THE STANDARD BANK OF SOUTH AFRICA LIMITED (Incorporated with limited liability under registration number 1962/000738/06 in the Republic of South Africa)

ZAR40 000 000 000 Domestic Medium Term Note Programme

On 7 June 2002, the Issuer (as defined below) established a ZAR10 000 000 000 Domestic Medium Term Note Programme (the “Programme”), which Programme was amended and restated on 11 September 2003 and on 26 October 2004. On 31 January 2005, the aggregate nominal amount of the Programme was increased to R20 000 000 000. On 14 October 2005 the aggregate nominal amount of the Programme was increased to R40 000 000 000. This Programme Memorandum supersedes any previous Programme Memoranda. Any Notes (as defined below) issued under the Programme on or after the date of this Programme Memorandum are subject to the provisions described herein. This Programme Memorandum does not affect any Notes issued before the date of this Programme Memorandum.

Under this ZAR40 000 000 000 Domestic Medium Term Note Programme, The Standard Bank of South Africa Limited (the “Issuer”) may from time to time issue notes (the “Notes”) subject to the terms and conditions (“Terms and Conditions”) contained in this Programme Memorandum. Any other terms and conditions not contained in the Terms and Conditions which are applicable to any Notes will be set forth in a pricing supplement (the “Applicable Pricing Supplement”). Save as set out herein, the Notes will not be subject to any minimum or maximum maturity and the maximum aggregate nominal amount of all Notes from time to time outstanding will not exceed ZAR40 000 000 000.

The Programme has been listed by the Bond Exchange of South Africa, a licensed exchange in terms of the Securities Services Act, 2004 (“BESA”). Notes may be listed on BESA, or any successor exchange or on such other or further exchange as may be determined by the Issuer and subject to any relevant ruling law. Unlisted Notes may also be issued under this Programme. Details of the Notes, including the aggregate nominal amount of the Notes, interest (if any) payable in respect of Notes and the issue price of the Notes will be set forth in the Applicable Pricing Supplement. With respect to Notes to be listed on BESA, the Applicable Pricing Supplement will be delivered to BESA and STRATE Limited (defined under “Form of Notes”) on or before the date of issue of such Notes and the Notes may be traded by or through members of BESA from the date specified in the Applicable Pricing Supplement.

The Notes may be issued on a continuing basis and be placed by one or more of the dealers specified under “Summary of the Programme” and any additional dealer appointed under the Programme from time to time, which appointment may be for a specific issue or on an ongoing basis (each a Dealer“ ” and together the “Dealers”).

The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking Division)

– Arranger and Dealer

Deutsche Bank AG, Johannesburg Branch J.P. Morgan Securities South Africa (Proprietary) Limited

– Dealers

Programme Memorandum dated 20 October 2005 The Issuer accepts responsibility for the information contained in this Programme Memorandum. To the best of the knowledge and belief of the Issuer (having taken all reasonable care to ensure that such is the case) the information contained in this Programme Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information.

The Issuer, having made all reasonable enquiries, confirms that this Programme Memorandum contains or incorporates all information which is material in the context of the issue and the offering of Notes, that the information contained or incorporated in this Programme Memorandum is true and accurate in all material respects and is not misleading, that the opinions and the intentions expressed in this Programme Memorandum are honestly held and that there are no other facts the omission of which would make this Programme Memorandum or any of such information or expression of any such opinions or intentions misleading.

This Programme 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 Programme Memorandum shall be read and construed on the basis that such documents are incorporated into and form part of this Programme Memorandum.

The Arranger, the Dealers, BESA and other professional advisers have not separately verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility is accepted by the Arranger, the Dealers, BESA or other professional advisers as to the accuracy or completeness of the information contained in this Programme Memorandum or any other information provided by the Issuer. The Arranger, the Dealers, BESA and professional advisers do not accept any liability in relation to the information contained in this Programme Memorandum or any other information provided by the Issuer in connection with the Programme.

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

Neither this Programme Memorandum nor any other information supplied in connection with the Programme is intended to provide a basis for any credit or other evaluation, or should be considered as a recommendation by the Issuer that any recipient of this Programme Memorandum or any other information supplied in connection with the Programme, should purchase any Notes.

Each investor contemplating the purchase of any Notes should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Programme Memorandum nor any other information supplied in connection with the Programme constitutes an offer or invitation by or on behalf of the Issuer to any person to subscribe for or to purchase any Notes.

The delivery of this Programme Memorandum does not at any time imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other financial statements or other information supplied in connection with the Programme is correct as at any time subsequent to the date indicated in the document containing the same. Investors should review, among others, the most recent financial statements of the Issuer when deciding whether or not to purchase any Notes.

This Programme Memorandum does not constitute an offer to sell or the solicitation of an offer to buy any Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction.

The distribution of this Programme Memorandum and the offer or sale of Notes may be restricted by law in certain jurisdictions. Persons into whose possession this Programme Memorandum or any Notes come must inform themselves about, and observe, any such restrictions. In particular, there are restrictions on the distribution of this Programme Memorandum and the offer or sale of Notes in the United States of America, the United Kingdom, the Republic of South Africa and certain other jurisdictions (see “Subscription and Sale”). The Issuer does not represent that this Programme Memorandum may be lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assumes any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer which would permit a public offering of any Notes or distribution of this document in any jurisdiction where action for that purpose is required. Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Programme 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. Notes have not been and will not be registered under the United States Securities Act of 1933 (the “Securities Act”). Notes may not be offered, sold or delivered within the United States of America or to U.S. persons except in accordance with Regulation S under the Securities Act.

All references in this document to “Rand”, “ZAR”, “South African Rand”, “R” and “cent” refer to the currency of the Republic of South Africa.

Where any term is defined within the context of any particular clause or section in this Programme Memorandum, the term so defined, unless it is clear from the clause or section in question that the term so defined has limited application to the relevant clause or section, shall bear the meaning ascribed to it for all purposes in this Programme Memorandum, unless qualified by the terms and conditions of any particular Tranche of Notes (as defined in the Terms and Conditions) as set out in the Applicable Pricing Supplement or unless the context otherwise requires. Expressions defined in this Programme Memorandum shall bear the same meanings in supplements to this Programme Memorandum which do not themselves contain their own definitions.

In connection with the issue and distribution of any Tranche of Notes, the Issuer or a Dealer disclosed as the approved stabilisation manager (if any) or any person acting for it (“Stabilisation Manager”) in the Applicable Pricing Supplement may, subject to the terms and conditions for stabilisation contained in the Applicable Pricing Supplement, over-allot or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail for a limited period after the issue date. However, there may be no obligation on the Stabilisation Manager or any of its agents to do this. Such stabilising, if commenced, may be discontinued at any time and must be brought to an end after a limited period. Such stabilising, if commenced, is to be carried out in accordance with all applicable laws and regulations. TABLE OF CONTENTS

Page

DOCUMENTS INCORPORATED BY REFERENCE 1

GENERAL DESCRIPTION OF THE PROGRAMME 2 SUMMARY OF THE PROGRAMME 3 FORM OF THE NOTES 7 PRO FORMA PRICING SUPPLEMENT 8 TERMS AND CONDITIONS OF THE NOTES 13 USE OF PROCEEDS 37 STANBANK GROUP ORGANISATIONAL STRUCTURE 38 DESCRIPTION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED 39 FINANCIAL INFORMATION ON THE STANDARD BANK OF SOUTH AFRICA LIMITED 52 CAPITALISATION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED 97 REPORT OF THE INDEPENDENT AUDITORS 98 SETTLEMENT, CLEARING AND TRANSFERS 99 SOUTH AFRICAN TAXATION 101 SUBSCRIPTION AND SALE 103 GENERAL INFORMATION 107 DOCUMENTS INCORPORATED BY REFERENCE

The following documents shall be deemed to be incorporated in, and to form part of, this Programme Memorandum:

(a) any supplements to this Programme Memorandum circulated by the Issuer from time to time in accordance with the Amended and Restated Programme Agreement dated 20 October 2005 relating to the Programme between the Arranger and Dealers (as defined therein) and the Issuer (the Programme“ Agreement”); and

(b) the audited Annual Financial Statements, and notes thereto, of the Issuer for the three financial years ended 31 December 2002, 2003 and 2004 as well as the published audited Annual Financial Statements, and notes thereto, of the Issuer in respect of further financial years, as and when such become available, save that any statement contained herein or in a document which is incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Programme Memorandum to the extent that a statement contained in any such subsequent document which is deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise).

The Issuer will, in connection with the listing of Notes on BESA, or on such other exchange or further exchange or exchanges as may be selected by the Issuer, and for so long as any Note remains outstanding and listed on such exchange, publish a new Programme Memorandum or a further supplement to the Programme Memorandum on the occasion of any subsequent issue of Notes where there has been:

(a) a material adverse change in the condition (financial or otherwise) of the Issuer which is not then reflected in the Programme Memorandum or any supplement to the Programme Memorandum; or

(b) any modification of the terms of the Programme which would then make the Programme Memorandum inaccurate or misleading.

Any such new Programme Memorandum or Programme Memorandum as supplemented shall be deemed to have been substituted for the previous Programme Memorandum from the date of its issue.

The Issuer will provide, free of charge, to each person to whom a copy of the Programme Memorandum has been delivered, upon request of such person, a copy of any of the documents deemed to be incorporated herein by reference, unless such documents have been modified or superseded. Requests for such documents should be directed to the Issuer at its registered office as set out herein.

Copies of all documentation incorporated in this Programme Memorandum by reference are available at:

The Standard Bank of South Africa Limited 4th Floor Standard Bank Centre 3 Simmonds Street Johannesburg 2001

1 GENERAL DESCRIPTION OF THE PROGRAMME

Under the Programme, the Issuer may from time to time issue Notes denominated in the currency specified in the Applicable Pricing Supplement. The applicable terms of any Notes will be set out in the Terms and Conditions incorporated by reference into the Notes, as modified and supplemented by the Applicable Pricing Supplement relating to the Notes and any supplementary Programme Memorandum. A summary of the Programme and the Terms and Conditions appears below.

This Programme Memorandum will only apply to Notes issued under the Programme in an aggregate nominal amount which does not exceed ZAR40 000 000 000 or its equivalent in such other currencies as Notes are issued, unless such amount is increased as set out below. For the purpose of calculating the aggregate nominal amount of Notes issued under the Programme from time to time:

(a) the ZAR equivalent of Notes denominated in another currency shall be determined at or about the time at which an agreement is reached for the issue of such Notes as between the Issuer and the relevant Dealer(s) on the basis of the spot rate at such time for the sale of such ZAR amount against the purchase of such currency or unit of account in the Johannesburg inter-bank foreign exchange markets, as quoted by any leading bank selected by the Issuer;

(b) the amount of Indexed Notes and Partly Paid Notes (each as defined in the Terms and Conditions) shall be calculated by reference to the original nominal amount of such Notes (and, in the case of Partly Paid Notes, regardless of the subscription price paid); and

(c) the amount of Zero Coupon Notes (as defined in the Terms and Conditions) and other Notes issued at a discount or premium shall be calculated by reference to the net subscription proceeds received by the Issuer for the relevant issue.

In the event that the Issuer issues unlisted Notes, or any Notes are listed on any exchange other than BESA, the Issuer shall, no later than the last day of the month of such issue, inform BESA in writing of the nominal amount and scheduled maturity date in respect of such Notes.

From time to time the Issuer may wish to increase the aggregate nominal amount of the Notes that may be issued under the Programme. Subject to the requirements of BESA and/or any such other exchange or exchanges on which the Notes may be listed or in terms of any law, the Issuer may, without the consent of Noteholders, increase the aggregate nominal amount of the Notes that may be issued under the Programme by delivering a notice thereof to Noteholders and the relevant exchange in accordance with Condition 19 of the Terms and Conditions. Upon such notice being given, all references in the Programme Memorandum or any other agreement, deed or document in relation to the Programme, to the aggregate nominal amount of the Notes, shall be and shall be deemed to be references to the increased aggregate nominal amount.

To the extent that Notes may be listed on the Bond Exchange of South Africa (“BESA”), BESA’s approval of the listing of any Notes is not to be taken in any way as an indication of the merits of the Issuer or the Notes. BESA has not verified the accuracy and truth of the contents of the Programme and to the extent permitted by law, BESA will not be liable for any claim of whatsoever kind.

Claims against the BESA Guarantee Fund may only be made in respect of trading in Notes on BESA and in accordance with the rules of the BESA Guarantee Fund.

To the extent that Notes may be listed on JSE Limited (“JSE”), the JSE’s approval of the listing of any Notes is not to be taken in any way as an indication of the merits of the Issuer or the Notes. The JSE has not verified the accuracy and truth of the contents of the Programme and to the extent permitted by law, the JSE will not be liable for any claim of whatsoever kind.

Claims against the JSE Guarantee Fund may only be made in respect of trading in Notes on the JSE and in accordance with the rules of the Guarantee Fund and can in no way relate to a default by the Issuer of its obligations in terms of its obligations under the Notes.

2 SUMMARY OF THE PROGRAMME

The following summary does not purport to be complete and is taken from, and is qualified by, the remainder of this Programme Memorandum and, in relation to the Terms and Conditions of any particular Tranche of Notes, the Applicable Pricing Supplement. Capitalised terms not separately defined herein shall bear the meaning given to them in the Terms and Conditions.

