided but it is envisaged that it will include the publication of detailed data on banks' balance sheets and portfolios but no projections.

Regulatory capital

The following table summarises the composition of regulatory capital and the ratios of the Issuer, the primary regulated entity of the Group.

31-Dec-14(1) 31-Dec-14(2) 31-Dec-13(2) 31-Dec-12* €m €m €m €m

Tier 1 capital

Share capital and share premium 2,922 2,922 2,922 2,922

Reserves -639 -639 -535 -269

Statutory Shareholders Funds 2,283 2,283 2,387 2,653

Prudential filters and deductions(3) -440 -181 -184 -78

Total qualifying Tier 1 capital 1,843 2,102 2,203 2,731

Tier 2 capital

Subordinated liabilities 15 15 183 234

Revaluation reserve 0 11 6 5

Prudential filters and deductions(3) 83 84 97 72

Total qualifying Tier 2 capital 98 110 286 311

Total qualifying Tier 1 and Tier 2 capital 1,941 2,212 2,489 3,042

Total own funds 1,941 2,212 2,513 3,042

Required capital as per European Capital Requirement Directive 1,186 1,186 1,342 1,189

Excess of total own funds over total required 755 1,026 1,147 1,853 capital

106 31-Dec-14 31-Dec-14 31-Dec-13 31-Dec-12

€m €m €m €m

Risk Weighted Assets

Credit risk 14,438 14,438 16,156 14,169

Market risk 0 0 188 161

Operational risk 392 392 430 529

Total risk-weighted assets 14,830 14,830 16,775 14,859

Capital Ratios

Common Equity Tier 1 capital ratio 12.4% 14.2% 13.1% 18.0%

Total capital ratio 13.1% 14.9% 14.8% 20.5%

The total capital ratio is calculated and reported to the Central Bank on a quarterly basis.

Note: As at 31 December 2013 and 31 December 2014, the Group CET1 was equal to its Tier 1 Capital. (1) Calculated on the Basel III fully loaded basis. (2) Calculated on the Basel III transitional basis. (3) The following prudential filters and deductions were applied during 2014. *The capital position for 31 December 2012 is calculated under the Basel II regulatory requirements.

As at 31 December 2014 CRD IV Fully Loaded CRD IV Transitional

Tier 1 Prudential filters and deductions -440 -181

Derecognition of Contingent Capital Notes -49 -49

Cash flow Hedge Reserve 56 56

Intangibles -63 -63

Deferred Tax -384 0

AFS Reserve 0 -114

Revaluation Reserve 0 -11

Tier 2 Prudential filters and deductions 83 84

Collective Provisionson Non-IRB Loans 0 1

IRB Excess of provisions over expected losses 83 83

The Parent Group's Common Equity Tier 1 capital ratio at 31 December 2014 was 14.2 per cent. (as at 31 December 2013 this figure was 13.1 per cent.). The total capital ratio at 31 December 2014 stood at 14.9 per cent. (as at 31 December 2013 this figure was 14.8 per cent.). The improvement in these ratios is primarily due to a decrease in RWAs,

107 offset by losses recorded during the year and the repurchase of the Contingent Capital Notes.

Total own funds reduced by €0.3b which included €0.1b of Tier 1 capital and €0.2b of Tier 2 capital in the twelve months to 31 December 2014. The reduction in Tier 1 capital is mainly due to losses recorded during the year. The reduction in Tier 2 capital is primarily due to the derecognition of the Contingent Capital Notes as part of its anticipated repurchase, which has been included within the Capital Plan.

RWAs decreased by €1.9bn in the year to 31 December 2014. This is predominantly due to improved macroeconomic conditions which positively impacted risk parameters, loan book redemptions, the sale of Residential Mortgage Backed Securities, Springboard loans and a portfolio of CHL loans and a refinement of the methodology for measuring the capital required for foreign exchange exposures.

Regulation and Supervision

Banking activities in Ireland are regulated and supervised by the ECB under the SSM Regulation, the Central Bank Acts and related legislation and in respect of matters falling outside the scope of the SSM Regulation by the Central Bank under the Central Bank Acts and related legislation. Under the SSM Regulation the ECB is responsible for all core banking supervisory responsibilities which includes authorisations, capital adequacy, large exposures, liquidity and qualifying holdings for those firms that it regulates. The Issuer has been designated as a significant credit institution for the purposes of the SSM on the grounds that the total value of the Issuer's assets exceeds €30b, and as such, from 4 November 2014 it has been directly supervised by the ECB through the Joint ECB/CBI Supervisory Team. Under the SSM, significant institutions in Ireland, including the Group, are supervised directly by a 'joint supervisory team' led by the ECB and consisting of both ECB and Central Bank supervisors. The Central Bank remains responsible in Ireland for all areas of supervision not allocated to the ECB under the SSM Regulation, including conduct of business rules and the protection of customer interests.

The Irish banking regulatory rules are primarily set out in the Central Bank Acts, CRD IV, the SSM Regulation, regulations made by the Minister under the European Communities Act 1972 and regulatory notices and regulations issued by the Central Bank. These regulations and regulatory notices implement in Ireland the EU directives relating to banking regulation, including the CRD and the Deposit Guarantee Scheme Directive and give further effect in Ireland to EU regulations (which have direct legal effect).

The Issuer is deemed to be authorised by the ECB under the SSM Regulation. This authorisation is subject to certain conditions, including the following: a. the Issuer shall notify the ECB as soon as it becomes aware of any material information which may negatively affect the suitability of a party that has a qualifying holding (a qualifying holding is defined point (36) of Article 4(1) of the Capital Requirements Regulation); b. it shall notify the ECB in advance of any substantive change in its activities, structure or overall condition, or as soon as it becomes aware of any material adverse developments, including breach of legal or prudential requirements; c. in accordance with the Issuer 's credit policy, the approval (which shall be recorded) of the Issuer 's board or senior management is necessary for (a) major credit exposures; and (b) credit risk exposures that carry a significant degree of risk or are otherwise not in line with the Issuer 's normal credit activities; d. it shall submit to the ECB on a quarterly and half yearly basis, certain information relating to the management of operational risks; e. it shall only acquire an interest in an undertaking where the amount of investment is equal to or exceeds nine per cent. of own funds, where it has received the prior approval of the ECB; f. it shall only acquire an interest in an undertaking where the amount of investment is equal to or exceeds five per cent. of own funds, where it has notified the ECB in advance; g. it shall apply for prior ECB approval to establish a subsidiary outside the EEA where that subsidiary is a bank or other licensed entity; h. it shall only establish, form or take part in forming a company, other body corporate or an unincorporated body or persons which is a non-licensed subsidiary in the EEA or elsewhere, where it has received the prior approval of the ECB; and i. it shall only establish a branch outside of the EEA where it has received the prior approval of the ECB.

108 The Issuer is subject to CRD IV which includes regulation of capital adequacy, liquidity and in the area of monitoring and control of large exposures. For further information, see Capital Adequacy.

All Irish incorporated and authorised banks are obliged to draw up and publish their annual accounts in accordance with the European Communities (Credit Institutions: Accounts) Regulations 1992 (as amended). As a listed entity, the Group is also required to prepare its financial statements in accordance with IFRS and with those parts of the Irish Companies Acts applicable to companies reporting under IFRS and Article 4 of the EU Council Regulation 1606/2002 of 19 July 2002.

The Group's operations in the Isle of Man and the UK are also subject to the regulations and reporting requirements of the regulatory and supervisory authorities in those jurisdictions.

Banks operating in Ireland must notify their existing fees and charges and related terms and conditions, and any changes therein from time to time, to the Central Bank, who can direct that no fees, charges or increases or changes therein be made without approval.

The Issuer is subject to the CBI Code. The Issuer has been designated as a major institution under the CBI Code. A revised CBI Code took effect from 1 January 2015.

The EU Third Money Laundering Directive has been transposed into Irish law by way of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 and 2013. All credit institutions are obliged to take the necessary measures to counteract money laundering effectively in accordance with the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 and 2013.

Sanctions take the form of restrictive or coercive measures against targeted individuals, entities, countries, governments and industries that are imposed by bodies such as the United Nations, through UN Security Council regulations, and the EU, through EU Regulations.

The Central Bank operates the Deposit Guarantee Scheme to which authorised banks (including PTSB) are required to make contributions. The Deposit Guarantee Scheme provides compensation to depositors in respect of eligible deposits up to a maximum level of compensation payable of €100,000 per eligible depositor, per institution. The Investor Compensation Company Limited (the "ICCL") was established under the Investor Compensation Act, 1998. The ICCL operates the investor compensation scheme which can compensate eligible investors for 90% of the money they have lost, up to a maximum of €20,000. The Issuer is a member of the investor compensation scheme.

