THIS DOCUMENT AND ANY ACCOMPANYING DOCUMENTS ARE IMPORTANT AND NEED YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from an independent financial adviser, who is authorised under the Financial Services and Markets Act 2000 ("FSMA") if you are in the United Kingdom, or from another appropriately authorised independent financial adviser if you are in a territory outside the United Kingdom. This document comprises a prospectus relating to Monzo Bank Limited ("Monzo") and has been prepared in accordance with the Prospectus Rules of the Financial Conduct Authority (the "FCA") made pursuant to section 84 of FSMA and has been filed with the FCA in accordance with Rule 3.2 of the Prospectus Rules. This document will be made available to the public in accordance with Rule 3.2 of the Prospectus Rules at www.monzo.com/invest. No application is being made or is currently intended to be made for the E Ordinary Shares to be admitted to listing or dealt with on any other exchange. You should read the entire document and any information incorporated herein by reference and, in particular, the section headed "Risk Factors" on pages 12 to 24 of this document when considering an investment in the E Ordinary Shares. All statements regarding Monzo's business, financial position and prospects should be viewed in light of such Risk Factors. Monzo, the Directors and the Proposed Director, whose names appear on page 34, accept responsibility for the information contained in this document. To the best of the knowledge and belief of Monzo, the Directors and the Proposed Director (each of whom has taken all reasonable care to make sure that such is the case), the information contained in this document is in accordance with the facts and contains no omission likely to affect the import of such information. Monzo Bank Limited (incorporated and registered in England and Wales with registered number 09446231) Prospectus Offer of up to 2,592,520 new E Ordinary Shares No person has been authorised to give any information or make any representations other than those contained in this document and any such information or representations must not be relied upon as having been so authorised by Monzo or any other person. Monzo will comply with its obligation to publish supplementary prospectuses containing further updated information needed by law or by any regulatory authority but assumes no further obligation to publish additional information. Subject to FSMA, the Prospectus Rules and applicable laws, the delivery of this document shall not, under any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this document or that the information in this document is correct as at any time after this date. This document should not be distributed, forwarded to or transmitted in, into or from any territory outside of the United Kingdom. Any failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction. The contents of this document and the information incorporated herein by reference should not be construed as legal, business or tax advice. Each prospective investor should consult a legal adviser, financial adviser authorised under FSMA or tax adviser for advice if they have any concerns or questions about the contents of this document or the subscription for the E Ordinary Shares before making their decision to invest. Neither Monzo nor any of its respective Directors, Proposed Director, employees or representatives is making any representation to any offeree or purchaser or acquirer of the E Ordinary Shares regarding the legality of an investment in the E Ordinary Shares by such offeree or purchaser or acquirer under the laws applicable to such offeree or purchaser or acquirer. 26 November 2018 CONTENTS Clause Page SUMMARY 2 SECTION A: INTRODUCTIONS AND WARNINGS 2 SECTION B: ISSUER AND ANY GUARANTOR 2 SECTION C: SECURITIES 6 SECTION D: RISKS 8 SECTION E: OFFER 9 RISK FACTORS 12 IMPORTANT INFORMATION 25 THE OFFER 27 EXPECTED TIMETABLE OF PRINCIPAL EVENTS 33 DIRECTORS, PROPOSED DIRECTOR, COMPANY SECRETARY, REGISTERED OFFICE AND ADVISERS 34 PART I INFORMATION ON THE GROUP 35 PART II REGULATION 46 PART III CAPITAL RESOURCES AND OPERATING AND FINANCIAL REVIEW OF THE GROUP 52 Part A: Capital Resources 52 Part B: Operating and Financial Review 53 PART IV FINANCIAL INFORMATION OF MONZO 56 PART V DIRECTORS, PROPOSED DIRECTOR, SENIOR MANAGEMENT, CORPORATE GOVERNANCE, AND EMPLOYEES 71 PART VI TAXATION 83 PART VII ADDITIONAL INFORMATION 86 PART VIII DEFINITIONS 109 APPENDIX 119 FY2017 annual report 119 FY2018 annual report 154 - 2 - SUMMARY Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in Sections A-E (A.1-E.7). This summary contains all the Elements needed to be included in a summary for this type of security and issuer. Because some Elements are not required to be addressed there may be gaps in the numbering sequence of the Elements. Even though an Element may be needed to be inserted into the summary because of the type of security and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of "not applicable". SECTION A: INTRODUCTIONS AND WARNINGS A.1 Introduction and Warning This summary should be read as an introduction to this document. Any decision to invest in the securities should be based on consideration of this document as a whole by the investor. Where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of a member state of the European Union, have to bear the costs of translating this document before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary, including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of this document or it does not provide, when read together with the other parts of this document, key information to aid investors when considering whether to invest in such securities. A.2 Subsequent resale of securities or final placement of securities through financial intermediaries Not applicable; no consent has been given by Monzo or any person responsible for drawing up this document to use this document for any subsequent resale or final placement of securities by financial intermediaries. SECTION B: ISSUER AND ANY GUARANTOR B.1 Legal and commercial name Monzo Bank Limited B.2 Domicile, legal form, legislation, country of incorporation Monzo is a private limited company, incorporated in England and Wales on 18 February 2015 under the Act, with its registered office situated in England and Wales. B.3 Current operations and principal activities and markets Monzo is a digital challenger bank whose principal activity is to provide retail banking services in the UK. Monzo's products include current accounts, overdrafts, fixed term loans, saving pots, and partnerships with third parties. Monzo has over 1,000,000 customers who have activated their current accounts. Monzo aims for its product to be simple and easy to use, with excellent customer service and innovative features to help customers to - 3 - understand and manage their money. Monzo's long term vision is to give customers the ability to view and control a range of financial and non-financial services from within the Monzo App. B.4a Significant recent trends affecting Monzo and its industry The challenger bank sector is thriving having seen continued rapid growth in the wake of increased openness, as well as customer desire for tailored, cheaper and more modern banking services. Returns on individual customers continue to improve and the Group is keeping high levels of cash at central banks to protect depositors (the CET1 ratio has increased up to 110% in FY18, from 17.4% in FY16). Emerging rules relating to capital in this area, including for example Basel IV, will continue to shape challenger bank appetites for different products and services, as well as defining their drive for scale and stronger balance sheets. Monzo has raised a total of £85 million since the end of its last financial year and a total of approximately £180 million since it began operating in 2015. £85 million of which was as a result of its Series E Investment Round in October 2018 from existing and new investors including General Catalyst and Accel. The Series E Investment Round valued Monzo at £1 billion. Monzo launched current accounts in July 2017 with nearly 95% of prepaid Active Customers migrated to the new current accounts in 2018. The prepaid scheme incurred marginal losses of around £65 per Active Customer per year (the marginal amount of money lost per Active Customer). Primarily by moving from the prepaid debit cards to the current accounts powered by Monzo's own technology, Monzo's unit economics (the marginal amount of money earned or lost per customer) improved dramatically with Monzo currently Contribution Margin positive. The improvement in unit economics between the prepaid and current account is reflective of both an increase in revenue from new product features and cost savings realised by Monzo. Monzo now wishes to complete the journey to profitability at the company level. B.5 Description of the Group Monzo has one subsidiary: Monzo Support US Inc. ("Monzo Support US"), a Delaware corporation, which was incorporated under the laws of Delaware in the United States on 18 September 2018.