Issuer The Standard Bank of South Africa Limited (Registration number 1962/000738/06);

Description of the The Standard Bank of South Africa Limited ZAR40 000 000 000 Domestic Medium Programme Term Note Programme;

Size of the Programme Up to ZAR40 000 000 000 outstanding at any time. The Issuer may increase the amount of the Programme in accordance with the Programme Agreement;

Arranger The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking Division);

Dealers The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking Division), Deutsche Bank AG, Johannesburg Branch, J.P. Morgan Securities South Africa (Proprietary) Limited, and any other additional Dealer appointed under the Programme from time to time, which appointment may be for a specific issue or on an ongoing basis, subject to the Issuer’s right to terminate the appointment of any Dealer;

Agent, Calculation Agent The Issuer, unless the Issuer elects to appoint, in relation to a particular Tranche or and Paying Agent Series of Notes, another entity as Agent, Calculation Agent or Paying Agent (as the case may be), in which event that other entity shall act in such capacity in respect of that Tranche or Series of Notes;

Notes Notes may comprise:

Fixed Rate Notes: Fixed Rate Notes will bear interest at a fixed interest rate, as indicated in the Applicable Pricing Supplement, and more fully described in Condition 8.1 of the Terms and Conditions

Floating Rate Notes: Floating Rate Notes will bear interest at a floating rate, as indicated in the Applicable Pricing Supplement, and more fully described in Condition 8.2 of the Terms and Conditions

Zero Coupon Notes: Zero Coupon Notes will be offered and sold at a discount to their nominal amount or at par and will not bear interest other than in the case of late payment

Indexed Notes: payments in respect of interest on Indexed Interest Notes or in respect of principal on Indexed Redemption Amount Notes will be calculated by reference to such index and/or formula as may be indicated in the Applicable Pricing Supplement

Mixed Rate Notes: Mixed Rate Notes will bear interest over respective periods at the rates applicable for any combination of Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes or Indexed Notes, each as specified in the Applicable Pricing Supplement

Instalment Notes: the Applicable Pricing Supplement in respect of each issue of Notes that are redeemable in two or more instalments will set out the dates on which, and the amounts in which, such Notes may be redeemed

Partly Paid Notes: the Issue Price of Partly Paid Notes will be payable in two or more instalments as set out in the Applicable Pricing Supplement

Exchangeable Notes: Notes which may be redeemed by the Issuer in cash or by the delivery of securities as specified in the Applicable Pricing Supplement

3 Senior Notes: Notes bearing the characteristics described under “Status of Senior Notes” below

Subordinated Notes: Notes bearing the characteristics described under “Status of Subordinated Notes” below

Other Notes: terms applicable to Notes other than those specifically contemplated under this Programme Memorandum will be set out in the Applicable Pricing Supplement;

Form of Notes Notes may be issued in the form of Registered Notes, Bearer Notes, Order Notes or in uncertificated format as described in “Form of the Notes” below;

Currencies South African Rand or, subject to all applicable laws and, in the case of Notes listed on BESA, the rules of BESA, in such other currency as specified in the Applicable Pricing Supplement;

Issue Price Notes may be issued on a fully-paid or a partly-paid basis and at an issue price which is at their nominal amount or at a discount to, or premium over, their nominal amount as specified in the Applicable Pricing Supplement;

Interest Period(s) or Such period(s) or date(s) as may be indicated in the Applicable Pricing Supplement; Interest Payment Date(s)

Denomination of Notes Notes will be issued in such denominations as may be specified in the Applicable Pricing Supplement;

Maturities Such maturity as may be specified in the Applicable Pricing Supplement (subject to a maturity as may be required by BESA and/or any such exchange or exchanges on which the Notes may be listed or in terms of any law). The Notes are not subject to any minimum or maximum maturity;

Redemption The Applicable Pricing Supplement relating to each Tranche of Notes will indicate either:

(a) that the Notes may only be redeemed prior to their stated maturity (other than in specified instalments, if applicable) for taxation reasons or following an Event of Default; or

(b) that such Notes will also be redeemable at the option of the Issuer (including in relation to Subordinated Notes identified in the Applicable Pricing Supplement as constituting secondary capital or tertiary capital in accordance with the Banks Act, 1990) and/or the Noteholders (in the case of Senior Notes only), upon giving not less than 15 nor more than 30 days’ irrevocable notice (or such other notice period, if any, as is indicated in the Applicable Pricing Supplement) to the Noteholders or the Issuer, as the case may be, on a date or dates specified prior to such stated maturity and at a price or prices and on such terms as are indicated in the Applicable Pricing Supplement.

If Condition 7.4 is specified in the Applicable Pricing Supplement as being applicable, the Issuer shall be entitled, by notice to the Noteholders, to defer the due date for payment of any principal or interest in respect of such Notes where required or requested by the South African Registrar of Banks to do so and for such period and subject to such conditions as the South African Registrar of Banks may prescribe;

The Applicable Pricing Supplement may provide that Notes may be repayable in two or more instalments and on such dates as indicated in the Applicable Pricing Supplement;

4 Status of Subordinated Subordinated Notes will constitute direct, unconditional, unsecured and subordinated Notes obligations of the Issuer and will rank pari passu among themselves and will rank at least pari passu with all other present and future unsecured and subordinated obligations of the Issuer, save for those that have been accorded preferential rights by law. Subject to applicable law, in the event of the dissolution of the Issuer or if the Issuer is placed into liquidation or wound up, then and in any such event, the claims of the persons entitled to be paid amounts due in respect of Subordinated Notes shall be subordinated to all other claims in respect of any other indebtedness of the Issuer except for other Subordinated Indebtedness (as defined in Condition 7.3 of the Terms and Conditions). Accordingly, no amount due on the Subordinated Notes shall be eligible for set-off or shall be payable to any person entitled to be paid such amount until all other indebtedness of the Issuer which is admissible in any such dissolution, liquidation or winding-up (other than Subordinated Indebtedness) has been paid or discharged in full;

Status of Senior Notes Unless otherwise specified in the Applicable Pricing Supplement, Senior Notes will constitute direct, unconditional, unsubordinated and unsecured obligations of the Issuer and will rank pari passu among themselves and (save for certain debts required to be preferred by law) equally with all other unsubordinated and unsecured obligations (other than subordinated obligations, if any) of the Issuer from time to time outstanding;

Negative Pledge So long as any Senior Notes remain Outstanding, the Issuer undertakes not to secure any Relevant Debt (as defined in Condition 6.2 of the Terms and Conditions) without at the same time granting security in respect of those Senior Notes equally and ratably with such Relevant Debt or providing such other security as may be approved by Extraordinary Resolution (as defined in the Terms and Conditions) of the holders of Senior Notes;

Stamp Duty/UST In terms of the Stamp Duties Act, 1968, the original issue and the registration of transfer of Notes qualifying as “instruments” as contemplated in section 24J of the Income Tax Act are exempt from stamp duty.

In terms of the Uncertificated Securities Act, 1998, no uncertificated securities tax is payable on the issue or on the transfer of securities qualifying as “instruments” as contemplated in section 24J of the Income Tax Act.

Accordingly, no stamp duty (as contemplated in the Stamp Duties Act, 1968) and no uncertificated securities tax (as contemplated in the Uncertificated Securities Act, 1998) is payable on the issue or on the transfer of Notes;

Taxation As at the date of this Programme Memorandum all payments in respect of the Notes will be made without withholding or deduction for or on account of taxes levied in the Republic of South Africa. In the event that certain withholding tax or such other deduction is required by law, then the Issuer will, subject to certain exceptions as provided in Condition 12 of the Terms and Conditions, pay such additional amounts as shall be necessary in order that the net amounts received by the Noteholders after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes in the absence of such withholding or deduction;

Governing Law The Notes will be governed by, and construed in accordance with the laws of the Republic of South Africa;

Listing The Programme has been listed by BESA. Notes issued under the Programme may be listed on BESA or on a successor exchange to BESA or such other or further exchange or exchanges as may be selected by the Issuer in relation to such issue. Unlisted Notes may also be issued under the Programme. The Applicable Pricing Supplement in respect of a Tranche will specify whether or not such Notes will be listed and, if so, on which exchange;

Register The Register maintained by the Agent in terms of the Terms and Conditions;

5 Selling Restrictions There are selling restrictions in relation to the United States, the United Kingdom, the Republic of South Africa and certain other jurisdictions (see “Subscription and Sale”) and such other restrictions as may be required to be met in relation to an offering or sale of a particular Tranche of Notes which may be included in the Applicable Pricing Supplement;

Blocked Rand Blocked Rand may be used for the purchase of Notes, subject to South African Exchange Control Regulations;

Noteholder(s) The holders of the Registered Notes (as recorded in the Register) and/or Bearers of the Bearer Notes and/or the Payees of the Order Notes; and

Terms and Conditions The terms and conditions of the Notes set out below.

6 FORM OF THE NOTES

Notes may be issued in Registered, Bearer, Order or in uncertificated form, as specified in the Applicable Pricing Supplement.

The Notes may be listed on the Bond Exchange of South Africa, a licensed exchange in terms of the Securities Services Act, 2004 (“BESA”) and/or a successor exchange to BESA or such other or further exchange or exchanges as the Issuer may select in relation to an issue. Each Tranche of Notes listed on BESA will be issued in accordance with the terms and conditions set out below in this Programme Memorandum (the “Terms and Conditions”) in the form of a single registered certificate, without interest coupons (the “Global Certificate”), which will be lodged and immobilised in STRATE Limited (Registration number 1998/022242/06), or its nominee, registered as a central securities depository in terms of the Securities Services Act, 2004 (the “Central Depository”), which forms part of the settlement system of BESA. This will entail that the Notes, represented by the Global Certificate, will be deposited with and registered in the name of, and for the account of, the Central Depository.

All Notes not issued in uncertificated format or not represented by a Global Certificate, including Bearer Notes and Order Notes, (each as defined below) shall be issued in definitive form Individual(“ Certificates”).

LISTED REGISTERED NOTES

Beneficial interests in Notes which are represented by a Global Certificate lodged in the Central Depository (“Beneficial Interests”) may, in terms of existing law and practice, be transferred through the Central Depository by way of book entry in the securities accounts of the participants in the Central Depository (“Participants”), who are also approved by BESA to act as settlement agents and therefore perform electronic settlement of both funds and scrip on behalf of market participants. A certificate or other document issued by a Participant as to the nominal amount of such Beneficial Interest in Notes standing to the account of any person shall be prima facie proof of such Beneficial Interest.

Beneficial Interests in Notes may be exchanged, by the Issuer, for Individual Certificates in accordance with the provisions of Condition 15 of the Terms and Conditions. The Notes represented by the Global Certificate and Individual Certificates will be registered in the names of the Noteholders in the register of Noteholders maintained by the Agent (the “Register”). The Issuer shall regard the Register as the conclusive record of title to the Notes. With regard to Notes listed on BESA, the Central Depository shall be recognised by the Issuer as the owner of the Notes represented by the Global Certificate and the registered holders of Individual Certificates shall be recognised by the Issuer as the owners of the Notes represented by such Individual Certificates.

UNLISTED REGISTERED NOTES

Transferable and non-transferable unlisted Registered Notes may be issued under the Programme. Transferable unlisted Registered Notes may be transferable in terms of the applicable rules and procedures of the Agent and/or Condition 16.1 of the Terms and Conditions.

BEARER AND ORDER NOTES

Notes issued in bearer form (“Bearer Notes”) or in order form (“Order Notes”) and which are interest bearing shall, if specified in the Applicable Pricing Supplement, have interest coupons (“Coupons”) and, if specified in the Applicable Pricing Supplement, talons for further Coupons (“Talons”) attached on issue. Notes repayable in instalments shall have receipts (“Receipts”) for the payment of the relevant Instalment Amount(s) attached on issue.

Title to Bearer Notes and/or Receipts, Coupons and Talons attached on issue to the Certificate evidencing such Bearer Notes will pass by delivery of such Certificate, Receipt, Coupon or Talon (as the case may be). Title to Order Notes and/or any Receipts, Coupons and Talons attached on issue to the Certificate evidencing such Order Note, will pass by way of endorsement and delivery of such Certificate, Receipt, Coupon orTalon (as the case may be).

UNCERTIFICATED NOTES

All transactions in uncertificated securities as contemplated in the Securities Services Act, 2004 (“Uncertificated Notes”) will be cleared and settled in accordance with the rules of the Central Depository. The Participant concerned shall provide a regular statement to the person on whose behalf such Uncertificated Notes are held. This statement shall set out the number and identity of the Uncertificated Notes held by the Participant on such person’s behalf.

Transfer of ownership in Uncertificated Notes shall only pass upon the debiting and crediting respectively, of both the account in the Sub-register from which the transfer is effected and the account in the Sub-register to which transfer is to be made, in accordance with the rules of the Central Depository.

7 PRO FORMA PRICING SUPPLEMENT

Set out below is the form of Pricing Supplement which will be completed for each Tranche of Notes issued under the Programme:

The Standard Bank of South Africa Limited (Incorporated with limited liability in South Africa under registration number 1962/000738/06)

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes] Under its ZAR• 000 000 000 Domestic Medium Term Note Programme

This document constitutes the Pricing Supplement relating to the issue of Notes described herein. Terms used herein shall be deemed to be defined as such for the purposes of the terms and conditions (the “Terms and Conditions”) set forth in the Programme Memorandum dated [•] (the “Programme Memorandum”), as updated and amended from time to time. This Pricing Supplement must be read in conjunction with such Programme Memorandum. To the extent that there is any conflict or inconsistency between the contents of this Pricing Supplement and the Programme Memorandum, the provisions of this Pricing Supplement shall prevail.