The Central Bank Reform Act 2010 applies to the Issuer and contains a number of provisions which impact on the regulation of the Group including:

 the requirement for the ECB to approve, prior to their appointment, key office-holders in regulated financial service providers under a fitness and probity regime implemented by the Central Bank;

 the power of the Central Bank, or, as applicable, the ECB, to suspend or remove a director, chief executive or other persons performing certain functions prescribed in secondary legislation from his or her position in a financial services provider; and

 the power of the Central Bank, or, as applicable, the ECB to impose levies for the purposes of funding regulation of financial services providers.

The required level of fitness and probity is set out in the Fitness and Probity Standards issued on 1 September 2011 pursuant to the Central Bank Reform Act 2010.

The Central Bank has implemented the Consumer Protection Code, the Minimum Competency Code and the SME Code. The Consumer Protection Code applies to banks and other financial services providers operating in Ireland including the Issuer. The Consumer Protection Code requires financial service providers and banks to know their customers and their suitability for products or services, to prepare terms of business and minimum levels of information for customers, including disclosure requirements and customer record obligations, to identify all charges, fees or other rewards connected with the supply of a service and to establish processes to deal with errors, complaints and conflicts of interest. There are also detailed rules on the fairness of advertising, and specific sectoral rules on banking products, loans, insurance services and investment products. The Minimum Competency Code requires employees of regulated entities who provide advice on or sell retail financial products to hold the competencies set out therein and to engage in continuing professional development on an ongoing basis. The SME Code sets out the processes regulated entities are required to adopt in facilitating access to credit for SMEs.

109 The CCMA is a code of conduct relevant to the enforcement of residential mortgages by mortgage lenders (including the PTSB). The revised CCMA came into force on 1 July 2013 and applies to the mortgage lending activities of lenders in relation to consumers in respect of their primary residence. A primary residence is either a residential property occupied by the borrower as their primary residence, or any other residential property if it is the only residential property in ROI owned by the borrower. The CCMA applies to the activities of the Issuer. Under the CCMA, lenders are required to establish a mortgage arrears resolution process ("MARP"). A MARP is defined as a framework for handling arrears and pre-arrears and must incorporate steps addressing communication with borrowers, financial information, assessment and resolution. The CCMA provides for a timeline that lenders must keep to before resorting to legal action. The mortgage arrears resolution strategy adopted by the Issuer endorses the following principles:

 Sustainability: To ensure that the customer can reasonably be expected to repay the principal of a loan by the end of the mortgage term (e.g. term extensions are not granted where this would extend beyond the borrower's normal retirement age);

 Affordability: Customers must be able to service the mortgage debt;

 Moral Hazard: To avoid offering customers treatments where there is a perception of a significant debt write-off and/or avoid the risk of performing customers tactically defaulting; and

 Social Impact: To aim to keep customers in their home and minimise the use of repossession cases.

On January 27, 2015, the CBI announced the introduction of new limits to mortgage lending by financial services providers regulated in Ireland. The rules came into force on February 11, and imposed loan to value ("LTV") and loan to income (LTI) limits for mortgage lending. Primary dwelling home ("PDH") mortgages for non-first time buyers are subject to a proportionate cap of 80 per cent. LTV. For first time buyers, the LTV cap will be 90 per cent. for properties valued at up to €220,000 with an 80 per cent. cap applied on any value over this amount. Buy to let mortgages are subject to a proportionate cap of 70 per cent. LTV, and PDH mortgage loans are subject to a proportionate cap of 3.5 times LTI. The introduction of these measures is likely to have an impact on lending volumes and eligibility of customers not only within the Group but also within the Irish mortgage market.

The Central Bank has extensive enforcement powers including the ability to impose administrative sanctions on financial institutions or individuals, subject to a right of appeal to the Irish Financial Services Appeals Tribunal and a further appeal to the High Court of Ireland. Administrative sanctions can include a reprimand or a caution, financial penalties up to €1m for an individual or €10m or 10 per cent. of annual turnover (whichever is greater) for a firm or a direction disqualifying a person from being concerned in the management of a regulated financial service provider. Any sanctions imposed by or agreed with the Central Bank will be published. Under the SSM Regulation, the ECB can exercise these enforcement powers.

The Group is subject to data protection laws. The main laws dealing with data protection are the Data Protection Acts 1998 and 2003.

The Resolution Directive will apply to the Group. For further information see the Risk Factor "The Group may be subject to risks relating to the proposed Resolution Directive".

A financial services ombudsman's bureau and a financial services ombudsman council have been established under the Central Bank and Financial Services Authority Act of 2004. This also sets out the functions and powers of that council and bureau. The Financial Services Ombudsman is a statutory officer who deals independently with complaints from consumers about their individual dealings with all financial services providers, including PTSB, that have not been resolved by the providers.

The Group remains a participant in the ELG Scheme. The ELG Scheme, involves, inter alia, obligations for participants to reduce risk profile and meet target ratios including, inter alia, loan/deposit ratio, wholesale funding/total liabilities ratio, deposit growth and maximum loan to value ratio and accept State nominated board appointees, controls on acquisitions and, if required by the Minister, to prepare and implement a restructuring plan, which could limit the Group's ability to determine independently its corporate strategy or adversely affect the Group's financial condition and prospects. Further, the Group could be subject to additional directions from the Central Bank and/or the Minister as to the conduct of its business in addition to the restrictions and potential restrictions arising out of the Group's participation in the ELG Scheme.

MANAGEMENT

The business of the Issuer is managed by its directors (the Directors), each of whose business address is 56-59 St. Stephen's Green, Dublin 2 (Tel: +353 (0)1 669 5000).

110 The Directors, their ages and positions and dates of appointment are as follows:

Name Age Position Date of appointment

Alan Cook 61 Non-Executive Group Chairman 13/04/2011

Jeremy Masding 49 Group Chief Executive Officer 28/02/2012

Glen Lucken 56 Group Chief Financial Officer 02/01/2013

Dominic Dodd 47 Independent Non-Executive Director 18/12/2012

Emer Daly 52 Independent Non-Executive Director 20/09/2011

Ken Slattery 66 Independent Non-Executive Director 30/08/2013

Julie O'Neill 59 Independent Non-Executive Director 28/01/2014

Richard Pike 48 Independent Non-Executive Director 28/01/2014

David Stewart 49 Independent Non-Executive Director 01/04/2014

Dominic Dodd is the Senior Independent Director.

Brief biographical details of the Directors are as follows:

Directors

Alan Cook – Non-Executive Group Chairman

Alan (61) is a Fellow of the Chartered Insurance Institute (UK) and has extensive experience in financial services and public service in the UK and elsewhere. He is an experienced chairman, non-executive director and financial services general manager with experience of leading large scale change in both the private and public sectors. He is a former managing director of the UK Post Office, where he transformed the loss-making organisation back into profit through cost reduction and growth in personal financial services. He is a former chief operating officer of Prudential (UK and Europe) and a former chief executive of National Savings and Investments (the government agency responsible for raising finance for the UK government through the retail savings market). He is also a former non-executive director of the Office of Fair Trading and the Financial Ombudsman Service. Until recently, he was the chairman of the Highways Agency in England and a non-executive director of the UK Department of Transport. Alan is the current deputy chairman of Sainsbury Bank p.l.c. and a non-executive director of MetLife Europe Limited. Alan also volunteers his time as chairman of the University of Bedfordshire and chairman of Action for ME, the leading UK Charity supporting those suffering from ME/CFS.

Jeremy Masding – Group Chief Executive Officer

Jeremy (49) is an experienced career banker having worked with Barclays Bank in a variety of different roles between 1984 and 2007. These roles included branch banking, international banking and in head office as a director of strategy development. In later years, he was a board director of Barclaycard, responsible for UK consumer finance. For a year (1998/1999) he worked on secondment from Barclays with the Cabinet Office in the UK. Jeremy was chairman of the Richmond Group (2010-2012), an independent loan broker and lender, and group chief executive of Central Trust p.l.c. (2007-2009), a specialist loan broker and lender. Jeremy is an Associate and Fellow of the Chartered Institute of Bankers and holds an MBA from Manchester Business School.

Glen Lucken – Group Chief Financial Officer

Glen (56) is a Fellow of the Institute of Chartered Accountants in England and Wales and an Associate Member of the Association of Corporate Treasurers. Glen is an experienced chief financial officer with knowledge and expertise in a wide range of sectors including retail and consumer financial services, credit and store cards, banks and building societies. He has previously held senior finance and operations positions in Abbey National, Lloyds Banking Group, Barclaycard and OneSavings Bank. Glen's experience has been particularly valuable in his role as chairman of the Group Assets and Liabilities Committee. Before his appointment as Group Chief Financial Officer in January 2013, Glen acted

111 as interim Chief Financial Officer of the Issuer from July 2012.

Dominic Dodd – Independent Non-Executive

Dominic (47) is an experienced non-executive director and board chairman. He is currently chairman of the Royal Free London NHS Foundation Trust, a UK University teaching hospital group. He was formerly an executive director of the Children's Investment Fund Foundation, a philanthropic foundation. Prior to this he was a managing partner of Marakon Associates, an international strategy consulting firm, where he advised chief executives and top management on growing long-term value. In his capacity as chairman of the Royal Free London, he is also a director of UCL Partners, an academic health science system. Dominic has also received the designation of 'Certified Bank Director' from the Institute of Banking. Dominic's unique experience is of particular benefit to the board in terms of strategy formulation.

Emer Daly – Independent Non-Executive Emer (52) is a Fellow of the Institute of Chartered Accountants and is an experienced non-executive director and chair of the Audit and Risk Committees. She previously worked in senior roles with PricewaterhouseCoopers and AXA Insurance. She is currently a non-executive director and audit committee member with FBD holdings p.l.c., a non- executive director and chair of the audit and risk committees of Friends Provident International Limited and Lombard International Assurance S.A., a member of the audit committee of the Department of Foreign Affairs and Trade and lectures in risk management in the UCD Graduate Business School. She previously held non-executive roles with Eirgrid p.l.c., Payzone p.l.c., the Property Registration Authority and the Dublin Dental Hospital where she was board chairman for seven years. Emer has also received the designation of 'Certified Bank Director' from the Institute of Banking. Emer brings her skills and expertise in accounting and risk management to the board and her past experience is of particular benefit as chair of the Audit Committee.

Ken Slattery – Independent Non-Executive

Ken (66) is a Fellow of the Institute of Bankers and a member of the Institute of Directors. He has wide-ranging experience of the Irish Financial Services landscape having worked with the Bank of Ireland Group ("BOI") for over 40 years. During his time with BOI he held a number of senior management positions including director of operations at BOI Corporate Banking and more recently as head of payment and electronic services. During this latter role, Ken was responsible for the development, delivery and management of internet business banking and electronic payments across the BOI Group. Following retirement from BOI in 2006, Ken has broadened his knowledge and experience through non- executive director positions with a number of Irish and Northern Ireland government departments, including chair positions on audit and risk committees. During this time he has also maintained his exposure to financial services through his directorship with Realex Financial Services where he was chair of the company's audit and risk committees until August 2013. Ken's general banking experience compliments the existing skillset of the board and his prior experience as chair of audit and risk committees in both the public and private sector has been of particular benefit to the deliberations of the Audit Committee.

Julie O'Neill – Independent Non-Executive

Julie (59) served as Secretary General of the Irish Department of Transport from 2002 until 2009 and in a public service career spanning 37 years, worked in strategic policy development and implementation with eight Government Departments. She is now an independent strategic management consultant and a non-executive director at Ryanair p.l.c. She is a former board member of the Irish Museum of Modern Art and of the Sustainable Energy Authority of Ireland. She chairs the audit committee of Trinity College Dublin and is a chair person of the China Research Group at the Institute of International and European Affairs. She is also a member of the Institute of Directors and has received the designation of 'Certified Bank Director' from the Institute of Banking. Julie brings a wide range of economic and social policy experience, as well as extensive administrative and managerial experience to the deliberations of the board.

Richard Pike – Independent Non-Executive

Richard (48) has extensive experience of working with financial institutions, assisting companies in managing enterprise risk more efficiently while addressing local regulatory guidelines and standards. He is currently senior market manager, EMEA at Wolters Kluwer Financial Services and has previously worked in various senior banking, insurance, credit and market risk roles at ABN AMRO, Bain, COMIT Gruppe and Quay Financial Software. He has analysed, designed and managed the development of core treasury and enterprise risk management systems for large financial institutions, including UBS, Citibank, Schroders and Unicredito. In 2009, Richard was recognised as a "Top 50" Face of Operational Risk by Op Risk & Compliance magazine and was a contributing author to two books on risk management. He is also a board member of the Enterprise Ireland/IDA funded Governance, Risk and Compliance Competence Centre which focuses on research in the area of financial services governance, risk and compliance. Richard has also received the designation of 'Certified Bank Director' from the Institute of Banking. Richard brings a different dimension to the board, related to his in depth knowledge of enterprise risk management systems.

112 David Stewart – Independent Non-Executive

David (49) has over 20 years board level experience in financial services. Until March 2014, he was the chief executive of the Coventry Building Society, having previously held the positions of finance director and operations director. Before joining Coventry Building Society in 2002, he worked for 10 years at DBS Management p.l.c., holding a variety of positions including group chief executive. David was the chief executive of Coventry Building Society throughout the entire period of the financial crisis, having been appointed in 2006. During this period, the Society performed strongly, more than doubling in size and retaining its "A" grade credit ratings. Key to this performance was the consistent implementation of a prudent and focused business model focusing on traditional savings and mortgages. A graduate of Warwick University and a qualified Chartered Accountant, he is a non-executive director of Marks & Spencer Bank and Unum Limited (Unum Limited is a leading provider of Group Income Protection Insurance in the UK). David brings retail banking and leadership experience to the board.

GOVERNMENTAL, LEGAL OR ARBITRAL PROCEEDINGS

Save as disclosed in this Part (Description of the Issuer) of this Information Memorandum, there have been no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Group is aware) during the 12 months preceding the date of this Information Memorandum which may have, or have had in the recent past, significant effects on the financial position or profitability of the Group.

Litigation involving a small number of minority shareholders in the Parent and the Minister

The following several litigation matters generally concern challenges brought by minority shareholders in the Parent to the capitalisation of the Parent Group in 2011 by the Minister. The minority shareholders referred to in the descriptions of each of these matters are substantially the same persons.

Stabilisation Act Litigation

On 26 July 2011, the High Court of Ireland made an order, under the Credit Institutions (Stabilisation) Act 2010, on the application of the Minister, directing, as soon as possible after the making of the order and by no later than 29 July 2011 that, inter alia, that the Parent and the Issuer enter into a placing agreement with the Minister and the NTMA, the making of the 2011 Subscription and the making of the 2011 Contingent Capital Investment. In this context, the Irish Government subscribed €2.3b of the required capital to meet the Group's PCAR requirements for which it obtained a 99.2 per cent. stake in the Parent. Four minority shareholders in the Parent issued proceedings in the High Court of Ireland on 3 August 2011 challenging the court order made by the High Court of Ireland on 26 July 2011. The Minister is the respondent to the application. The Issuer and the Parent are notice parties to the proceedings.

In the proceedings, the applicants are seeking to have the High Court of Ireland order, made on 26 July 2011, set aside on the basis that it did not comply with the relevant statutory procedural requirements, that the opinion of the Minister (that the High Court of Ireland order was necessary) was not reasonably held and that the opinion of the Minister was vitiated by errors of law.

The substantive hearing in the proceedings took place in the High Court of Ireland in January and February 2014. In a judgment delivered on 15 August 2014, the High Court of Ireland decided to refer certain questions to the CJEU for a preliminary ruling. In summary, the High Court of Ireland determined that the relevant statutory procedure was complied with when the July 2011 High Court of Ireland order was made. The High Court of Ireland noted that, when assessing whether the opinion of the Minister was vitiated by errors of law, the central arguments made by the applicants related to European Union legislation and case law. The High Court of Ireland said that if the applicants were correct in their submissions, there would be no need for the High Court of Ireland to determine whether the opinion of the Minister was reasonable. The High Court of Ireland noted that the applicants' arguments on this issue focus on the requirements of the Second European Company Law Directive (which the applicants claim were not complied with in relation to the issue of ordinary shares by the Parent to the Minister in July 2011). The High Court of Ireland noted that the applicants contended that the Second European Company Law Directive must be complied with, no matter what the circumstances, in the absence of any express derogation and that their position was supported by a series of Greek cases from the late 1980s and 1990s. The High Court of Ireland noted that in response, the Minister's position was that the State was entitled as a matter of EU law to take necessary measures to defend the integrity of its own financial system and was required by the EU Treaty to take the steps which it did to secure the safety of an institution of systemic importance for Ireland and the EU. The High Court of Ireland said that, as there was support for both positions, the judge was not in a position to say definitively whether the CJEU would affirm the position set out in the Greek cases, qualify it or resile from it. The High Court of Ireland judge stated in the judgment that the determination of this issue was necessary for the purposes of her decision and so the judge has decided to seek a preliminary ruling on the issue from the CJEU.

On 12 November 2014, a request for a preliminary ruling from the CJEU was ordered by the High Court of Ireland. In

113 the request, the High Court of Ireland sought a ruling on certain questions relating to the Second Company Law Directive (Council Directive 77/91 EEC as amended). The questions focus on whether the Second Company Law Directive precludes the making of a Direction Order pursuant to section 9 of the Credit Institutions (Stabilisation) Act 2010 in certain circumstances and secondly, whether the specific Direction Order made on 26 July 2011 in respect of the Parent (as referred to above) was made in breach of European Law.