DESCRIPTION OF THE NOTES

1. Issuer The Standard Bank of South Africa Limited

2. Status of Notes [Senior/Subordinated] [Secured/Unsecured]

3. (a) Tranche Number [ ] (b) Series Number [ ]

4. Aggregate Principal Amount [ ]

5. Interest/Payment Basis [Fixed Rate/Floating Rate/Zero Coupon/lndexed Interest/Indexed Redemption Amount/Partly Paid/ Instalment/Exchangeable/other]

6. Form of Notes [Registered Notes/Bearer Notes/Order Notes]

7. Automatic/Optional Conversion from one [insert details including date for conversion] Interest/Payment Basis to another

8. Issue Date [ ]

9. Business Centre [ ]

10. Additional Business Centre [ ]

11. Specified Denomination [ ]

12. Issue Price [ ]

13. Interest Commencement Date [ ]

14. Maturity Date [ ]

15. Specified Currency [ ]

16. Applicable Business Day Convention [Floating Rate Business Day/Following Business Day/Modified Following Business Day/Preceding Business Day/other convention – insert details]

8 17. Calculation Agent [ ]

18. Paying Agent [ ]

19. Specified office of the Paying Agent [ ]

20. Agent [ ]

21. Final Redemption Amount [ ]

PARTLY PAID NOTES

22. Amount of each payment comprising the [ ] Issue Price

23. Date upon which each payment is to be [ ] made by Noteholder

24. Consequences (if any) of failure to make [ ] any such payment by Noteholder

25. Interest Rate to accrue on the first and [ ] percent subsequent instalments after the due date for payment of such instalments

INSTALMENT NOTES

26. Instalment Dates [ ]

27. Instalment Amounts (expressed as a [ ] percentage of the aggregate Principal Amount of the Notes)

FIXED RATE NOTES

28. (a) Fixed Interest Rate(s) [ ] percent (b) Interest Payment Date(s) [Dates/Periods] (c) Initial Broken Amount [ ] (d) Final Broken Amount [ ] (e) Any other terms relating to the particular [ ] method of calculating interest

FLOATING RATE NOTES

29. (a) Interest Payment Date(s) [ ] (b) Interest Period(s) [ ] (c) Definitions of Business Day [ ] (if different from that set out in Condition 1) (d) Interest Rate(s) [ ] percent (e) Minimum Interest Rate [ ] percent (f) Maximum Interest Rate [ ] percent (g) Other terms relating to the method of [ ] calculating interest (e.g. Day Count Fraction, rounding up provision, if different from Condition 8.2) 30. Manner in which the Interest Rate is to be [ISDA Determination/Screen Rate determined Determination/other (insert details)]

9 31. Margin [(+/–) • percent to be added to/subtracted from the relevant (ISDA Rate/Reference Rate)]

32. If ISDA Determination (a) Floating Rate [ ] (b) Floating Rate Option [ ] (c) Designated Maturity [ ] (d) Reset Date(s) [ ]

33. If Screen Determination (a) Reference Rate (including relevant [e.g. ZAR-JIBAR-SAFEX] period by reference to which the Interest Rate is to be calculated) (b) Interest Determination Date(s) [ ] (c) Relevant Screen Page and Reference [ ] Code

34. If Interest Rate to be calculated otherwise [ ] than by reference to 32 or 33 above, insert basis for determining Interest Rate/Margin/ Fall Back provisions

35. If different from the Calculation Agent, agent [ ] responsible for calculating amount of principal and interest

MIXED RATE NOTES

36. Period(s) during which the interest rate for the Mixed Rate Notes will be (as applicable) that for: (a) Fixed Rate Notes [ ] (b) Floating Rate Notes [ ] (c) Indexed Notes [ ] (d) Other [ ]

ZERO COUPON NOTES

37. (a) Implied Yield [ ] (b) Reference Price [ ] (c) Any other formula or basis for [ ] determining amount(s) payable

INDEXED NOTES

38. (a) Type of Indexed Notes [Indexed Interest Notes/Indexed Redemption Amount Notes] (b) Index/Formula by reference to which [ ] Interest Amount/Final Redemption Amount is to be determined (c) Manner in which the Interest Amount/ [ ] Final Redemption Amount is to be determined (d) Interest Payment Date(s) [ ] (e) If different from the Calculation Agent, [ ] agent responsible for calculating amount of principal and interest (f) Provisions where calculation by reference [ ] to Index and/or Formula is impossible or impracticable

10 EXCHANGEABLE NOTES

39. Mandatory Exchange applicable? [Yes/No]

40. Noteholders’ Exchange Right applicable? [Yes/No]

41. Exchange Securities [ ]

42. Manner of determining Exchange Price [ ]

43. Exchange Period [ ]

44. Other [ ]

OTHER NOTES

45. If the Notes are not Partly Paid Notes, [ ] Instalment Notes, Fixed Rate Notes, Floating Rate Notes, Mixed Rate Notes, Zero Coupon Notes, Indexed Notes or Exchangeable Notes or if the Notes are a combination of any of the aforegoing, set out the relevant description and any additional terms and conditions relating to such Notes

PROVISIONS REGARDING REDEMPTION/ MATURITY

46. Prior consent of Registrar of Banks required [Yes/No] for any redemption prior to the Maturity Date?

47. Redemption at the option of the Issuer: [Yes/No] if yes: (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) and [ ] method, if any, of calculation of such amount(s) (c) Minimum period of notice (if different to [ ] Condition 11.3) (d) If redeemable in part: Minimum Redemption Amount(s) [ ] Higher Redemption Amount(s) [ ] (e) Other terms applicable on Redemption [ ]

48. Redemption at the option of the Noteholders holding Senior Notes: [Yes/No] if yes: (a) Optional Redemption Date(s) [ ] (b) Optional Redemption Amount(s) and [ ] method, if any, of calculation of such amount(s) (c) Minimum period of notice (if different to [ ] Condition 11.4) (d) If redeemable in part: Minimum Redemption Amount(s) [ ] Higher Redemption Amount(s) [ ] (e) Other terms applicable on Redemption [ ] (f) Attach pro forma put notice(s)

49. Early Redemption Amount(s) payable on [ ] redemption for taxation reasons or on Event of Default

11 GENERAL

50. Qualification of Notes as Secondary Capital [Yes/No] under the Banks Act, 1990

51. Qualification of Notes as Tertiary Capital [Yes/No] under the Banks Act, 1990

52. Condition 7.4 to apply (deferral of interest [Yes/No] and principal payments)?

53. Additional selling restrictions [ ]

54. (a) International Securities Numbering (ISIN) [ ] (b) Stock Code [ ]

55. Financial Exchange [ ]

56. If syndicated, names of managers [ ]

57. Receipts attached? If yes, number of [Yes/No] Receipts attached [ ]

58. Coupons attached? If yes, number of [Yes/No] Coupons attached [ ]

59. Talons attached? If yes, number of [Yes/No] Talons attached [ ]

60. Credit Rating assigned to Notes (if any) [ ]

61. Stripping of Receipts and/or Coupons [Yes/No] prohibited as provided in Condition 16.4?

62. Governing law (if the laws of South Africa [ ] are not applicable)

63. Other Banking Jurisdiction [ ]

64. Last Day to Register [ ], which shall mean that the “books closed period” (during which the Register will be closed) will be from each Last Day to Register to the applicable Payment Day until the date of redemption

65. Stabilisation Manager (if any) [ ]

66. Other provisions [ ]

Application is hereby made to list this issue of Notes on [insert date].

THE STANDARD BANK OF SOUTH AFRICA LIMITED

Issuer

By:______By:______

12 TERMS AND CONDITIONS OF THE NOTES

The following are the Terms and Conditions of the Notes to be issued by the Issuer under the Programme. Notes will be issued in individual Tranches which, together with other Tranches, may form a Series of Notes. Before the Issuer issues any Tranche of Notes, the Issuer shall complete and sign the Applicable Pricing Supplement, based on the pro forma Pricing Supplement included in the Programme Memorandum, setting out details of such Notes. The Applicable Pricing Supplement in relation to any Tranche of Notes may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with the following Terms and Conditions, replace or modify the following Terms and Conditions for the purpose of such Tranche of Notes. The Applicable Pricing Supplement will be attached to each Certificate.

1. INTERPRETATION

In these Terms and Conditions, unless inconsistent with the context or separately defined in the Applicable Pricing Supplement, the following expressions shall have the following meanings:

“Agent” the Issuer, unless the Issuer elects to appoint, in relation to a particular Tranche or Series of Notes, another entity as Agent in accordance with the Agency Agreement, in which event that other entity shall act as an Agent in respect of that Tranche or Series of Notes;

“Agency Agreement” the Amended and Restated Agency Agreement dated 20 October 2005 and made between the Issuer, the Agent, the Calculation Agent and the Paying Agent, as may be further supplemented and/or amended and/or restated from time to time;

“Applicable Pricing Supplement” the Pricing Supplement relating to each Tranche of Notes;

“Applicable Procedures” the rules and operating procedures for the time being of the Central Depository, Settlement Agents, BESA and/or any Exchange, as the case may be;

“Bearer” the bearer of a Certificate evidencing a Bearer Note or of a Receipt or Coupon attached to such Certificate on issue;

“Bearer Note” a Note payable to the Bearer thereof, transferable by way of delivery in accordance with Condition 16.2 and the term “Bearer Note” shall include the rights to payment of any interest or principal represented by a Coupon or Receipt (if any) attached on issue to the Certificate evidencing such Bearer Note;

“Beneficial Interest” the undivided share of a co-owner of the Notes represented by a Global Certificate as provided in section 14 of the Securities Services Act, 2004;

“BESA” the Bond Exchange of South Africa, a licensed exchange in terms of the Securities Services Act, 2004 or any exchange which operates as a successor exchange to BESA;

“Business Day” a day (other than a Saturday or Sunday or public holiday within the meaning of the Public Holidays Act, 1994) which is a day on which commercial banks settle ZAR payments in Johannesburg or any Additional Business Centre specified in the Applicable Pricing Supplement save that if the Specified Currency is not ZAR, “Business Day” shall mean a day (other than a Saturday or Sunday) which is a day on which commercial banks and foreign exchange markets settle payments in the principal financial centre of the Specified Currency and in each (if any) Additional Business Centre, save further that if the Applicable Pricing Supplement so provides, “Business Day” shall include a Saturday;

13 “Calculation Agent” the Issuer, unless the Issuer elects to appoint, in relation to a particular Tranche or Series of Notes, another entity as Calculation Agent in accordance with the Agency Agreement, in which event that other entity shall act as a calculation agent in respect of that Tranche or Series of Notes;

“Central Depository” STRATE Limited (Registration number 1998/022242/06), or its nominee, a public company registered as a central securities depository in terms of the Securities Services Act, 2004, or any additional or alternate depository approved by the Issuer;

“Certificate” a Global Certificate or Individual Certificate;

“Class of Noteholders” the holders of a Series of Notes or, where appropriate, the holders of different Series of Notes;

“Coupon” an interest coupon evidencing title to an interest payment in respect of an interest bearing Note which is a Bearer Note or an Order Note, attached on issue to the Certificate evidencing such interest bearing Note and any reference to a Coupon shall, unless the context otherwise requires, be deemed to include a reference to a Talon;

“Dealer” The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking Division), Deutsche Bank AG, Johannesburg Branch, J.P. Morgan Securities South Africa (Proprietary) Limited and any other additional Dealer appointed under the Programme from time to time, which appointment may be for a specific issue or on an ongoing basis, subject to the Issuer’s right to terminate the appointment of any Dealer;

“Early Redemption Amount” the amount at which the Notes will be redeemed by the Issuer pursuant to the provisions of Condition 11.2 and/or Condition 14, as set out in Condition 11.5;

“Endorsement” an “indorsement”, mutatis mutandis, within the meaning of the Bills of Exchange Act, 1964;

“Endorsement in Blank” an Endorsement which specifies no named Payee;

“Event of Default” an event of default by the Issuer as set out in Condition 14;

“Exchange” any existing or future exchange or exchanges on which any Notes may be listed and which is referred to in the Applicable Pricing Supplement;

“Exchangeable Notes” Notes which may be redeemed by the Issuer in the manner specified in the Applicable Pricing Supplement by the delivery to the Noteholders of cash or of so many of the Exchange Securities as are determined in accordance with the Applicable Pricing Supplement;

“Exchange Period” in respect of Exchangeable Notes to which the Noteholders’ Exchange Right applies (as specified in the Applicable Pricing Supplement), the period specified in the Applicable Pricing Supplement during which such right may be exercised;

“Exchange Price” the value specified in the Applicable Pricing Supplement according to which the number of Exchange Securities which may be delivered in redemption of an Exchangeable Note will be determined;

“Exchange Securities” the securities specified in the Applicable Pricing Supplement which may be delivered by the Issuer in redemption of Exchangeable Notes to the value of the Exchange Price;

“Extraordinary Resolution” a resolution passed at a meeting (duly convened) of the Noteholders by a majority consisting of not less than 66.6% of the persons voting thereat upon a show of hands or if a poll be duly demanded, then by a majority consisting of not less than 66.6% of the votes given on such poll;

14 “Final Redemption Amount” the amount of principal payable in respect of each Note upon final redemption thereof, as specified in the Applicable Pricing Supplement;

“Fixed Interest Rate” the rate or rates of interest applicable to Fixed Rate Notes, as specified in the Applicable Pricing Supplement;

“Fixed Rate Notes” Notes which will bear interest at the Fixed Interest Rate, as specified in the Applicable Pricing Supplement and more fully described in Condition 8.1;

“Floating Rate Notes” Notes which will bear interest as specified in the Applicable Pricing Supplement and more fully described in Condition 8.2;

“Global Certificate” the single certificate, without interest coupons, registered in the name of the Central Depository representing those Notes issued under the Terms and Conditions which are lodged and immobilised in the Central Depository, other than those Notes represented by Individual Certificates;

“Implied Yield” the yield accruing on the Issue Price of Zero Coupon Notes, as specified in the Applicable Pricing Supplement;

“Indexed Interest Notes” Notes in respect of which the Interest Amount is calculated by reference to such index and/or formula as specified in the Applicable Pricing Supplement;

“Indexed Notes” an Indexed Interest Note and/or an Indexed Redemption Amount Note, as applicable;

“Indexed Redemption Amount Notes in respect of which the Final Redemption Amount is calculated by Notes” reference to an index and/or a formula as specified in the Applicable Pricing Supplement;

“Individual Certificate” (a) in respect of Registered Notes: a Note in the definitive registered form of a single Certificate and, in respect of Registered Notes which are listed, being a Certificate exchanged for a Beneficial Interest in the Notes represented by the Global Certificate in accordance with Condition 15 and any further Certificate issued in consequence of a transfer thereof;

(b) in respect of Bearer Notes: a Note in the definitive bearer form of a single Certificate together with Coupons and/or Receipts, if applicable;