On 21 November 2014, three minority shareholders in the Parent issued a further set of proceedings in the High Court of Ireland seeking, inter alia, declarations that the Minister was precluded from completing any irreversible disposal, transition or cancellation of his shareholding in the Parent pending the Irish Court's determination of the minority shareholders' challenge to the 2011 Direction Order (which is referred to above) and that the Minister was precluded from using the voting rights attached to his shareholding in the Parent to overrule a relevant majority of votes of the other outstanding Parent shares in respect of special business at a general meeting of the Parent regarding any further irreversible diminishing of the stake in the Parent of the current Parent minority shareholders, pending the Irish Court's determination of the minority shareholders' challenge to the 2011 Direction Order (which is referred to above). As part of the proceedings, the plaintiffs sought injunctions to restrain the Minister on the same terms as the declarations sought pending the Irish Court's determination of the minority shareholders' challenge to the 2011 Direction Order (which is referred to above). The Minister was the respondent to the application. The Issuer and the Parent successfully applied to be joined as notice parties to the proceedings. Following a hearing in December 2014, the High Court of Ireland dismissed the plaintiffs' injunction application. The three minority shareholders have appealed the decision to the Court of Appeal which has made certain directions in relation to the appeal and listed it for mention again on 21 May 2015. The plaintiffs also sought leave to appeal to the Supreme Court an element of a decision that was made by the Court of Appeal on 19 March 2015 in respect of the appeal. On 20 April 2015, the Supreme Court issued its determination refusing the plaintiffs' application for leave to appeal to the Supreme Court in respect of the ruling of the Court of Appeal dated 19 March 2015.

In the event that the plaintiffs succeed in their challenge to the direction order made by the High Court of Ireland in July 2011, the Credit Institutions (Stabilisation) Act 2010 provides that the High Court of Ireland may set the direction order aside or it may make an order varying or amending the direction order. The Credit Institutions (Stabilisation) Act 2010 also provides that if a direction order is set aside or amended or varied, that setting aside or amendment or variation is without prejudice to the validity of anything previously done pursuant to the direction order.

Irish Life Litigation

A group of minority shareholders in the Parent issued proceedings in the High Court of Ireland in March 2012 challenging a High Court of Ireland order made in March 2012, on the application of the Minister, directing the Issuer to sell the Irish Life business. The Minister was the respondent to the application. The Issuer was a notice party to the proceedings. The High Court of Ireland dismissed the proceedings in June 2012 and awarded costs to the Issuer and to the Minister. The plaintiffs appealed the decision of the High Court of Ireland but the appeal has not yet been listed for hearing.

Restructuring Plan Litigation

A group of minority shareholders in the Parent issued proceedings in the High Court of Ireland in September 2013 seeking to prevent the Minister from implementing any restructuring plan submitted in respect of the Group. The applicants did not proceed with an application for injunctive relief in the proceedings and the proceedings have been adjourned.

Additional Proceedings

There are two related sets of High Court of Ireland proceedings in which certain minority shareholders in the Parent are challenging the constitutionality of provisions of the Credit Institutions (Stabilisation) Act 2010. The Issuer and the Parent are not yet notice parties to these proceedings. If the cases proceed, the Issuer and the Parent will renew their applications to be joined as notice parties.

There are also three sets of High Court of Ireland proceedings in being involving the Issuer, the Parent, certain current and former directors of the Group and certain minority shareholders which relate to the interaction between the minority shareholders and the directors as well as relating to corporate governance issues.

Capital Raise Litigation

Certain minority shareholders issued a set of proceedings in the High Court of Ireland on 15 April 2015 against the Parent, its directors and the ISE. In these proceedings, the plaintiffs have sought, inter alia, a series of declarations and an injunction against the Parent, its directors and the ISE in respect of the Parent's proposed issuance of new shares. The

114 plaintiffs have sought a declaration that the Parent's share issuance is being effected in a manner that is illegal and incompatible with EU law, that the related capital increase is invalid and that the Parent be precluded from issuing new shares for the purpose of repaying the Minister approximately €400m in respect of the Contingent Capital Notes. The plaintiffs have also sought an injunction to restrain the issuance of the new Parent Ordinary Shares to raise capital for the purpose of repaying the Minister pending certain other events, including the determination of the case that is before the CJEU, referred to above. The plaintiffs have also sought to restrain the ISE from admitting any such new shares to trading pending certain events, again including the determination of the case that is before the CJEU, referred to above. The Minister was subsequently joined as a notice party to these proceedings.

Following a hearing on 24 April 2015, the High Court on 25 April 2015 dismissed all of the plaintiffs’ application for orders, including those applications seeking to restrain the Parent from proceeding with the proposed issuance of new shares and to restrain the ISE from admitting to trading any of the new Parent Ordinary Shares. The plaintiffs may, as a matter of course, appeal the High Court’s decision to the Court of Appeal and may seek an expedited hearing of the appeal. The plaintiffs may also seek to appeal the High Court’s decision (or any decision of the Court of Appeal) to the Supreme Court of Ireland. There would be no automatic right to make such appeal; in determining whether to grant leave to appeal, the Supreme Court would require to be satisfied that the decision involves a matter of general public importance and/or that the interests of justice require that the appeal be heard by the Supreme Court and, in the case of a direct appeal to the Supreme Court, that there are exceptional circumstances warranting such an appeal. The plaintiffs may also seek to bring an additional application before the CJEU arising out of these issues, either as part of the case that is before the CJEU, referred to above, or separately to it. Following the dismissal by the High Court on 25 April 2015 of all of the plaintiffs’ applications, the Parent is not prevented from proceeding with the proposed issuance of new shares and would not be so prevented by any such appeal brought by the plaintiffs, or by initiation of any case in the CJEU relating to these proceedings, absent a contrary binding determination by a relevant court. The Parent intends to vigorously defend any appeal that may be issued in these proceedings, and any related case before the CJEU which the plaintiffs may initiate, and the substantive trial of the action in due course. Furthermore, the Parent intends to proceed with the issuance of new Parent Ordinary Shares unless otherwise directed by binding determination of a relevant court.

Fixed Rate Mortgage Exits

During the period between September 2008 and March 2009, a significant number of customers exited from a fixed rate mortgage prior to the contractual maturity date of the fixed rate mortgage. Some of these customers had a contractual right to a tracker rate mortgage at the end of their fixed rate period. However, it was the Issuer's practice to provide only variable rate mortgages where a customer exited early from a fixed rate mortgage. The Issuer did not inform customers that they would lose their entitlement to a tracker rate mortgage if they exited early from their fixed rate mortgage. During the period, the calculation of the ‘fixed rate exit fee’ which the Issuer applies in these circumstances materially understated the actual cost to the Group of this event and customers who exited early from a fixed rate were not being charged this cost.

A number of customers submitted complaints to the Financial Services Ombudsman in relation to the loss by them of their entitlement to a tracker rate mortgage. The Financial Services Ombudsman's office issued determinations of four complaints. In each of the four determinations, the Financial Services Ombudsman upheld the complaints made by the customers. During July and August 2011 the Issuer appealed the determinations of the Financial Services Ombudsman to the High Court of Ireland, which in 2012 upheld two of the determinations of the Financial Services Ombudsman and quashed two of the determinations of the Financial Services Ombudsman, remitting them back to the Financial Services Ombudsman for further consideration. In December 2012 the Issuer appealed to the Supreme Court the High Court of Ireland's decision to uphold two of the determinations of the Financial Services Ombudsman. In February 2015 the Issuer withdrew these appeals and is implementing the directions of the Financial Services Ombudsman.

On 30 June 2014, the Central Bank notified the Issuer of the commencement of an investigation by it, pursuant to its administrative sanctions regime, into alleged breaches of the Consumer Protection Code 2006 in relation to these issues. The Issuer is in communication with the Central Bank in order to resolve these issues. As part of this process, the Group is conducting a review to identify, and address as appropriate, those situations where the required disclosures were not made to customers who lost their contractual entitlement to tracker rate mortgages, in these or similar circumstances, or where, in certain circumstances, the Group did not offer customers the correct contractual tracker rate. The Group has made certain proposals to the Central Bank for the Issuer to provide redress and compensation, where appropriate, to customers impacted by these issues, including providing to certain customers the option to revert to the contractual tracker rate. The Central Bank also has the power to impose sanctions under the administrative sanctions regime either by way of an agreed early resolution or an inquiry process. The Central Bank has expressed its serious concern with the manner in which certain customers have been treated with respect to this issue, including in relation to customers who were or are in arrears and regarding the timeframe in which the process, including the provision of redress and compensation to customers where appropriate, is being conducted. The Group has assessed the likely impact of the proposed redress and compensation, including the future cost to the Group of reinstating the contractual tracker rate for those impacted customers who may select to revert to that rate. The Group made provision in its accounts for the year

115 ended 31 December 2014 in this regard and will keep the level of this provision under review.

Litigation in respect of a portion of the Buy-to-Let Mortgage Book

In 2011, a number of sets of High Court of Ireland proceedings were issued by customers against the Issuer in which the plaintiff customers are claiming that the Issuer was not entitled to switch their mortgages from interest only repayments to capital and interest repayments. In the proceedings, the plaintiffs are seeking, amongst other things, a court order allowing the loan repayments to remain interest only, at the tracker rate set out in the relevant letter of offer, with a capital repayment due at the expiry of the loan. The same set of solicitors is acting for the plaintiffs in all bar one of the cases. Shortly after some of the proceedings were issued, the Issuer gave an undertaking to a limited number of plaintiffs that the Issuer would allow those plaintiffs to remain on interest only repayments, and not treat the accounts as being in arrears for Irish Credit Bureau reporting purposes until the conclusion of the cases, provided that those plaintiffs agreed to an early hearing date for the cases and co-operated in seeking such a date from the High Court of Ireland. This undertaking was offered in the context of those plaintiffs seeking an injunction from the High Court of Ireland, pending the court cases, seeking to prevent the Issuer from switching the customers to capital and interest repayments. The Issuer subsequently agreed to allow the remaining plaintiffs avail of capital payment holidays in respect of their loan repayments pending the outcome of the cases, in circumstances where those plaintiffs were threatening to issue a similar injunction.

The 74 sets of plaintiffs who are represented by one set of solicitors agreed with the Issuer that four of the cases would be run as 'pathfinder' or 'test cases', while the remaining cases would be stayed pending the High Court of Ireland's decision in the test cases. The Issuer has filed a full defence to the cases and is of the view that, absent the plaintiffs establishing that representations were made to them that the loans were interest only for their entire terms, it is difficult to see how a court could construe the relevant loan documentation as meaning anything other than that the Issuer is entitled to demand capital and interest repayments after a particular point during the term of the loans.

Transactions with Irish Bank Resolution Corporation

The Group has been subject to inquiries by a number of statutory bodies, including an investigation by the Central Bank, into deposits placed by Irish Life Assurance p.l.c. with IBRC (formerly Anglo Irish Bank) in 2008. The transactions which are the subject of the Central Bank investigation occurred in March 2008 and in September 2008. The Group has engaged with the Central Bank and the other investigating bodies in respect of these inquiries and investigations. In circumstances where there are pending criminal proceedings which are related to the subject matter of these inquiries and to the Central Bank investigation, these inquiries and the investigation have not been completed. It is likely that the resolution of the inquiries and the Central Bank investigation will be subsequent to the determination of the criminal proceedings which are related to the same subject matter. The trial in the criminal proceedings is currently scheduled to commence in early 2016. Depending on the outcome of the investigation, the Central Bank may seek to impose sanctions on Irish Life Assurance p.l.c. for its role in the transactions. As the Parent gave certain indemnities to the Minister as part of the sale of Irish Life Limited in June 2012, the Parent could face a liability in respect of this issue.

Payment Protection Insurance

In 2011, the Central Bank undertook a themed review of sales of Payment Protection Insurance by Irish regulated credit institutions from the date of the introduction of the Consumer Protection Code on 1 July 2007. The objective of the review was to identify if there were instances where the Consumer Protection Code 2006 was not complied with in respect of the sale of Payment Protection Insurance by credit institutions and where appropriate to remediate consumers. Payment Protection Insurance is an insurance policy that covers the monthly debt repayment, for a limited period, on a lending product in the event that the borrower loses his / her income. The Central Bank's report on this review was published in 2012. The key concerns identified by the Central Bank in that industry wide review included a failure to gather sufficient information, the timing of the provision of key information to consumers, a failure to bring key information to the attention of consumers and poor record keeping/incomplete files being maintained by credit institutions.

Arising from this review, the Central Bank requested the Issuer together with a number of other credit institutions to undertake a review of Payment Protection Insurance sales following the introduction of the Consumer Protection Code. Following this review, the Issuer calculated a total customer refund (including interest) of approximately €11.4m, of which approximately €10.7m had been paid out to customers as of 31 March 2015.

Banking Inquiry

An inquiry is being conducted by an Oireachtas Joint Committee pursuant to section 7 of the Houses of the Oireachtas (Inquiries, Privileges and Procedures) Act, 2013 into the banking industry in Ireland. The subject matter of the inquiry is to inquire into the reasons Ireland experienced a systemic banking crisis, including the political, economic, social,

116 cultural, financial and behavioural factors and policies which impacted on or contributed to the crisis, by investigating relevant matters relating to banking systems and practices, regulatory and supervisory systems and practices, crisis management systems, and policy responses and the preventative reforms implemented in the wake of the crisis. A terms of reference for the inquiry was approved by the Dáil and the Seanad in late November 2014 and public hearings, in the first phase of the inquiry, commenced in December 2014. The terms of reference provide, in the context of the scope of the inquiry and the time period to be covered, a start date based on the effective implementation date of Basel I at the beginning of 1992 and an end date of end of 2013. There is a risk that the Issuer could suffer reputational damage arising out of issues which emerge from the Banking Inquiry.

117 DESCRIPTION OF THE PARENT ORDINARY SHARES

Set out below is a description of the principal rights attaching, as at the date of this Information Memorandum, to the ordinary shares that will be issued in the event that the Securities are converted in accordance with their terms. The Parent Ordinary Shares are shares of €0.50 each in the capital of the Parent. The International Security Identification Code (ISIN) for the Parent Ordinary Shares is IE 00BWB8X525. Any Parent Ordinary Shares issued on Conversion will be fully paid and non-assessable, free from any encumbrance and will in all respects rank pari passu with the fully paid Parent Ordinary Shares in issue on the relevant Conversion Date except for any right excluded by mandatory provisions of applicable law and except that any Parent Ordinary Shares so issued will not rank for any rights, distributions or payments the record date or other due date for the establishment of entitlement for which falls prior to the relevant Conversion Date. The Parent Ordinary Shares are currently listed and admitted to trading on the Enterprise Securities Market (the ESM) of the Irish Stock Exchange (ISE). Any Conversion of the Securities to Parent Ordinary Shares will result in the holders of the Securities receiving Parent Ordinary Shares listed and trading on the ESM unless and until the Parent Ordinary Shares are admitted to trading on the ISE's regulated market and the London Stock Exchange main market as outlined below. Further information on the past, the further performance and the volatility of the Parent Ordinary Shares can be found at www.permanenttsbgroup.ie and on the website of the ISE at www.ise.ie. The ESM was launched on 12 April 2005 and is regulated by the ISE. The ESM is the junior market of the ISE. The ESM is the market for smaller, growth companies and has been specifically designed to meet the funding needs of companies at earlier stages in their development. Daily trading volumes on the ESM are available on the website of the ISE. Price information in relation to the ESM is published on the ISEQ ESM Index (the ESM Index). The ESM Index is available on the website of the ISE and is updated on an hourly basis. Liquidity on the ESM is provided by market makers who are member firms of the ISE and are obliged to quote a share price for each company for which they make a market between 8.00 a.m. and 4.30 p.m. on Business Days. While the obligations of a company whose shares are traded on the ESM are similar to the listing rules of the ISE for companies whose shares are listed or trading on the Main Securities Market (the Listing Rules), there are certain exceptions, including those referred to below:

1. Under the rules of the ESM (the ESM Rules) prior shareholder approval is required only for (i) reverse takeovers (being an acquisition or acquisitions in a twelve month period which either (a) exceed 100 per cent. in any of the class tests or (b) result in a fundamental change in the Parent Group's business, board or voting control); and (ii) disposals, which when aggregated with any other disposal or disposals over the previous twelve months, exceed 75 per cent. in any of the class tests and are deemed to result in a fundamental change of business. Under the Listing Rules, prior shareholder approval is required for a transaction exceeding the 25 per cent. threshold under any class test unless an exemption applies or the Listing Rules specifically provide otherwise. It should also be noted that under the ESM Rules any related party transaction greater than 5 per cent. under any class test requires notification to shareholders rather than shareholder approval.

2. There is no requirement under the ESM Rules for a prospectus or an admission document to be published for further issues of securities to institutional investors, except when seeking admission for a new class of securities or as otherwise required by law.

3. Unlike the Listing Rules, the ESM Rules do not specify any required structures or discount limits in relation to further issues of securities.

4. Under the Listing Rules, a company is required to appoint a sponsor. The responsibilities of the sponsor include providing assurance to the Central Bank and/or the ISE, when required, that the responsibilities of the listed company have been met. The ESM Rules require that ESM companies retain at all times a nominated adviser, that has ongoing responsibilities to both the Parent and the ISE. J&E Davy has agreed to act as ESM adviser and broker to the Parent. The Issuer does not envisage that there will be any alteration in the standards of reporting and governance which the Parent currently maintains.

5. Under the ESM Rules, there is no requirement for a minimum number of shares to be maintained in public hands, whereas on the Main Securities Market a minimum of 25 per cent. of a company's issued ordinary share capital should be maintained in public hands at all times.

118 6. Neither the UK Corporate Governance Code nor the Irish Corporate Governance Annex issued by the ISE applies directly to companies who are admitted to trading on the ESM. The Parent Group recognises, however, the importance of high standards of corporate governance and intend that the Parent should observe the requirements of the UK Corporate Governance Code and the Irish Corporate Governance Annex to the extent the Parent Group considers appropriate having regard to the size, nature and resources of the Group.