(c) in respect of Order Notes: a Note in the definitive order form of a single Certificate together with Coupons and/or Receipts, if applicable;

“Instalment Amount” the amount expressed as a percentage of the Principal Amount of an Instalment Note, being an instalment of principal (other than the final instalment) on an Instalment Note;

“Instalment Notes” Notes redeemable in Instalment Amounts by the Issuer on an amortised basis on different Instalment Dates, as specified in the Applicable Pricing Supplement;

“Interest Amount” the amount of interest payable in respect of each Principal Amount of Fixed Rate Notes, Floating Rate Notes and Indexed Notes, as determined in accordance with Condition 8.1, 8.2F and 8.4 respectively;

“Interest Commencement Date” the first date from which interest on the Notes, other than Zero Coupon Notes, will accrue, as specified in the Applicable Pricing Supplement;

“Interest Payment Date” the Interest Payment Date(s) specified in the Applicable Pricing Supplement or if no express Interest Payment Date(s) is/are specified in the Applicable Pricing Supplement, each date which occurs after a certain period following the preceding Interest Payment Date (being such period as is specified in the Applicable Pricing Supplement) or, in the case of the first Interest Payment Date, after the Interest Commencement Date;

15 “Interest Rate” the rate or rates of interest applicable to Notes other than Zero Coupon Notes and Fixed Rate Notes;

“ISDA” International Swaps and Derivatives Association, Inc.;

“ISDA Definitions” the 2000 ISDA Definitions as published by ISDA (as amended, supplemented, revised or republished from time to time);

“Issuer” The Standard Bank of South Africa Limited (Registration number 1962/000738/06);

“JSE” JSE Limited (registration number 2005/022939/06), a public company incorporated in accordance with the laws of the Republic of South Africa, licensed as an exchange under the Securities Services Act, 2004, as amended from time to time;

“Last Day to Register” with respect to a particular Series of Notes (as specified in the Applicable Pricing Supplement), the last date or dates preceding a Payment Day on which the Agent will accept Transfer Forms and record the transfer of Notes in the Register for that particular Series of Notes and whereafter the Register is closed for further transfers or entries until the Payment Day and in the case of Notes listed on the JSE, shall mean “Last Day to Trade” as set out in the Listing Requirements of the JSE;

“Mandatory Exchange” if specified in the Applicable Pricing Supplement, the obligation of the Issuer to redeem Exchangeable Notes on the Maturity Date by delivery of Exchange Securities to the relevant Noteholders of Exchangeable Notes;

“Mixed Rate Notes” Notes which will bear interest over respective periods at differing interest rates applicable to any combination of Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes or Indexed Notes, each as specified in the Applicable Pricing Supplement and as more fully described in Condition 8.3;

“Noteholders” the holders of the Registered Notes (as recorded in the Register) and/or the Bearers of the Bearer Notes and/or the Payees of the Order Notes;

“Noteholders’ Exchange Right” if specified in the Applicable Pricing Supplement, the right of Noteholders of Exchangeable Notes to elect to receive delivery of the Exchange Securities in lieu of cash from the Issuer upon redemption of such Notes;

“Notes” the notes issued or to be issued by the Issuer under the Programme and represented by a Certificate, together with Receipts and/or Coupons (if any);

“Order Note” a Note payable to the Payee thereof, transferable by way of Endorsement and delivery in accordance with Condition 16.3 and the term “Order Note” shall include the rights to interest or principal represented by a Coupon or Receipt (if any) attached on issue to the Certificate evidencing such Order Note;

“Outstanding” in relation to the Notes, all the Notes issued other than:

(a) those which have been redeemed in full;

(b) those in respect of which the date for redemption in accordance with the Terms and Conditions has occurred and the redemption moneys wherefor (including all interest (if any) accrued thereon to the date for such redemption and any interest (if any) payable under the Terms and Conditions after such date) remain available for payment against presentation of Certificates;

(c) those which have been purchased and cancelled as provided in Condition 11;

(d) those which have become void under Condition 13;

16 (e) Notes represented by those mutilated or defaced Certificates which have been surrendered in exchange for replacement Certificates pursuant to Condition 15;

(f) (for the purpose only of determining how many Notes are Outstanding and without prejudice to their status for any other purpose), those Notes represented by Certificates alleged to have been lost, stolen or destroyed and in respect of which replacement Certificates have been issued pursuant to Condition 15,

provided that for each of the following purposes, namely:

(i) the right to attend and vote at any meeting of the Noteholders; and

(ii) the determination of how many and which Notes are for the time being Outstanding for the purposes of Conditions 20 and 21,

all:

(i) Notes (if any) which are for the time being held by the Issuer (subject to any applicable law) or by any person for the benefit of the Issuer and not cancelled (unless and until ceasing to be so held); and

(ii) Receipts and Coupons,

shall be deemed not to be Outstanding;

“Participants” depositary institutions accepted by the Central Depository as participants in terms of the Securities Services Act, 2004;

“Partly Paid Notes” Notes which are issued with the Issue Price partly paid and which Issue Price is paid up fully by the Noteholder in instalments (as specified in the Applicable Pricing Supplement);

“Payee” a person reflected (either as the subscriber or by way of Endorsement) as the payee on a Certificate evidencing an Order Note or a Receipt or Coupon, attached thereto on issue, and to whom such Certificate, Receipt or Coupon (as the case may be) has been delivered;

“Paying Agent” the Issuer, unless the Issuer elects to appoint, in relation to a particular Tranche or Series of Notes, another entity as Paying Agent, in which event that other entity shall act as a Paying Agent in respect of that particular Tranche or Series of Notes;

“Payment Day” any day which is a Business Day and upon which a payment is due by the Issuer in respect of any Notes;

“Principal Amount” the nominal amount of each Note specified on the Certificate evidencing such Note;

“Programme” the ZAR40 000 000 000 Domestic Medium Term Note Programme under which the Issuer may from time to time issue Notes;

“Receipt” a receipt evidencing title to payment of an Instalment Amount payable on an Instalment Note which is a Bearer Note or an Order Note, attached upon issue to the Certificate evidencing such Instalment Note;

“Registrar of Banks” the Registrar of Banks in accordance with the Banks Act, 1990;

“Register” the register maintained by the Agent in terms of Condition 17 including any Sub-register if applicable;

17 “Registered Note” a Note issued in registered form and transferable in accordance with Condition 16.1 and which may include Uncertificated Notes;

“Relevant Date” in respect of any payment relating to the Notes, the date on which such payment first becomes due, except that, in relation to monies payable to the Central Depository in accordance with these Terms and Conditions, it means the first date on which: (i) the full amount of such monies have been received by the Central Depository, (ii) such monies are available for payment to the holders of Beneficial Interests, and (iii) notice to that effect has been duly given to such holders in accordance with the Applicable Procedures;

“Representative” a person duly authorised to act on behalf of a Noteholder, who may be regarded by the Issuer, the Agent and the Paying Agent (all acting in good faith) as being duly authorised based upon the tacit or express representation thereof by such Representative, in the absence of express notice to the contrary from such Noteholder;

“Senior Notes” Notes issued with the status set out in Condition 5 and being subject to the negative pledge set out in Condition 6;

“Series” a Tranche of Notes together with any further Tranche or Tranches of Notes which are: (i) expressed to be consolidated and form a single series; and (ii) identical in all respects (including as to listing) except for their respective Issue Dates, Interest Commencement Dates and/or Issue Prices;

“Settlement Agent” a Participant, approved by BESA or any other Exchange to perform electronic net settlement of both funds and scrip on behalf of market participants;

“Stanbank Group” the Issuer, its holding company and any subsidiaries of its holding company;

“Subordinated Notes” Notes issued with the status set out in Condition 7;

“Sub-register” a sub-register as contemplated in Section 91A of the Companies Act, 1973;

“Talon” a talon entitling the holder to receive further Coupons in relation to an interest bearing Bearer Note or Order Note, if specified in the Applicable Pricing Supplement, attached to the Certificate evidencing such interest bearing Note;

“Terms and Conditions” the terms and conditions incorporated in this section headed “Terms and Conditions of the Notes” and in accordance with which the Notes will be issued;

“Tranche” in relation to any particular Series, all Notes which are identical in all respects (including as to listing);

“Transfer Form” the written form for the transfer of a Registered Note, in the form approved by the Agent, and signed by the transferor and transferee;

“Uncertificated Note” a Note that is an uncertificated security as contemplated in the Securities Services Act, 2004;

“ZAR” the lawful currency of the Republic of South Africa, being South African Rand, or any successor currency;

“ZAR-JIBAR-SAFEX” the mid-market rate for deposits in ZAR for a period of the Designated Maturity which appears on the Reuters Screen SAFEY Page as at 12h00, Johannesburg time on the relevant date, or any successor rate; and

“Zero Coupon Notes” Notes which will be offered and sold at a discount to their Principal Amount or at par and will not bear interest other than in the case of late payment.

Any reference in this Programme Memorandum to any statute, regulation or other legislation shall be a reference to that statute, regulation or other legislation at the date of this Programme Memorandum, as amended or substituted from time to time.

18 2. ISSUE

2.1 Subject to the prior consent of the Registrar of Banks (to the extent required), Notes may be issued by the Issuer in Tranches pursuant to the Programme. A Tranche of Notes may, together with a further Tranche or Tranches, form a Series of Notes issued under the Programme.

2.2 The Noteholders are deemed to have notice of, are entitled to the benefit of, and are subject to, all the provisions of the Applicable Pricing Supplement and the Agency Agreement.

2.3 The Applicable Pricing Supplement for each Tranche of Notes is (to the extent relevant) incorporated herein for the purposes of those Notes and supplements these Terms and Conditions. The Applicable Pricing Supplement may specify other terms and conditions which shall, to the extent so specified or to the extent inconsistent with these Terms and Conditions, replace or modify these Terms and Conditions for the purposes of those Notes.

2.4 Capitalised expressions used in these Terms and Conditions and not herein defined shall bear the meaning assigned to them in the Applicable Pricing Supplement.

3. FORM AND DENOMINATION

3.1 General

Notes will be issued in such denominations as may be determined by the Issuer and as specified in the Applicable Pricing Supplement.

All payments in relation to the Notes will be made in the Specified Currency.

Each Note shall be a Senior Note or a Subordinated Note, as specified in the Applicable Pricing Supplement. Any Note may be a Partly Paid Note, Instalment Note or an Exchangeable Note.

Each Note, whether a Senior Note or a Subordinated Note, may be a Fixed Rate Note, a Floating Rate Note, a Zero Coupon Note, an Indexed Interest Note, an Indexed Redemption Amount Note, a Mixed Rate Note or a combination of any of the foregoing or such other types of Note as may be determined by the Issuer, as specified in the Applicable Pricing Supplement.

Listed and/or unlisted Notes may be issued under the Programme.

3.2 Registered Notes

Each Tranche of Registered Notes listed on BESA will be issued in the form of a Global Certificate, which Certificate will be deposited with and registered in the name of, and for the account of, the Central Depository. An owner of a Beneficial Interest in the Notes represented by the Global Certificate shall be entitled to exchange such Beneficial Interest for an Individual Certificate in accordance with Condition 15.

Unlisted Registered Notes may be issued under the Programme.

3.3 Bearer Notes and Order Notes

Bearer Notes and Order Notes will be evidenced by Individual Certificates. Bearer Notesand Order Notes, other than Zero Coupon Notes, may have Coupons and (if specified in the Applicable Pricing Supplement), Talons attached to the Certificate on issue. Instalment Notes which are either Bearer Notes or Order Notes may have Receipts attached to the Certificate on issue.

3.4 Uncertificated Notes

Uncertificated Notes may be issued under the Programme.

4. TITLE

4.1 Registered Notes

Subject to what is set out below, title to Registered Notes shall pass upon registration of transfer in the Register in accordance with Condition 16.1. The Issuer shall recognise and treat the registered holder of any Registered Note as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes and shall not be bound to enter any trust in the Register or to take notice of or to accede to the execution of any trust (express, implied or constructive) to which any Registered Note may be subject. 19 4.2 Bearer Notes

Title to Bearer Notes (including rights to Instalment Amounts and/or interest thereon, as applicable) will pass by delivery of the Certificate evidencing such Note or of the Receipt and/or Coupon relating thereto, as the case may be, in accordance with Condition 16.2. The Issuer, the Agent and the Paying Agent shall recognise and treat the Bearer of any such Certificate, Receipt or Coupon as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or writing thereon or notice of any previous loss or theft thereof) for all purposes.

4.3 Order Notes

Title to Order Notes (including rights to Instalment Amounts and/or interest thereon, as applicable) will initially pass by Endorsement and delivery of the Certificate evidencing such Note or of the Receipt and/or Coupon relating thereto, as the case may be, in accordance with Condition 16.3. Any Certificate evidencing an Order Note or such Receipt or Coupon upon which the last Endorsement is an Endorsement in Blank shall be treated as a Bearer Note, for so long as that Certificate is not subject to further Endorsement.

The Issuer and the Agent shall recognise and treat the person who from the face of the Certificate, Receipt or Coupon relating to an Order Note appears to be the Payee thereof as the absolute owner thereof (whether or not overdue and notwithstanding any notice of ownership or notice of any previous loss or theft thereof) for all purposes and payment to such person or their Representative shall discharge the Issuer from all liability to the Payee in relation to such Certificate, Receipt or Coupon, as the case may be, even if such Endorsement has been forged or made without authority.

Provided the Issuer pays any amount due upon presentation and surrender of a Certificate evidencing an Order Note, or any Receipt or Coupon attached thereto on issue, in good faith, it shall not be incumbent upon the Issuer or the Agent to determine or prove that the Endorsement of the Payee making such Endorsement was made by or under the authority of the person whose Endorsement it purports to be.

4.4 Uncertificated Notes

Ownership of Uncertificated Notes shall be evidenced by the regular statement sent by Participants tothe person on whose behalf such Participant holds such Notes. Transfer of ownership in Uncertificated Notes shall pass only upon the debiting and crediting, respectively, of both the account in the Sub-register from which the transfer is effected and the account in the Sub-register to which transfer is to be made, in accordance with the rules of the Central Depository.