7. A company listed on the ESM is not required to comply with the Prospectus (Directive 2003/71/EC) Regulations 2005 (except where there is an offer of transferable securities to the public) or with the Market Abuse (Directive 2003/6/EC) Regulations 2005. However, it should also be noted that Part V of the Companies Act, 1990 which relates to insider dealing still applies to securities quoted on the ESM. Shares quoted on the ESM are monitored by the ISE and the Office of the Irish Director of Corporate Enforcement has an enforcement role. The Minister holds over 99% of the Parent Ordinary Shares currently in issue. The Minister's holding of the Parent Ordinary Shares will reduce if and when the Capital Raise is successfully completed.

Application will be made to the Irish Stock Exchange for the Parent Ordinary Shares to be admitted, as a primary listing to the Official List of the Irish Stock Exchange and to trading on its regulated market. Application will be made to the FCA for the Parent Ordinary Shares to be admitted to the standard listing segment of the UK Official List, and to the London Stock Exchange for the Parent Ordinary Shares to be admitted to trading on the London Stock Exchange's main market for listed securities. No application has been or is currently intended to be made for the Parent Ordinary Shares to be admitted to listing or dealt in on any other exchange.

It is expected that admission to the Official Lists will become effective and that unconditional dealings in the Parent Ordinary Shares will commence on the Irish Stock Exchange and the London Stock Exchange at 8:00 a.m. on 5 May 2015.

119 TAXATION

Ireland

The following is a summary based on the laws and practices currently in force in Ireland regarding the tax position of investors beneficially owning their Securities or, as the case may be, Parent Ordinary Shares issued upon Conversion and should be treated with appropriate caution. Particular rules may apply to certain classes of taxpayers holding Securities or Parent Ordinary Shares. The summary does not constitute tax or legal advice and the comments below are of a general nature only. Prospective investors in the Securities or Parent Ordinary Shares should consult their professional advisers on the tax implications of the purchase, holding, redemption or sale of the Securities or Parent Ordinary Shares and the receipt of interest or dividends thereon under the laws of their country of residence, citizenship or domicile.

Withholding Tax

While this section summarises the circumstances in which tax must be withheld from payments on the Securities and any Parent Ordinary Shares issued on Conversion investors should note that to the extent that tax is withheld from payments of interest on the Securities the Conditions provide for a gross up of such payments (subject to customary exceptions). Investors are referred to Condition 9.

The Irish Revenue Commissioners have expressed the view that the Securities should be treated as equity instruments for tax purposes.

If the Securities are equity instruments as reflected in the view expressed by the Revenue Commissioners, or in any event, subject to the one exception referred to below, under the provisions of section 130 of the TCA interest paid in respect of the Securities will be treated as a distribution for Irish tax purposes and will be subject to Dividend Withholding Tax ("DWT") at the standard rate of income tax (currently 20 per cent.) unless the holder of the Securities is within one of the categories of exempt holders for DWT purposes referred to below.

If the Securities are not equity instruments interest paid in respect of the Securities will not be treated as a distribution under the provisions of section 130 by virtue of section 133 TCA if the holder of the Securities is a company which is within the charge to Irish corporation tax and the amount of interest receivable does not exceed a commercial rate of return.

Dividend withholding tax

DWT will have to be withheld from interest payments made on the Securities treated as a distribution in the circumstances outlined above, and from dividends paid on any Parent Ordinary Shares issued upon Conversion unless an exception applies. For DWT purposes, a dividend includes any distribution, including cash dividends, non-cash dividends and additional shares taken in lieu of a cash dividend.

Certain categories of Irish resident holders of Securities or Parent Ordinary Shares are entitled to an exemption from DWT, including (but not limited to) Irish resident companies, qualifying employee share ownership trusts, charities and pension funds. Except in very limited circumstances, interest or dividend payments by the Issuer or Parent to Irish resident holders of Securities or Parent Ordinary Shares who are individuals will not be exempt from DWT.

Certain non-Irish resident holders of Securities or Parent Ordinary Shares (both individual and corporate) are also entitled to an exemption from DWT. In particular, a holder of Securities or Parent Ordinary Shares which is not resident for tax purposes in Ireland is beneficially entitled to the interest or dividend and which is:

(i) an individual who by virtue of the laws of the relevant country is resident for tax purposes in either a Member State of the EU (apart from Ireland) or a country with which Ireland has signed a double tax treaty (a "Relevant Territory") and the individual is neither resident nor ordinarily resident in Ireland; or

(ii) a company that is, by virtue of the law of a Relevant Territory, resident for tax purposes in that Relevant Territory but is not under the control, whether directly or indirectly, of a person or persons who is or are resident in Ireland; or

(iii) a company that is controlled, directly or indirectly, by persons who, by virtue of the laws of a Relevant Territory, are resident in that Relevant Territory and not under the control, whether directly or indirectly, of a person or persons who are not so resident; or

120 (iv) a company whose principal class of shares is substantially and regularly traded on (i) a recognised stock exchange in Ireland or one or more Relevant Territories or (ii) a stock exchange approved by the Irish Minister; or

(v) a company which is at least a 75 per cent. subsidiary, direct or indirect, of another company whose principal class of shares is substantially and regularly traded on a recognised stock exchange in Ireland or one or more Relevant Territories or (ii) a stock exchange approved by the Irish Minister; or

(vi) a company that is wholly owned, directly or indirectly, by two or more companies, the principal class of shares of each of which is substantially and regularly traded on a recognised stock exchange in Ireland or one or more Relevant Territories or (ii) a stock exchange approved by the Irish Minister is not subject to DWT on interest received from the Issuer or dividends received from the Parent.

For an exemption to apply, the Issuer or Parent must have received all necessary documentation required by the relevant legislation evidencing entitlement to the relevant exemption from the relevant holder of Securities or Parent Ordinary Shares prior to payment of the interest or dividend. In this regard, a holder of Securities or Parent Ordinary Shares must file the requisite declaration and certification(s) with the Issuer or Parent to substantiate entitlement to receive the payment without deduction of DWT. If interest or dividends are paid through an intermediary, the intermediary will have to fulfil certain requirements with the tax authorities to enable the Issuer or Parent to pay interest or dividends without deduction of DWT and the exempt holder will have to provide the intermediary with the appropriate declarations and certificates.

Withholding tax on interest

In circumstances where interest paid in respect of the Securities is not treated as a distribution for Irish tax purposes, the Issuer will be required to withhold interest withholding tax ("IWT") unless an exemption applies.

An exemption from IWT applies to interest payable to a qualifying company within the meaning of Section 110 of the TCA.

A further exemption from IWT exists under Section 64 of the TCA for interest bearing securities which are quoted on a recognised stock exchange (which would include the ISE) ("quoted Eurobonds").

Any interest paid on such quoted Eurobonds can be paid free of IWT provided:

• the person by or through whom the payment is made is not in Ireland; • the payment is made by or through a person in Ireland, and the person who is the beneficial owner of the quoted Eurobond and who is beneficially entitled to the interest is not resident in Ireland and has made a declaration to the person by or through whom the payment is made; or • the payment is made by or through a person in Ireland and the quoted Eurobond is held in a recognised clearing system (which includes Euroclear and Clearstream, Luxembourg).

Deposit Interest Retention Tax

The Issuer will not be required to operate Deposit Interest Retention Tax ("DIRT") in respect of interest paid on interest bearing securities which are listed on a stock exchange.

Encashment Tax

In certain circumstances, Irish tax will be required to be withheld at the standard rate from interest in respect of a quoted Eurobond, where such interest is collected by a bank or other agent in Ireland on behalf of any holder who is resident in Ireland.

Taxation of holders

Notwithstanding that a holder of Securities or Parent Ordinary Shares may receive interest or dividends free of withholding tax, the holder may still be liable to pay Irish tax in respect of the income. Ireland operates a self-assessment system in respect of tax and any person, including a person who is neither resident nor ordinarily resident in Ireland, with Irish source income comes within its scope.

121 1 In respect of dividends and distributions

An Irish resident or ordinarily resident individual holder of Parent Ordinary Shares or Securities where the interest is treated as a distribution will be subject to Irish income tax on the gross dividend at his or her marginal rate of tax plus the universal social charge and, in certain circumstances, PRSI. The gross dividend is the dividend received plus DWT withheld. Irish resident individual holders of Parent Ordinary Shares or Securities would generally be entitled to a credit for the DWT deduction against their income tax liability and to have refunded to them any amount by which DWT exceeds such income tax liability.

Irish resident corporate holders of Parent Ordinary Shares or Securities would generally be exempt from Irish tax on dividends/interest receivable on the Parent Ordinary Shares or Securities. If an Irish resident corporate holder is a close company, however, it may, in certain circumstances, be liable to a 20 per cent. investment income surcharge in respect of payments received on the Parent Ordinary Shares or Securities.

Non-Irish resident holders of Parent Ordinary Shares will, unless entitled to an exemption from DWT, be liable to Irish income tax on dividends received on the Parent Ordinary Shares or interest on the Securities. However, the DWT deducted by the Parent or Issuer discharges such liability to Irish income tax. Where a non-resident holder of Parent Ordinary Shares or Securities is entitled to exemption from DWT, then no Irish income tax arises and, where the Parent or Issuer deducted DWT, a claim may be made for a refund of the DWT.

2 In respect of interest not treated as a distribution

In circumstances where interest on the Securities is not treated as a distribution, the holder of the Securities may be exempt from tax on such interest. Otherwise, depending on the circumstances of the holder of the Securities, a charge to tax on the income, plus the universal social charge and, in certain circumstances, PRSI could arise.

Interest on the Securities will be exempt from Irish income tax if the interest on the Securities is exempt from IWT under the quoted Eurobond exemption and the holder of the Securities is (i) a person who is not a resident of Ireland but is a resident of a Relevant Territory, (ii) a company under the control, directly or indirectly, of persons who by virtue of the law of a Relevant Territory are resident in that country and that person or persons are not themselves under the control whether directly or indirectly of a person who is not resident in such a country, or (ii) a company, the principal class of shares of such company, or another company of which the recipient company is a 75% subsidiary, is substantially and regularly traded on one or more recognised stock exchanges in Ireland or a Relevant Territory or a stock exchange approved by the Minister.

Notwithstanding these exemptions from income tax, a corporate recipient that carries on a trade in Ireland through a branch or agency in respect of which the Securities are held or attributed may have a liability to Irish corporation tax on the interest.

B. Capital Gains Tax on a Conversion Event or on a disposal of Securities or Parent Ordinary Shares

A gain made on a disposal of Securities or Parent Ordinary Shares will be brought within the charge to Irish tax where the holder is resident or ordinarily resident in Ireland or carries on a trade in Ireland through a branch or agency in respect of which the Securities or Parent Ordinary Shares are used or held.

No liability to capital gains tax should arise on a Conversion, provided that the Parent issues the Parent Ordinary Shares in exchange for the Securities and the Parent has control of the Issuer at that time.

C. Capital Acquisitions Tax

A gift or inheritance comprising of Securities or Parent Ordinary Shares will be within the charge to capital acquisitions tax if either (i) the disponer or the donee/successor in relation to the gift or inheritance is resident or ordinarily resident in Ireland (or, in certain circumstances, if the disponer is domiciled in Ireland irrespective of his residence or that of the donee/successor) or (ii) if the Securities or Parent Ordinary Shares are regarded as property situate in Ireland. Registered Securities are generally regarded as situated where the principal register of the holders is maintained or is required to be maintained, but the Securities may be regarded as situated in Ireland regardless of the location of the register as they secure a debt due by an Irish resident debtor and they may be secured over Irish property. The Parent Ordinary Shares will be regarded as situate in Ireland as the share register of the Parent is held in Ireland. Accordingly, if the Securities or Parent Ordinary Shares are comprised in a gift or inheritance, the gift or inheritance may be within the charge to tax regardless of the residence status of the disponer or the donee/successor.

122 D. Stamp Duty

No Irish stamp duty will be payable on the issue of the Securities or Parent Ordinary Shares.

The transfer of a Parent Ordinary Share will be subject to stamp duty at the rate of 1% of the consideration paid in respect of the transfer (or, if greater, the market value thereof), which must be paid in Euro by the transferee (assuming an arm's length transfer) within 30 days of the date on which the transfer of the Parent Ordinary Share is executed. No Irish stamp duty will be payable on the transfer, issue or redemption of a Security.

European Union

The following relates only to the EU Savings Directive and the proposed financial transactions tax. It does not deal with any other European Union taxation implications of acquiring, holding or disposing of Securities. The tax treatment of prospective Securityholders in Member States of the European Union depends on their individual circumstances and may be subject to change in the future. Prospective Securityholders who may be unsure as to their tax position should seek their own professional advice.

1. The EU Savings Directive

Under Council Directive 2003/48/EC on the taxation of savings income, Member States are required to provide to the tax authorities of other Member States details of certain payments of interest or similar income paid or secured by a person established in a Member State to or for the benefit of an individual resident in another Member State or certain limited types of entities established in another Member State.

On 24 March 2014, the Council of the European Union adopted a Council Directive amending and broadening the scope of the requirements described above. Member States are required to apply these new requirements from 1 January 2017. The changes will expand the range of payments covered by the Directive, in particular to include additional types of income payable on securities. The Directive will also expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported. This approach will apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union.

For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments. The changes referred to above will broaden the types of payments subject to withholding in those Member States which still operate a withholding system when they are implemented. The end of the transitional period is dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries. A number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland).

2. The proposed financial transactions tax ("FTT")

On 14 February 2013, the European Commission published a proposal (the "Commission's Proposal") for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the "participating Member States").

The Commission's Proposal has very broad scope and could, if introduced, apply to certain dealings in the Securities or Parent Ordinary Shares (including secondary market transactions) in certain circumstances.

Under the Commission's Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Securities or Parent Ordinary Shares where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, "established" in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State.

A joint statement issued in May 2014 by ten of the eleven participating Member States indicated an intention to implement the FTT progressively, such that it would initially apply to shares and certain derivatives, with this initial implementation occurring by 1 January 2016. The FTT, as initially implemented on this basis, may not apply to dealings in the Securities.

The FTT proposal remains subject to negotiation between the participating Member States. It may therefore be

123 altered prior to any implementation. Additional EU Member States may decide to participate.

Prospective holders of the Securities are advised to seek their own professional advice in relation to the FTT.

Foreign Account Tax Compliance Act

FATCA imposes a new reporting regime and potentially a 30% withholding tax with respect to certain payments to (i) any non-U.S. financial institution (a "foreign financial institution", or "FFI" (as defined by FATCA)) that does not become a "Participating FFI" by entering into an agreement with the U.S. Internal Revenue Service ("IRS") to provide the IRS with certain information in respect of its account holders and investors or is not otherwise exempt from or in deemed compliance with FATCA and (ii) any investor (unless otherwise exempt from FATCA) that does not provide information sufficient to determine whether the investor is a U.S. person or should otherwise be treated as holding a "United States account" of the Issuer (a "Recalcitrant Holder"). The Issuer should be classified as an FFI.

The new withholding regime will be phased in beginning 1 July 2014 for payments from sources within the United States and will apply to "foreign passthru payments" (a term not yet defined) no earlier than 1 January 2017. This withholding would potentially apply to payments in respect of (i) any Securities characterised as debt (or which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are issued after the "grandfathering date", which is the date that is six months after the date on which final U.S. Treasury regulations defining the term foreign passthru payment are filed with the Federal Register, or which are materially modified on or after the grandfathering date and (ii) any Securities characterised as equity or which do not have a fixed term for U.S. federal tax purposes, whenever issued. If Securities are issued before the grandfathering date, and additional Securities are issued on or after that date, the additional Securities may not be treated as grandfathered, which may have negative consequences for the existing Securities, including a negative impact on market price.

The United States and a number of other jurisdictions have announced their intention to negotiate intergovernmental agreements to facilitate the implementation of FATCA (each, an "IGA"). Pursuant to FATCA and the "Model 1" and "Model 2" IGAs released by the United States, an FFI in an IGA signatory country could be treated as a "Reporting FI" not subject to withholding under FATCA on any payments it receives, except in very rare circumstances. Further, an FFI in an IGA jurisdiction would generally not be required to withhold under FATCA or an IGA (or any law implementing an IGA) (any such withholding being "FATCA Withholding") from payments it makes. Under each Model IGA, a Reporting FI would still be required to report certain information in respect of its account holders and investors to its home government or to the IRS. The United States and Ireland have entered into an agreement (the "US-Ireland IGA") which is a Model 1 IGA.

As the Issuer is treated as a Reporting FI pursuant to the US-Ireland IGA, it does not anticipate that it will be obliged to deduct any FATCA Withholding on payments it makes. However, there can be no assurance that the Issuer would in the future not be required to deduct FATCA Withholding from payments it makes. The Issuer and financial institutions through which payments on the Securities are made may be required to withhold FATCA Withholding if (i) any FFI through or to which payment on such Securities is made is not a Participating FFI, a Reporting FI, or otherwise exempt from or in deemed compliance with FATCA or (ii) an investor is a Recalcitrant Holder.

Whilst the Securities are in global form and held within the clearing systems, it is expected that FATCA will not affect the amount of any payments made under, or in respect of, the Securities by the Issuer, any paying agent and the Common Depositary, given that each of the entities in the payment chain from the Issuer and to the clearing systems is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an IGA will be unlikely to affect the Securities. The documentation expressly contemplates the possibility that the Securities may be taken out of the clearing systems. If this were to happen, then a non-FATCA compliant holder could be subject to FATCA Withholding. However, Securities will only be taken out of the clearing systems in remote circumstances.