5. STATUS OF SENIOR NOTES

Unless otherwise specified in the Applicable Pricing Supplement, Senior Notes are direct, unconditional, unsubordinated and unsecured obligations of the Issuer and rank pari passu among themselves and, subject to Condition 6 and save for certain debts required to be preferred by law, rank equally with all other present and future unsecured and unsubordinated obligations of the Issuer from time to time owing.

6. NEGATIVE PLEDGE

6.1 This Condition 6 shall apply only to Senior Notes. For as long as any Senior Notes remain Outstanding, the Issuer undertakes not to create or permit the creation of any Encumbrance (as defined below) over any of its present or future assets or revenues to secure any present or future Relevant Debt (as defined below) without at the same time securing all Senior Notes equally and rateably with such Relevant Debt or providing such other security as may be approved by Extraordinary Resolution of the holders of those Senior Notes, unless the provision of any such security is waived by an Extraordinary Resolution of the holders of those Senior Notes. The Issuer shall be entitled but not obliged, to form, or procure the formation of, a trust or trusts or appoint, or procure the appointment of, an agent or agents to hold any such rights of security for the benefit or on behalf of such Noteholders.

6.2 For the purposes of this Condition 6:

(a) “Encumbrance” means any mortgage, pledge, hypothecation, assignment, cession-in-securitatem debiti, deposit by way of security or any other agreement or arrangement (whether conditional or not and whether relating to existing or to future assets), having the effect of providing a security interest to a creditor or any agreement or arrangement to give any form of security to a creditor but excluding statutory preferences, any security interest arising by operation of law, any Encumbrance on or with respect to the receivables of the Issuer which is created pursuant to any securitisation scheme or like arrangement or any Encumbrance created over any asset acquired, developed or constructed by the Issuer provided that the Relevant Debt so secured shall not exceed the bona fide arm’s length market value of such asset or the cost of such 20 acquisition, development or construction (including all interest and other finance charges, any adjustments due to changes in circumstances and other charges reasonably incidental to such cost, whether contingent or otherwise) and where such market value or cost both apply, the higher of the two; and

(b) “Relevant Debt” means any present or future indebtedness of the Issuer in the form of, or represented by any bond, note or debenture issued by the Issuer and listed on a financial or stock exchange but excluding any option or warrant in respect of any share or index or any written acknowledgement of indebtedness issued by the Issuer to the South African Reserve Bank.

7. STATUS OF SUBORDINATED NOTES

7.1 Subordinated Notes constitute direct, unconditional, unsecured and subordinated obligations of the Issuer and rank pari passu among themselves and at least pari passu with all other present and future unsecured and subordinated obligations of the Issuer, save for those that have been accorded preferential rights by law.

7.2 Subject to applicable law, in the event of the dissolution of the Issuer or if the Issuer is placed into liquidation or is wound-up, the claims of the persons entitled to be paid amounts due in respect of Subordinated Notes shall be subordinated to all other claims in respect of any other indebtedness of the Issuer except for other Subordinated Indebtedness (as defined below). Accordingly, no amount due on the Subordinated Notes shall be eligible for set-off or shall be payable to any person entitled to be paid such amount in respect of the obligations of the Issuer thereunder until all other indebtedness of the Issuer which is admissible in any such dissolution, liquidation or winding-up (other than Subordinated Indebtedness) has been paid or discharged in full.

7.3 “Subordinated Indebtedness” means for the purposes of this Condition 7, any indebtedness of the Issuer, including any guarantee given by the Issuer, under which the right of payment of the person(s) entitled thereto is, or is expressed to be, or is required by any present or future agreement of the Issuer to be, subordinated to the rights of all unsubordinated creditors of the Issuer in the event of the dissolution, winding-up or placing into liquidation of the Issuer.

7.4 In the case of Subordinated Notes to which this Condition 7.4 is specified in the Applicable Pricing Supplement as being applicable, the Issuer shall be entitled, by notice in writing to the Noteholders (a “Deferral Notice”), to defer the due date for payment of any principal and/or interest in respect of such Notes, and, accordingly, on the giving of such notice, the due date for payment of such principal and/or interest (the “Deferred Payment”) shall be so deferred and the Issuer shall not be obliged to make payment thereof on the date upon which such Deferred Payment would otherwise have become due and payable, and such deferral of payment shall not constitute an Event of Default. The Issuer may not give a Deferral Notice except where the Registrar of Banks has required or requested a Deferred Payment for such period and subject to such conditions as the Registrar of Banks may prescribe. Interest at the Interest Rate will accrue on principal deferred as aforesaid, save that such interest shall only become due and payable at such time as the principal in respect of which it has accrued becomes due and payable as set out hereunder. Promptly upon being satisfied that the Registrar of Banks will not object to the payment of the whole or any part of any Deferred Payment, the Issuer shall give written notice thereof (a “Payment Notice”) to the Noteholders and the relevant Deferred Payment (or the appropriate part of it) and any accrued interest as aforesaid shall become due and payable on the fifth Business Day after the date of such Payment Notice. In addition, all Deferred Payments which remain unpaid upon the Issuer being placed into liquidation or being wound-up shall become due and payable upon such occurrence. When more than one Deferred Payment remains unpaid, payment in part thereof shall be made pro rata according to the amounts of such Deferred Payments remaining unpaid and of any accrued interest as aforesaid remaining unpaid.

8. INTEREST

8.1 Interest on Fixed Rate Notes

Except if otherwise specified in the Applicable Pricing Supplement, interest on Fixed Rate Notes will be paid on a six-monthly basis, on the Interest Payment Dates.

Each Fixed Rate Note bears interest on its Principal Amount (or, if it is a Partly Paid Note, the amount paid up) from (and including) the Interest Commencement Date to (but excluding) the Maturity Date at the rate(s) per annum equal to the Fixed Interest Rate(s). Such interest shall fall due for payment in arrear on the Interest Payment Date(s) in each year and on the Maturity Date if such date does not fall on an Interest Payment Date. The first payment of interest will be made on the Interest Payment Date next following the Interest Commencement Date.

21 Unless otherwise specified, the interest in respect of any six-monthly period shall be calculated by dividing the Fixed Interest Rate by two and multiplying the product by the Principal Amount (or, if it is a Partly Paid Note, the amount paid up), provided that:

(a) if an Initial Broken Amount is specified in the Applicable Pricing Supplement, then the first Interest Amount shall equal the Initial Broken Amount specified in the Applicable Pricing Supplement; and

(b) if a Final Broken Amount is specified in the Applicable Pricing Supplement, then the final Interest Amount shall equal the Final Broken Amount.

Save as provided in the preceding paragraphs, if interest is required to be calculated for a period of other than one year (in the case of annual interest payments) or other than six months (in the case of semi-annual interest payments), as the case may be, such interest shall be calculated on the basis of the actual number of days in such period divided by 365.

8.2 Interest on Floating Rate Notes

A. Interest Rate

The Interest Rate payable from time to time in respect of the Floating Rate Notes will be determined:

(a) on the basis of ISDA Determination; or

(b) on the basis of Screen Rate Determination; or

(c) on such other basis as may be determined by the Issuer,

all as specified in the Applicable Pricing Supplement.

B. ISDA Determination

Where ISDA Determination is specified in the Applicable Pricing Supplement as the manner in which the Interest Rate is to be determined, the Interest Rate for each Interest Period will be the relevant ISDA Rate (as defined below) plus or minus (as specified in the Applicable Pricing Supplement) the Margin (if any).

For the purposes of this Condition 8.2B:

“ISDA Rate” for an Interest Period means a rate equal to the Floating Rate that would be determined by such agent as is specified in the Applicable Pricing Supplement under a notional interest rate swap transaction if that agent were acting as Calculation Agent for that swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(a) the Floating Rate Option is as specified in the Applicable Pricing Supplement;

(b) the Designated Maturity is the period specified in the Applicable Pricing Supplement; and

(c) the relevant Reset Date is either: (i) if the applicable Floating Rate Option is based on the ZAR- JIBAR-SAFEX on the first day of that Interest Period; or (ii) in any other case, as specified in the Applicable Pricing Supplement.

“Floating Rate”, “Floating Rate Option”, “Designated Maturity” and “Reset Date” have the meanings given to those expressions in the ISDA Definitions.

When this Condition 8.2B applies, in respect of each Interest Period such Agent as is specified in the Applicable Pricing Supplement shall have discharged its obligations under Condition 8.2F in respect of the determination of the Interest Rate if it has determined the Interest Rate in respect of such Interest Period in the manner provided in this Condition 8.2B.

C. Screen Rate Determination

Where Screen Rate Determination is specified in the Applicable Pricing Supplement as the manner in which the Interest Rate is to be determined, the Interest Rate for each Interest Period will, subject as provided below, be either:

(a) the offered quotation (if there is only one quotation on the Relevant Screen Page); or

(b) the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.00005 being rounded upwards) of the offered quotations, 22 for the Reference Rate(s) which appears or appear as the case may be, on the Relevant Screen Page as at 12h00 (Johannesburg time) on the Interest Determination Date in question, plus or minus (as specified in the Applicable Pricing Supplement) the Margin (if any), all as determined by the Calculation Agent. If five or more such offered quotations are available on the Relevant Screen Page, the highest (or, if there is more than one such highest quotation, one only of such quotations) and the lowest (or, if there is more than one such lowest quotation, one only of such quotations) shall be disregarded by such agent for the purpose of determining the arithmetic mean (rounded as provided above) of such offered quotations.

If the Relevant Screen Page is not available or if, in the case of (a) above, no such offered quotation appears or, in the case of (b) above, fewer than three such offered quotations appear, in each case at the time specified in the preceding paragraph, the Calculation Agent shall request the principal Johannesburg office of each of the Reference Banks (as defined below) to provide the Calculation Agent with its offered quotation (expressed as a percentage rate per annum) for the Reference Rate at approximately 12h00 (Johannesburg time) on the Interest Determination Date in question. If two or more of the Reference Banks provide the Calculation Agent with such offered quotations, the Interest Rate for such Interest Period shall be the arithmetic mean (rounded if necessary to the fifth decimal place with 0.00005 being rounded upwards) of such offered quotations plus or minus (as appropriate) the Margin (if any), all as determined by the Calculation Agent.

If the Interest Rate cannot be determined by applying the provisions of the preceding paragraphs of this Condition 8.2C, the Interest Rate for the relevant Interest Period shall be the rate per annum which the Calculation Agent determines as being the arithmetic mean (rounded if necessary to the fifth decimal place, with 0.00005 being rounded upwards) of the rates, as communicated to (and at the request of) the Calculation Agent by the Reference Banks or any two or more of them, at which rate such banks offered, at approximately 12h00 (Johannesburg time) on the relevant Interest Determination Date in respect of deposits in an amount approximately equal to the Principal Amount of the Notes of the relevant Series, for a period equal to that which would have been used for the Reference Rate, to Reference Banks in the Johannesburg inter-bank market plus or minus (as appropriate) the Margin (if any). If fewer than two of the Reference Banks provide the Calculation Agent with such offered rates, the Interest Rate for the relevant Interest Period will be determined by the Calculation Agent as the arithmetic mean (rounded as provided above) of the rates for deposits in an amount approximately equal to the Principal Amount of the Notes of the relevant Series, for a period equal to that which would have been used for the Reference Rate, quoted at approximately 12h00 (Johannesburg time) on the relevant Interest Determination Date, by four leading banks in Johannesburg (selected by the Calculation Agent and approved by the Issuer) plus or minus (as appropriate) the Margin (if any). If the Interest Rate cannot be determined in accordance with the foregoing provisions of this paragraph, the Interest Rate shall be determined as at the last preceding Interest Determination Date (though substituting, where a different Margin is to be applied to the relevant Interest Period from that which applied to the last preceding Interest Period, the Margin relating to the relevant Interest Period, in place of the Margin relating to that last preceding Interest Period).

If the Reference Rate from time to time in respect of Floating Rate Notes is specified in the Applicable Pricing Supplement as being other than the ZAR-JIBAR-SAFEX rate, the Interest Rate in respect of such Notes will be determined, in the manner provided above, or as may be specified in the Applicable Pricing Supplement.

“Reference Banks” means for the purposes of this Condition 8.2C, the four leading banks in the South African inter-bank market selected by the Calculation Agent and approved by the Issuer.

D. Minimum and/or Maximum Interest Rate

If the Applicable Pricing Supplement specifies a Minimum Interest Rate for any Interest Period, then the Interest Rate for such Interest Period shall in no event be less than such Minimum Interest Rate and/or if it specifies a Maximum Interest Rate for any Interest Period, then the Interest Rate for such Interest Period shall in no event be greater than such Maximum Interest Rate.

E. Interest Payment Dates

Each Floating Rate Note bears interest on its Principal Amount (or, if it is a Partly Paid Note or Instalment Note, on the amount paid up or on the amount outstanding, as the case may be) from (and including) the Interest Commencement Date up to (but excluding) the Maturity Date at the rate equal to the Interest Rate. Such interest shall fall due for payment in arrears on the Interest Payment Date(s).

23 F. Determination of Interest Rate and calculation of Interest Amount

The Calculation Agent will, in the case of Floating Rate Notes, at or as soon as practicable after each time at which the Interest Rate is to be determined, determine the Interest Rate and calculate the Interest Amount for the relevant Interest Period. Unless specified otherwise in the Applicable Pricing Supplement, each Interest Amount shall be calculated by multiplying the Interest Rate by the Principal Amount, then multiplying the product by the applicable Day Count Fraction and rounding the resultant product to the nearest smallest denomination of the Specified Currency, half of any such denomination being rounded upwards.

“Day Count Fraction” means, in respect of the calculation of the Interest Amount for any Interest Period:

(a) if “Actual/365” is specified in the Applicable Pricing Supplement, the actual number of elapsed days (including the first day and excluding the last day of such Interest Period) in the Interest Period divided by 365; or

(b) such other calculation method as is specified in the Applicable Pricing Supplement.