FATCA is particularly complex and its application is uncertain at this time. The above description is based in part on regulations, official guidance and model IGAs, all of which are subject to change or may be implemented in a materially different form. Prospective investors should consult their tax advisers on how these rules may apply to the Issuer and to payments they may receive in connection with the Securities.

TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, EACH TAXPAYER IS HEREBY NOTIFIED THAT: (A) ANY TAX DISCUSSION HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED BY THE TAXPAYER FOR THE PURPOSE OF AVOIDING U.S. FEDERAL INCOME TAX PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER; (B) ANY SUCH TAX DISCUSSION WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR

124 MATTERS ADDRESSED HEREIN; AND (C) THE TAXPAYER SHOULD SEEK ADVICE BASED ON THE TAXPAYER'S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISER.

125 SUBSCRIPTION AND SALE

The Managers have, pursuant to a Subscription Agreement (the "Subscription Agreement") dated 27 April 2015, jointly and severally agreed to procure subscribers for the Securities at the issue price of 100.029 per cent. of their principal amount less a combined commission, subject to the provisions of the Subscription Agreement. The Issuer will also reimburse the Managers in respect of certain of their expenses, and has agreed to indemnify the Managers against certain liabilities, incurred in connection with the issue of the Securities. The Subscription Agreement may be terminated in certain circumstances prior to payment of the issue price to the Issuer.

Selling restrictions

United States

The Securities have not been and will not be registered under the Securities Act and, subject to certain exceptions, may not be offered or sold within the United States or to or for the account or benefit of a U.S. person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Accordingly, the Securities are being offered and sold only outside the United States to persons other than U.S. persons as defined in Regulation S in offshore transactions in reliance on, and in compliance with, Regulation S.

In addition, until 40 days after the commencement of the offering, an offer or sale of Securities within the United States by any dealer (whether or not participating in the offering of the Securities) may violate the registration requirements of the Securities Act.

Each Manager has represented and agreed that it has offered and sold, and will offer and sell, the Securities (a) as part of its distribution at any time and (b) otherwise until 40 days after the later of the commencement of the offering and the Issue Date, only in accordance with Rule 903 of Regulation S. Accordingly, neither such Manager nor its affiliates, nor any persons acting on its or their behalf, have engaged or will engage in any directed selling efforts (as defined in Regulation S) with respect to the Securities, and such Manager, its affiliates and all persons acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S. Each Manager has agreed that, at or prior to confirmation of sale of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases the Securities from it during the restricted period a confirmation or notice to substantially the foregoing effect.

Ireland

Each Manager has represented, warranted and agreed that it has not offered, sold, placed or underwritten and will not offer, sell, place or underwrite the Securities, or do anything in Ireland in respect of the Securities, otherwise than in conformity with the provisions of:

(a) the Prospectus (Directive 2003/71/EC) Regulations 2005 (as amended), Irish prospectus law and any rules issued by the Central Bank under Section 51 of the Investment Funds, Companies and Miscellaneous Provisions Act 2005 of Ireland (as amended) (the "2005 Act");

(b) the Companies Acts 1963 to 2014;

(c) the European Communities (Markets in Financial Instruments) Regulations 2007 (Nos. 1 to 3) (as amended) and it will conduct itself in accordance with any rules or codes of conduct and any conditions or requirements, or any other enactment, imposed or approved by the Central Bank;

(d) the Market Abuse (Directive 2003/6/EC) Regulations 2005 (as amended) and any rules issued by the Central Bank under Section 34 of the 2005 Act, and will assist the Issuer in complying with its obligations thereunder; and

(e) the Central Bank Acts 1942 to 2014 and any codes of conduct rules made under Section 117(1) of the Central Bank Act 1989 (as amended).

United Kingdom

Each Manager has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the Securities in circumstances in which

126 Section 21(1) of the FSMA does not apply to the Issuer; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom.

General

No action has been taken by the Issuer or any of the Managers that would, or is intended to, permit a public offer of the Securities in any country or jurisdiction where any such action for that purpose is required. Accordingly, each Manager has undertaken that it will not, directly or indirectly, offer or sell any Securities or distribute or publish any offering circular, prospectus, form of application, advertisement or other document or information in any country or jurisdiction except under circumstances that will, to the best of its knowledge and belief, result in compliance with any applicable laws and regulations and all offers and sales of Securities by it will be made on the same terms.

The Securities are not intended to be sold and should not be sold to retail clients in the EEA, as defined in the rules set out in the TMR other than in circumstances that do not and will not give rise to a contravention of those rules by any person. Prospective investors are referred to the section headed "Restrictions on marketing and sales to retail investors" on pages 2 to 4 of this Information Memorandum for further information.

127 GENERAL INFORMATION

Authorisation

1. The issue of the Securities was duly authorised by a resolution of the Board of Directors of the Issuer and the Parent dated 8 April 2015.

Listing

2. Application has been made to the Irish Stock Exchange for the Securities to be admitted to the official list and to trading on the Global Exchange Market. The total expenses relating to the listing of the Securities on the Global Exchange Market are approximately €4,600.

Clearing systems

3. The Securities have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The ISIN for this issue is XS1227057814 and the Common Code is 122705781.

The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and the address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855 Luxembourg.

No significant change

4. Save as set out in the Section "Recent Developments", there has been no significant change in the financial or trading position of the Issuer and no material adverse change in the financial position or prospects of the Issuer, in each case since 31 December 2014.

Litigation

5. Save as set out in the section "Government, Legal or Arbitral Proceedings", neither the Issuer nor any other member of the Issuer Group is or has been involved in any governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Issuer is aware) in the 12 months preceding the date of this document which may have or have in such period had a significant effect on the financial position or profitability of the Issuer or the Group.

Auditors

6. The auditors of the Issuer are PricewaterhouseCoopers, who have audited the Issuer's accounts, without qualification, in accordance with IFRS for the financial year ended on 31 December 2014.

Documents available

7. Copies of the following documents will be available for physical inspection while the Securities remain outstanding at the registered office of the Issuer and at the office of the Luxembourg Listing Agent during normal business hours on any weekday:

 the constitutional documents of the Issuer;

 the audited consolidated financial statements published by the Issuer for the years ended 31 December 2014 and 31 December 2013 and each subsequent audited consolidated financial statements so published;

 the most recently published unaudited interim financial statements of the Issuer, in each case together with any audit or review reports prepared in connection therewith; and

 the Information Memorandum.

In addition, copies of the Trust Deed (which includes the terms and form of the Securities), and the Agency Agreement, will be available for physical inspection while the Securities remain outstanding at the office of the Irish Listing Agent during normal business hours on any weekday.

128 Conflicts of Interest

8. Certain of the Managers and their affiliates have engaged, and may in the future engage, in investment banking and/or commercial banking transactions with, and may perform services to the Issuer, the Parent and their respective affiliates in the ordinary course of business. In the ordinary course of their business activities, the Managers and their affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of the Issuer and its affiliates. Where the Managers or their affiliates have a lending relationship with the Issuer and/or its affiliates they may routinely hedge their credit exposure to those entities consistent with their customary risk management policies. Typically, such Managers and their affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the creation of short positions in securities, including potentially the Securities. Any such short positions could adversely affect future trading prices of the Securities. The Managers and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

129 THE ISSUER

Permanent tsb p.l.c. 56-59 St. Stephen's Green, Dublin 2

TRUSTEE PRINCIPAL PAYING AGENT

Deutsche Trustee Company Limited Deutsche Bank AG, London Branch Winchester House Winchester House 1 Great Winchester Street 1 Great Winchester Street London EC2N 2DB London EC2N 2DB

REGISTRAR

Deutsche Bank Luxembourg S.A. 2 Boulevard Konrad Adenauer L-1115 Luxembourg

SOLE STRUCTURING ADVISOR, SOLE CO-ORDINATOR AND LEAD MANAGER

Deutsche Bank AG, London Branch Winchester House 1 Great Winchester Street London EC2N 2DB

JOINT LEAD MANAGER

J&E Davy Davy House 49 Dawson Street Dublin 2

LEGAL ADVISERS

To the Issuer as to Irish law To the Issuer as to English law

A&L Goodbody Clifford Chance LLP International Financial Services Centre 10 Upper Bank Street North Wall Quay London E14 5JJ Dublin 1

To the Managers as to Irish law To the Managers as to English law

McCann FitzGerald Allen & Overy LLP Riverside One One Bishops Square Sir John Rogerson's Quay London E1 6AD Dublin 2

printed by Allen & Overy LLP 0015437-0009364 ICM:21013780.32 AUDITORS

To the Issuer PRICEWATERHOUSECOOPERS One Spencer Dock North Wall Quay Dublin 1

IRISH LISTING AGENT J&E Davy Davy House 49 Dawson Street Dublin 2

printed by Allen & Overy LLP 0015437-0009364 ICM:21013780.32