G. Notification of Interest Rate and Interest Amount

The Calculation Agent (or such other agent as is specified in the Applicable Pricing Supplement) will cause the Interest Rate and each Interest Amount for each Interest Period and the relevant Interest Payment Date to be notified to the Issuer, the Paying Agent, the Agent, the Noteholders in respect of any Floating Rate Notes which are Bearer Notes or Order Notes, any Exchange on which the relevant Floating Rate Notes are for the time being listed and any central securities depository in which Certificates in respect of the Notes are immobilised, as soon as possible after their determination but not later than the fourth Business Day thereafter. Each Interest Amount and Interest Payment Date so notified may subsequently be amended (or appropriate alternative arrangements made by way of adjustment) in the event of an extension or shortening of the Interest Period. Any such amendment will be promptly notified to the Issuer, the Paying Agent, the Agent, the Noteholders in respect of any Floating Rate Notes which are Bearer Notes or Order Notes, each Exchange on which the relevant Floating Rate Notes are for the time being listed and any central securities depository in which Certificates in respect of the Notes are immobilised.

H. Certificates to be Final

All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of this Condition 8.2 by the Calculation Agent shall, in the absence of wilful deceit, bad faith, manifest error or dispute as set out hereunder, be binding on the Issuer, the Calculation Agent, and all Noteholders, and no liability to the Issuer or the Noteholders shall attach to the Agent, the Calculation Agent or the Paying Agent (as the case may be) in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions. Where the Issuer acts as the Calculation Agent and should Noteholders holding not less than 25% in Aggregate Principal Amount of the Notes for the time being Outstanding, deliver to the Issuer a written notice of objection to any determination made by the Issuer within five Business Days of notification of the Interest Rate and Interest Amount in accordance with Condition 8.2G, such determination shall not be regarded as final and upon such notification, the Issuer shall request the chief executive officer for the time being of BESA to appoint an independent third party to make such determination. Such independent third party shall make such determination promptly, acting as an expert and not as an arbitrator and its determination, in the absence of wilful deceit, bad faith or manifest error, shall be binding on the Issuer and all Noteholders, and no liability to the Issuer or the Noteholders shall attach to such third party in connection with the exercise or non-exercise by it of its powers, duties and discretions pursuant to such provisions. The costs of procuring and effecting such determination shall be borne by the Issuer should the determination of such third party differ from that of the Issuer as Calculation Agent and shall be borne by the Noteholders disputing such determination by the Issuer should the determination of such third party confirm that of the Issuer as Calculation Agent.

8.3 Interest on Mixed Rate Notes

The interest rate payable from time to time on Mixed Rate Notes shall be the interest rate payable on any combination of Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes or Indexed Notes for respective periods, each as specified in the Applicable Pricing Supplement. During each such applicable period, the interest rate on the Mixed Rate Notes shall be determined and fall due for payment on the basis that and to the extent that such Mixed Rate Notes are Fixed Rate Notes, Floating Rate Notes, Zero Coupon Notes or Indexed Notes, as the case may be.

24 8.4 Interest on Indexed Notes

In the case of Indexed Notes, if the Interest Rate or Final Redemption Amount falls to be determined by reference to an index and/or a formula, such rate or amount payable shall be determined in the manner specified in the Applicable Pricing Supplement. Any interest payable shall fall due for payment on the Interest Payment Date(s).

8.5 Interest on Partly Paid Notes

In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero Coupon Notes), interest will accrue on the paid-up Principal Amount of such Notes and otherwise as specified in the Applicable Pricing Supplement.

8.6 Interest on Instalment Notes

In the case of Instalment Notes, interest will accrue on the amount outstanding on the relevant Note from time to time and otherwise as specified in the Applicable Pricing Supplement.

8.7 Accrual of Interest

Each Note (or in the case of the redemption of part only of a Note, that part only of such Note) will cease to bear interest (if any) from the date of its redemption unless, upon due presentation thereof, payment of principal is improperly withheld or refused. In such event, interest will accrue at the SAFEX Overnight Deposit Rate (to be found on the Reuters Screen SAFEY page as at 12h00 (Johannesburg time) on the presentation date, or any successor rate) until the earlier of:

(a) the date on which all amounts due in respect of such Note have been paid; or

(b) the date on which the full amount of the moneys payable has been received by the Paying Agent and notice to that effect has been given to Noteholders in accordance with Condition 19.

In the event that the SAFEX Overnight Deposit Rate is not ascertainable from the relevant screen page at the time contemplated above, the Calculation Agent shall follow the procedure contemplated in Condition 8.2C to ascertain a rate.

8.8 Business Day Convention

If any Interest Payment Date (or other date) which is specified in the Applicable Pricing Supplement to be subject to adjustment in accordance with a Business Day Convention would otherwise fall on a day which is not a Business Day, then, if the Business Day Convention specified is:

(a) the “Floating Rate Business Day Convention”, such Interest Payment Date (or other date) shall in any case where Interest Periods are specified in accordance with Condition 8.2E, be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event: (i) such Interest Payment Date (or other date) shall be brought forward to the first preceding Business Day; and (ii) each subsequent Interest Payment Date (or other date) shall be the last Business Day in the month which falls the number of months or other period specified as the Interest Period in the Applicable Pricing Supplement after the preceding applicable Interest Payment Date (or other date) has occurred; or

(b) the “Following Business Day Convention”, such Interest Payment Date (or other date) shall be postponed to the next day which is a Business Day; or

(c) the “Modified Following Business Day Convention”, such Interest Payment Date (or other date) shall be postponed to the next day which is a Business Day unless it would thereby fall into the next calendar month, in which event such Interest Payment Date (or other such date) shall be brought forward to the first preceding Business Day; or

(d) the “Preceding Business Day Convention”, such Interest Payment Date (or other date) shall be brought forward to the first preceding Business Day.

9. PAYMENTS

9.1 Payments – Registered Notes/Uncertificated Notes

Only Noteholders reflected in the Register (or Sub-register) at 17h00 (Johannesburg time) on the relevant Last Day to Register shall be entitled to payments of interest and/or principal in respect of Registered Notes.

25 9.2 Payments – Bearer Notes

Payments of interest in respect of Bearer Notes will be made to the Bearer only against presentation and surrender by the Bearer or its Representative of the relevant Coupon or (in respect of interest bearing Bearer Notes issued without Coupons) only against presentation by the Bearer or its Representative of the relevant Certificate.

Payments of Instalment Amounts in respect of Bearer Notes will be made to the Bearer only following presentation and surrender by the Bearer or its Representative of the relevant Receipt. Payments of the final instalment of principal in respect of Bearer Notes which are Instalment Notes, or of the principal of all other Bearer Notes, will be made to the Bearer only following presentation and surrender by the Bearer or its Representative of the Certificate evidencing such Bearer Notes.

Upon presentation and/or surrender as aforesaid, the Bearer or its Representative shall be required to nominate in writing to the Paying Agent a bank account within the Republic of South Africa (or any Other Banking Jurisdiction specified in the Applicable Pricing Supplement) into which the relevant payment must be made and provide details of its address (being an address within the Republic of South Africa or any Other Banking Jurisdiction specified in the Applicable Pricing Supplement).

9.3 Payments – Order Notes

Payments of interest in respect of Order Notes will be made to the Payee only following presentation and surrender by the Payee or its Representative of the relevant Coupon or (in respect of interest bearing Order Notes issued without Coupons) only against presentation by the Payee or its Representative of the relevant Certificate.

Payments of Instalment Amounts in respect of Order Notes will be made to the Noteholder only following presentation and surrender by the Payee or its Representative of the relevant Receipt. Payments of the final instalment of principal in respect of Order Notes which are Instalment Notes, or of the principal of all other Order Notes, will be made to the Payee only following presentation and surrender by the Payee or its Representative of the Certificate evidencing such Order Notes.

Upon presentation and/or surrender as aforesaid, the Payee or its Representative shall be required to nominate in writing to the Paying Agent a bank account within the Republic of South Africa (or any Other Banking Jurisdiction specified in the Applicable Pricing Supplement) into which the relevant payment must be made and provide details of its address (being an address within the Republic of South Africa or any Other Banking Jurisdiction specified in the Applicable Pricing Supplement).

9.4 Method of Payment

Payments of interest and principal will be made in the Specified Currency by electronic funds transfer.

If the Issuer is prevented or restricted directly or indirectly from making any payment by electronic funds transfer in accordance with the preceding paragraph (whether by reason of strike, lockout, fire, explosion, floods, riot, war, accident, act of God, embargo, legislation, shortage of or breakdown in facilities, civil commotion, unrest or disturbances, cessation of labour, Government interference or control or any other cause or contingency beyond the control of the Issuer), the Issuer shall make such payment by cheque (or by such number of cheques as may be required in accordance with applicable banking law and practice) of any such amounts. Such payments by cheque shall be sent by post to:

(a) the address of the Noteholder of Registered Notes as set forth in the Register or, in the case of joint Noteholders of Registered Notes, the address set forth in the Register of that one of them who is first named in the Register in respect of that Note; or

(b) the address nominated by the Bearer or the Payee in respect of Bearer Notes or Order Notes, as the case may be, upon presentation and surrender in accordance with Condition 9.2 or Condition 9.3, as the case may be.

Each such cheque shall be made payable to the relevant Noteholder or, in the case of joint Noteholders of Registered Notes, the first one of them named in the Register. Cheques may be posted by ordinary post, provided that neither the Issuer nor the Paying Agent shall be responsible for any loss in transmission and the postal authorities shall be deemed to be the agent of the Noteholders for the purposes of all cheques posted in terms of this Condition 9.4.

In the case of joint Noteholders of Registered Notes payment by electronic funds transfer will be made to the account of the Noteholder first named in the Register. Payment by electronic transfer to the Noteholder first named in the Register shall discharge the Issuer of its relevant payment obligations under the Notes.

26 Payments will be subject in all cases to any taxation or other laws, directives and regulations applicable thereto in the place of payment, but subject to the provisions of Condition 12.

9.5 Surrender of Certificates, Receipts and Coupons

No payment in respect of the final redemption of a Registered Note shall be made until ten days after the date on which the Certificate in respect of the Note to be redeemed has been surrendered to the PayingAgent.

Payments of interest in respect of Bearer Notes or Order Notes shall be made in accordance with Condition 9.4 only following presentation and surrender of the relevant Coupon (if any) to the Paying Agent.

Payments of Instalment Amounts in respect of Instalment Notes which are Bearer Notes or Order Notes shall be made by the Issuer in accordance with Condition 9.4 only following presentation and surrender of the relevant Receipt to the Paying Agent.

No payment in respect of the final redemption of a Bearer Note or Order Note shall be made until the later of:

(a) the Relevant Date; and

(b) the date on which the Certificate in respect of the Note to be redeemed has beenpresented and surrendered to the Paying Agent.

Upon final redemption as aforesaid, all unmatured Coupons relating to Bearer Notes or Order Notes, as the case may be, (whether or not surrendered with the relevant Certificate) shall become void and no payment shall be made thereafter in respect of them.

Documents required to be presented and/or surrendered to the Paying Agent in accordance with these Terms and Conditions shall be so presented and/or surrendered at the office of the Paying Agent specified in the Applicable Pricing Supplement.

Holders of Uncertificated Notes are not required to present and/or surrender any documents of title.

9.6 Payment Day

If the date for payment of any amount in respect of any Note is not a Business Day and is not subject to adjustment in accordance with a Business Day Convention, the holder thereof shall not be entitled to payment until the next following Payment Day in the relevant place for payment and shall not be entitled to further interest or other payment in respect of any such delay.

9.7 Interpretation of principal and interest

Any reference in these Terms and Conditions to principal in respect of the Notes shall include, as applicable: (a) any additional amounts which may be payable with respect to principal under Condition 12; (b) the Final Redemption Amount of the Notes or the Early Redemption Amount of the Notes, as the case may be; (c) the Optional Redemption Amount(s) (if any) of the Notes; (d) in relation to Instalment Notes, the Instalment Amounts; (e) in relation to Zero Coupon Notes, the Amortised Face Amount (as defined under Condition 11.5(c)); and (f) any premium and any other amounts which may be payable under or in respect of the Notes, but excluding for the avoidance of doubt, interest. Any reference in these Terms and Conditions to interest in respect of the Notes shall include, as applicable, any additional amounts which may be payable with respect to interest under Condition 12.

10. EXCHANGE OF TALONS

On or after the Interest Payment Date on which the final Coupon (being the Coupon in respect of the relevant Certificate relating to the latest Interest Payment Date in respect of that series of Coupons) matures, but not later than the date of prescription (in accordance with Condition 13) of the Talon which may be exchanged for the respective Coupons, the Talon (if any) attached to the relevant Certificate upon issue may be surrendered at the specified office of the Agent in exchange for further Coupons, including (if such further Coupons do not include Coupons up to, and including, the final date for the payment of interest due in respect of the Notes to which they pertain) a further Talon, subject to the provisions of Condition 13. Each Talon shall for the purposes of these Terms and Conditions, mature on the Interest Payment Date on which the final Coupon issuedpursuant to such Talon matures. 27 11. REDEMPTION AND PURCHASE

11.1 At maturity

Unless previously redeemed or purchased and cancelled as specified below, each Note will be redeemed in the Specified Currency by the Issuer at its Final Redemption Amount specified in, or determined in the manner specified in, the Applicable Pricing Supplement on the Maturity Date.

11.2 Redemption for tax reasons

Notes may be redeemed at the option of the Issuer (subject to the consent of the Registrar of Banks, to the extent required) in whole, but not in part, at any time (in the case of Notes other than Floating Rate Notes or Indexed Notes or Mixed Rate Notes having an interest rate then determined on a floating or indexed basis) or on any Interest Payment Date (in the case of Floating Rate Notes, Indexed Notes or Mixed Rate Notes having an interest rate then determined on a floating or indexed basis),by giving not less than 30 nor more than 60 days’ notice to the Noteholders in accordance with Condition 19 (which notice shall be irrevocable), if the Issuer is of the reasonable opinion that:

(a) on the occasion of the next payment due under the Notes, the Issuer has or will become obliged to pay additional amounts as provided for or referred to in Condition 12 as a result of any change in or amendment to, the laws or regulations of the country of domicile (or residence for tax reasons) of the Issuer or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations, which change or amendment becomes effective on or after the Issue Date; and

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

provided that no such notice of redemption shall be given earlier than 90 days prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a payment in respect of the Notes then due. On the date of publication of any notice of redemption pursuant to this Condition 11.2, the Issuer shall deliver to the Agent and the Paying Agent at their registered offices, for inspection by any holder of Notesto be redeemed, a certificate signed by two authorised signatories of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, together with an opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will become obliged to pay such additional amounts as a result of such change or amendment.

Notes redeemed for tax reasons pursuant to this Condition 11.2 will be redeemed at their Early Redemption Amount referred to in Condition 11.5, together (if appropriate) with interest accrued up to (but excluding) the date of redemption.

11.3 Redemption at the option of the Issuer

If the Issuer is specified in the Applicable Pricing Supplement as having an option to redeem, the Issuer shall be entitled (subject to the consent of the Registrar of Banks, to the extent required), having given:

(a) not less than 15 and not more than 30 days’ notice to the Noteholders in accordance with Condition 19; and

(b) not less than 7 days before giving the notice referred to in (a) above, notice to the Agent,

(both of which notices shall be irrevocable) to redeem all or some of the Notes then Outstanding on the Optional Redemption Date(s) and at the Optional Redemption Amount(s) specified in, or determined in the manner specified in, the Applicable Pricing Supplement together, if appropriate, with interest accruedup to (but excluding) the Optional Redemption Date(s).

Any such redemption amount must be of a nominal amount equal to or greater than the Minimum Redemption Amount or equal to or less than a Higher Redemption Amount, both as specified in the Applicable Pricing Supplement. In the case of a partial redemption of Notes, the Notes to be redeemed (“Redeemable Notes”) will be selected:

(a) in the case of Redeemable Notes represented by Individual Certificates, individually by lot; and

(b) in the case of Redeemable Notes represented by a Global Certificate, in accordance with the Applicable Procedures,

and in each such case not more than 30 days prior to the date fixed for redemption (such date of selection being hereinafter called the “Selection Date”).

28 A list of the serial numbers of the Certificates (and in the case of Redeemable Notes which are Bearer Notes or Order Notes, the relevant Receipts and/or Coupons) will be published in accordance with Condition 19 not less than 15 days prior to the date fixed for redemption.

No exchange of Beneficial Interests in Notes represented by the Global Certificate for Individual Certificates will be permitted during the period from and including the Selection Date up to and including the date fixed for redemption pursuant to this Condition 11.3 and notice to that effect shall be given by the Issuer to the Noteholders in the notice to Noteholders contemplated in the first paragraph of this Condition 11.3.

Holders of Redeemable Notes shall surrender the Certificates, together with Receipts and Coupons (if any) relating to the Notes in accordance with the provisions of the notice given to them by the Issuer as contemplated above. Where only a portion of the Notes represented by such Certificates, Receipts and Coupons (as applicable) are redeemed, the Agent shall deliver new Certificates, Receipts and Coupons (as applicable) to such Noteholders in respect of the balance of the Notes.

11.4 Redemption at the option of Noteholders of Senior Notes

If Noteholders of Senior Notes are specified in the Applicable Pricing Supplement as having an option to redeem any Senior Notes, such Noteholders may redeem Senior Notes represented by Individual Certificates, by delivering to the Issuer and the Agent in accordance with Condition 19, a duly executed notice (“Put Notice”), at least 15 days but not more than 30 days, prior to the applicable Optional Redemption Date. The redemption amount specified in such Put Notice in respect of any such Note must be of a nominal amount equal to or greater than the Minimum Redemption Amount or equal to or less than the Higher Redemption Amount, each as specified in the Applicable Pricing Supplement.

The redemption of Senior Notes represented by a Global Certificate shall take place in accordance with the Applicable Procedures.

Where a Noteholder redeems Senior Notes represented by an Individual Certificate, such Noteholder shall deliver the Individual Certificate, together with Receipts and/or Coupons (if any), to the Agent for cancellation by attaching it to a Put Notice. A holder of an Individual Certificate shall specify its payment details in the Put Notice for the purposes of payment of the Optional Redemption Amount.

The Issuer shall proceed to redeem such Senior Notes (in whole but not in part) in accordance with the terms of the Applicable Pricing Supplement, at the Optional Redemption Amount and on the Optional Redemption Date, together, if appropriate, with interest accrued up to (but excluding) the Optional Redemption Date(s).

The delivery of Put Notices shall be required to take place during normal office hours of the Agent. Pro forma Put Notices shall be available from the registered office of the Issuer.

Any Put Notice given by a holder of any Senior Note pursuant to this Condition 11.4 shall be irrevocable except where after giving the notice, but prior to the due date of redemption, an Event of Default shall have occurred and be continuing in which event such Noteholder, at its option, may elect by notice to the Issuer and the Agent to withdraw the notice given pursuant to this paragraph and instead to declare such Senior Note forthwith due and payable pursuant to Condition 14.

11.5 Early Redemption Amounts

For the purpose of Condition 11.2 and Condition 14 (and otherwise as stated herein), the Notes will be redeemed at the Early Redemption Amount calculated as follows:

(a) in the case of Notes with a Final Redemption Amount equal to the Principal Amount, at the Final Redemption Amount thereof; or

(b) in the case of Notes (other than Zero Coupon Notes) with a Final Redemption Amount which is or may be less or greater than the Issue Price (to be determined in the manner specified in the Applicable Pricing Supplement), at that Final Redemption Amount or, if no such amount or manner is so specified in the Pricing Supplement, at their Principal Amount; or

(c) in the case of Zero Coupon Notes, at an amount (the “Amortised Face Amount”) equal to the sum of: (i) the Reference Price; and (ii) the product of the Implied Yield (compounded semi-annually) being applied to the Reference Price from (and including) the Issue Date up to (but excluding) the date fixed for redemption or, as the case may be, the date upon which such Note becomes due and payable, or such other amount as is specified in the Applicable Pricing Supplement.

29 Where such calculation is to be made for a period which is not a whole number of years, it shall be calculated on the basis of actual days elapsed divided by 365, or such other calculation basis as may be specified in the Applicable Pricing Supplement.

11.6 Instalment Notes

Instalment Notes will be redeemed at the Instalment Amounts and on the Instalment Dates. In the case of early redemption, the Early Redemption Amount will be determined pursuant to Condition 11.5.

11.7 Partly Paid Notes

If the Notes are Partly Paid Notes, they will be redeemed, whether at maturity, early redemption or otherwise, in accordance with the provisions of this Condition 11 and the Applicable Pricing Supplement.

11.8 Exchangeable Notes

If the Notes are Exchangeable Notes, they will be redeemed, whether at maturity, early redemption or otherwise in the manner specified in the Applicable Pricing Supplement. Exchangeable Notes, in respect of which Mandatory Exchange is specified in the Applicable Pricing Supplement as applying, or upon the exercise by the Noteholder of the Noteholder’s Exchange Right (if applicable), will be redeemed by the Issuer delivering to each Noteholder so many of the Exchange Securities as are required in accordance with the Exchange Price. The delivery by the Issuer of the Exchange Securities in the manner specified in the Applicable Pricing Supplement shall constitute the in specie redemption in full of such Notes.

11.9 Purchases

The Issuer may at any time purchase Notes (including all unmatured Coupons and Receipts) at any price in the open market or otherwise. In the event of the Issuer purchasing Notes, such Notes may (subject to restrictions of any applicable law) be held, resold or, at the option of the Issuer, cancelled.

11.10 Cancellation

All Notes which are redeemed will forthwith be cancelled. Where only a portion of Notes represented by a Certificate are cancelled, the Agent shall deliver a Certificate to such Noteholder in respect of the balance of the Notes.

11.11 Late payment on Zero Coupon Notes

If the amount payable in respect of any Zero Coupon Note upon redemption of such Zero Coupon Note, pursuant to Condition 11 or upon its becoming due and repayable as provided in Condition 14, is improperly withheld or refused, the amount due and repayable in respect of such Zero Coupon Note shall be the amount calculated as provided in Condition 11.5(c), as though the references therein to the date fixed for the redemption or the date upon which such Zero Coupon Note becomes due and payable were replaced by references to the date which is the earlier of: (i) the date on which all amounts due in respect of such Zero Coupon Note have been paid; and (ii) where relevant, 5 days after the date on which the full amount of the moneys payable has been received by the Central Depository, and notice to that effect has been given to the Noteholders in accordance with Condition 19.

12. TAXATION

As at the date of issue of this Programme Memorandum, all payments of principal or interest in respect of the Notes will be made without withholding or deduction for or on account of any present or future taxes, duties, assessments or governmental charges (“taxes”) of whatever nature imposed or levied by or in or on behalf of the country of domicile (or residence for tax purposes) of the Issuer or any political subdivision or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law. The payment of any taxes by the Issuer as an agent or representative tax payer for a Noteholder shall not constitute a withholding or deduction for the purposes of this Condition 12. In the event of any such withholding or deduction in respect of taxes being levied or imposed on interest or principal payments on Debt Instruments (as defined below), the Issuer will pay such additional amounts as shall be necessary in order that the net amounts received by the Noteholders after such withholding or deduction shall equal the respective amounts of principal and interest which would otherwise have been receivable in respect of the Notes, as the case may be, in the absence of such withholding or deduction except that no such additional amounts shall be payable with respect to any Note:

30 (a) held by or on behalf of a Noteholder, who is liable for such taxes in respect of such Note by reason of it having some connection with the country of domicile (or residence for tax purposes) of the Issuer other than the mere holding of such Note or the receipt of principal or interest in respect thereof; or (b) held by or on behalf of a Noteholder which would not be liable or subject to the withholding or deduction by complying with any statutory requirement or by making a declaration of non-residence or other similar claim for exemption to the relevant tax authority; or (c) where such withholding or deduction is in respect of taxes levied or imposed on interest or principal payments only by virtue of the inclusion of such payments in the Taxable Income or Taxable Gains (each as defined below) of any Noteholder; or (d) where (in the case of any payment of principal or interest which is conditional on surrender of the relevant Certificate in accordance with these Terms and Conditions) the relevant Certificate is surrendered for payment more than 30 days after the Relevant Date except to the extent that the relevant Noteholder would have been entitled to an additional amount on presenting the Certificate for payment on such thirtieth day; or (e) if such withholding or deduction arises through the exercise by revenue authorities of special powers in respect of tax defaulters; or (f) where the Noteholder is entitled to claim a tax reduction, credit or similar benefit in respect of such withholding or deduction in terms of the Noteholder’s domestic tax laws or applicable double tax treaty. For the purposes of this Condition 12: (i) “Debt Instrument” means any “instrument” as defined in section 24J(1) of the IncomeTax Act; (ii) “Taxable Income” means any “taxable income” as defined in section 1 of the IncomeTax Act; (iii) “Taxable Gain” means any “taxable capital gain” as defined in paragraph 1 of Schedule 8 to the Income Tax Act; and (iv) “Income Tax Act” means the Income Tax Act, 1962.

13. PRESCRIPTION

The Notes, Receipts and Coupons will become void unless presented for payment of principal and interest within a period of 3 years after the Relevant Date therefor save that any Certificate, Receipt or Coupon constituting a bill“ of exchange or other negotiable instrument” in accordance with section 11 of the Prescription Act, 1969 will become void unless presented for payment of principal and interest within a period of 6 years from the Relevant Date thereof.

14. EVENTS OF DEFAULT

14.1 Senior Notes An Event of Default in relation to Senior Notes shall arise if any one or more of the following events shall have occurred and be continuing: (a) the failure by the Issuer to pay within 7 Business Days from the due date any amount due in respect of any of the Notes; or (b) the failure by the Issuer to perform or observe any of its other obligations under any of the Notes and such failure continues for a period of 30 calendar days (and for these purposes, a failure to perform or observe an obligation shall be deemed to be remediable notwithstanding that the failure results from not doing an act or thing by a particular time); or (c) the granting of an order by any competent court or authority for the liquidation, winding-up, dissolution or judicial management of the Issuer, whether provisionally (and not dismissed or withdrawn within 30 days thereof) or finally, or the placing of the Issuer under voluntary liquidation or curatorship, provided that no liquidation, curatorship, winding-up, dissolution or judicial management shall constitute an event of default if: (i) the liquidation, curatorship, winding-up, dissolution or judicial management is for purposes of effecting an amalgamation, merger, demerger, consolidation, reorganisation or other similar arrangement within the Stanbank Group; or (ii) the liquidation, curatorship, winding-up, dissolution or judicial management is for purposes of effecting an amalgamation, merger, demerger, consolidation, reorganisation or other similar arrangement, the terms of which were approved by Extraordinary Resolution of Noteholders before the date of the liquidation, curatorship, winding-up, dissolution or judicial management; or

31 (d) any action, condition or thing (including the obtaining of any consent, licence, approval or authorisation) now or hereafter necessary to enable the Issuer to comply with its obligations under the Programme is not taken, fulfilled or done, or any such consent, licence, approval or authorisation shall be revoked, modified, withdrawn or withheld or shall cease to remain in full force and effect, resulting in the Issuer being unable to perform any of its payment or other obligations in terms of the Notes or the Programme.

If the Issuer becomes aware of the occurrence of any Event of Default, the Issuer shall forthwith notify all Noteholders and, in respect of listed Notes, shall forthwith notify BESA or such other Exchange upon which such Notes are listed, as the case may be.

Upon the happening of an Event of Default, any holder of Senior Notes may, by written notice to the Issuer at its registered office, effective upon the date of receipt thereof by the Issuer, declare the Notes held by such Noteholder to be forthwith due and payable. Upon receipt of that notice, such Notes shall become forthwith due and payable at the Early Redemption Amount, together with accrued interest (if any) to the date of payment.

14.2 Subordinated Notes

Subject to Condition 7.4 (if applicable), an Event of Default in relation to Subordinated Notes shall arise if any one or more of the events contemplated in Condition 14.1 (a) or (c) shall have occurred and be continuing. Upon the happening of such an Event of Default, any holder of Subordinated Notes may, by written notice to the Issuer at its registered office, effective upon the date of receipt thereof by the Issuer, declare the Subordinated Notes held by such holder to be forthwith due and payable whereupon those Subordinated Notes shall become forthwith due and payable at the Early Redemption Amount together with accrued interest (if any) to the date of payment.

15. DELIVERY, EXCHANGE AND REPLACEMENT OF CERTIFICATES, RECEIPTS AND COUPONS

15.1 Upon the issue of Bearer Notes, Order Notes, unlisted Registered Notes or upon notice from a Participant pursuant to Condition 15.3 requesting the exchange or partial exchange of a Beneficial Interest in Notes represented by a Global Certificate(s) for an Individual Certificate(s), the Agent shall deliver the relevant Individual Certificate(s) in accordance with the Agency Agreement.

15.2 Notes of each Tranche listed on BESA will be issued in the form of the Global Certificate and will be lodged and immobilised in the Central Depository.

15.3 Any person holding a Beneficial Interest in the Notes represented by the Global Certificate may, interms of the Applicable Procedures and through its nominated Participant, direct a written request to the Agent for an Individual Certificate representing the number of Notes to be delivered by the Issuer in exchange for such Beneficial Interest. The aggregate of the Principal Amount of the Notes represented by such Individual Certificate shall be equivalent to the amount of such Beneficial Interest. The Agent shall deliver such Individual Certificate upon such written request no later than 14 days after receiving the written request of the holder of such Beneficial Interest in accordance with the Applicable Procedures, provided that, joint holders ofa Beneficial Interest shall be entitled to receive only one Individual Certificate in respect of that joint holding and delivery to one of those joint holders shall be delivery to all of them.

15.4 Upon the receipt of a written request for delivery of an Individual Certificate in terms of Condition 15.3, the Global Certificate shall, in terms of the Applicable Procedures, be presented to the Agent for splitting and a new Global Certificate for the balance of the Notes (if any) still held by the Central Depository shall be delivered to the Central Depository. The original Global Certificate shallthereupon be cancelled and retained by the Agent.

15.5 Global Certificates, and any Receipts and/or Coupons in relation to Bearer Notes or Order Notes, shall be provided (whether by way of issue, delivery or exchange) by the Issuer without charge, save as otherwise provided in these Terms and Conditions. For Notes issued on or after the date of this Programme Memorandum the Issuer may impose a charge for the issuing of Individual Certificates where the Notes are represented by a Global Certificate or in uncertificated format. Separate costs and expenses relating to the provision of Certificates and/or the transfer of Notes may be levied by other persons, such as a Settlement Agent, under the Applicable Procedures and such costs and expenses shall not be borne by the Issuer. The costs and expenses of delivery of Certificates, Receipts and/or Coupons otherwise than by ordinary post (if any) and, if the Issuer shall so require, taxes or governmental charges or insurance charges that may be imposed in relation to such mode of delivery, shall be borne by the Noteholder.

32 15.6 Any person becoming entitled to Registered Notes in consequence of the death, sequestration or liquidation of the relevant holder of such Notes may upon producing such evidence that he holds the position in respect of which he proposes to act under this Condition 15 or of his title to the relevant Notes as the Issuer and the Agent may require, be registered himself as the holder of such Notes or, subject to the requirements of the Applicable Procedures and of this Condition 15, may transfer such Notes. The Issuer and the Paying Agent shall be entitled to retain any amount payable upon the Notes to which any person is so entitled until such person shall be registered as aforesaid or shall duly transfer the Notes.

15.7 If any Certificate, Receipt or Coupon is mutilated, defaced, stolen, destroyed or lost it may be replaced at the registered office of the Issuer or at the office of the Agent specified in the Applicable Pricing Supplement, on payment by the claimant of such costs and expenses as may be incurred in connection therewith and against the provision of such indemnity as the Issuer may reasonably require. Mutilated or defaced Certificates, Receipts or Coupons must be surrendered before replacements will be issued.

16. TRANSFER OF NOTES

16.1 Transfer of Registered Notes

Beneficial Interests in Registered Notes evidenced by a Global Certificate may be transferred in terms of the Applicable Procedures of the Central Depository.

In order for any transfer of Registered Notes to be effected through the Register, and for the transfer to be recognised by the Issuer, each transfer of a Registered Note:

(a) must be embodied in a Transfer Form;

(b) must be signed by the relevant Noteholder and the transferee, or any Representatives of that registered Noteholder and/or the transferee;

(c) shall only be in the Specified Denomination or a multiple thereof and consequently the Issuer will not recognise any fraction of the Specified Denomination; and

(d) must be made by way of the delivery of the Transfer Form to the Agent together with the Certificate in question for cancellation or, if only part of the Notes represented by a Certificate isto be transferred, a new Certificate for the balanceof the Notes not transferred, will be delivered to the transferor. The surrendered Certificate will forthwith becancelled and retained by the Agent.

The transferor of any Registered Notes represented by a Certificate shall remain the owner thereof until the transferee is registered in the Register as the holder thereof.

Before any transfer is registered, all relevant transfer taxes (if any) must have been paid and such evidence must be furnished as the Issuer may reasonably require as to the identity and title of the transferor and the transferee.

The Agent will, within 3 Business Days of receipt by it of a valid Transfer Form (or such longer period as may be required to comply with any applicable taxation or other laws, regulations or Applicable Procedures), authenticate and deliver to the transferee (at the risk of the transferee) a new Certificate in respect of the Notes transferred.

No transfer will be registered while the Register is closed.

In the event of a partial redemption of Notes under Conditions 11.3 or 11.4, the Issuer and the Agent shall not be required:

(a) to register the transfer of any Notes during the period beginning on the tenth day before the date of the partial redemption and ending on date of the partial redemption (both inclusive); or

(b) to register the transfer of any Note, or part of a Note, called for partial redemption.

16.2 Transfer of Bearer Notes

Bearer Notes (including rights to Instalment Amounts and/or interest thereon, as applicable) may be transferred by the delivery of the Certificate evidencing such Bearer Note or the relevant Receipt or Coupon relating thereto, as the case may be. Where the last Endorsement on a Certificate evidencing an Order Note or a Receipt or Coupon relating thereto is an Endorsement in Blank, then such Certificate, Receipt or Coupon, as the case may be, shall be treated as evidencing a Bearer Note.

33 16.3 Transfer of Order Notes

Order Notes (including rights to Instalment Amounts and/or interest thereon, as applicable) may be transferred by the Endorsement of the Certificate evidencing such Order Note or Receipt or Coupon relating thereto, as the case may be, by the old Payee and the delivery of such Certificate, Receipt or Coupon to the new Payee.

16.4 Transfer of Uncertificated Notes

All transactions in Uncertificated Notes, are to be cleared and settled in accordance with the rules of the Central Depository. Transfer of ownership in the Uncertificated Notes shall only pass upon the debiting and crediting, respectively of both the account in the Sub-register from which the transfer is effected and the account in the Sub-register to which transfer is to be made, in accordance with rules of the Central Depository.

16.5 Prohibition on stripping

Where so specified in the Applicable Pricing Supplement, Bearer Notes or Order Notes which are issued with Receipts and/or Coupons attached and which are redeemable at the option of the Issuer and/or Noteholders shall be issued subject to the condition that the relevant Notes (including rights to Instalment Amounts and/or interest thereon, as applicable) may only be transferred to a single transferee at a time and accordingly that the various rights in respect of such Notes may not be stripped and transferred to various transferees at different times.

17. REGISTER

17.1 The Register shall be kept at the registered office of the Agent. The Register shall reflect the number of Notes issued and Outstanding and whether they are Registered Notes, Bearer Notes or Order Notes. The Register shall contain the name, address, and bank account details of the Noteholders of Registered Notes. The Register shall set out the Principal Amount of the Notes issued to such Noteholders and shall show the date of such issue. The Register shall show the serial number of Certificates issued in respect of Notes. The Register shall be open for inspection during the normal business hours of the Issuer to any Noteholder or any person authorised in writing by any Noteholder. The Agent shall not be obliged to record any transfer while the Register is closed. The Agent shall not be bound to enter any trust into the Register or to take notice of any or to accede to any trust executed, whether express or implied, to which any Note may be subject. The Register shall be closed from the Last Day to Register until each payment date of principal and interest in respect of the Notes, as the case may be.

17.2 The Agent shall alter the Register in respect of any change of name, address or bank account number of any of the Noteholders of any Registered Notes of which it is notified in accordance with theseTerms and Conditions.

18. AGENT, CALCULATION AGENT AND PAYING AGENT

18.1 The Issuer is entitled to vary or terminate the appointment of the Agent, the Calculation Agent and the Paying Agent and/or appoint additional or other agents and/or approve any change in the specified office through which any such agent acts on the terms of the Agency Agreement, provided that there will at all times be an Agent, Calculation Agent and a Paying Agent with an office in such place as may be required by the Applicable Procedures. The Agent, Paying Agent and Calculation Agent act solely as the agents of the Issuer and do not assume any obligation towards or relationship of agency or trust for or with any Noteholders.

18.2 To the extent that the Issuer acts as the Agent, Calculation Agent or Paying Agent, all references in these Terms and Conditions to:

(a) any action, conduct or functions in such role shall be understood to mean that the Issuer shall perform such action, conduct or function itself; and

(b) requirements for consultation, indemnification by or of, payment by or to, delivery by or to, notice by or to, consent by or to or agreement between the Issuer and such Agent, Calculation Agent or Paying Agent (as the case may be) shall be disregarded to the extent that the Issuer performs such role.

19. NOTICES

19.1 All notices to Noteholders in respect of Registered Notes shall be sent by registered mail or delivered by hand to their addresses appearing in the Register. Any such notice shall be deemed to have been given on the seventh day after the day on which it is mailed and on the day of delivery if delivered. In the event of there being any Individual Certificates (whether evidencing Registered Notes, Bearer Notes or Order Notes) in issue, notices 34 to such Noteholders shall be published: (i) in an English language daily newspaper of general circulation in the Republic of South Africa; and (ii) for so long as the Notes are listed on BESA or such other Exchange, a daily newspaper of general circulation in the city in which BESA or such other Exchange is situated or any electronic news service of general distribution, and any such notices shall be deemed to have been given on the date of first publication.

19.2 For as long as any of the Notes are represented by a Global Certificate, all notices in respect of such Notes shall be by way of the delivery of the relevant notice to the Central Depository and BESA or such other exchange on which the Notes are listed for communication by them to holders of Beneficial Interests in Notes represented by the Global Certificate.

19.3 A notice to be given by any Noteholder to the Issuer shall be in writing and given by lodging (either by hand delivery or posting by registered mail) that notice, together with a certified copy of the relevant Certificate, Coupon or Receipt at the office of the Agent specified in the Applicable Pricing Supplement. For so long as any of the Notes are represented by a Global Certificate, notice may be given by any holder of a Beneficial Interest in Notes represented by a Global Certificate to the Issuer via the relevant Settlement Agent in accordance with the Applicable Procedures, in such manner as the Issuer and the relevant Settlement Agent may approve for this purpose. Such notices shall be deemed to have been received by the Issuer, if delivered by hand, on the second Business Day after being hand delivered, or, if sent by registered mail, 7 days after posting.

19.4 For so long as any Notes are listed on the JSE, notwithstanding Conditions 19.1 and 19.2, all notices in respect of such JSE-listed Notes, shall be made by way of an announcement on the Securities Exchange News Service.

20. MEETINGS OF NOTEHOLDERS

20.1 The Agency Agreement contains provisions for convening meetings of any Class of Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary Resolution of a modification of the Notes or certain provisions of the Agency Agreement, if proposed by the Issuer. Such meetings may be convened by the Issuer or Noteholders holding not less than 10 percent in nominal amount of the Notes in such Class for the time being Outstanding.

20.2 Subject to the remainder of this Condition 20.2, the quorum at any such meeting for passing an Extraordinary Resolution is one or more persons holding or representing not less than a clear majority in nominal amount of the Notes of such Class for the time being Outstanding, or at any adjourned meeting one or more persons being or representing Noteholders of such Class, whatever the nominal amount of the Notes so held or represented. At any meeting the business of which includes the modification of certain provisions of any of the Notes (including, but not limited to, modifying the date of maturity of any of the Notes or any date for payment of interest thereof, reducing or cancelling the amount of principal or the rate of interest payable in respect of the Notes or modifying the majority required to pass an Extraordinary Resolution), the necessary quorum for passing an Extraordinary Resolution will be one or more persons holding or representing not less than two-thirds in nominal amount of the Notes of such Class for the time being Outstanding, or at any adjourned such meeting not less than one-third in nominal amount of the Notes of that Class for the time being Outstanding.

20.3 An Extraordinary Resolution passed at any meeting of the Noteholders shall be binding on all the Noteholders of the relevant Class, whether or not they are present at the meeting.

21. MODIFICATION

21.1 No modification of these Terms and Conditions may be effected without the written agreement of the Issuer. The Issuer may effect, without the consent of the relevant Class of Noteholders, any modification of the Terms and Conditions which is of a formal, minor or technical nature or is made to correct a manifest error or to comply with mandatory provisions of the law of the jurisdiction in which the Issuer is incorporated and the governing law in accordance with which Notes are issued. Any such modification shall be binding on the relevant Class of Noteholders and any such modification shall be notified to the relevant Class of Noteholders in accordance with Condition 19 as soon as practicable thereafter. For the avoidance of doubt, the provision of any rights of security to or for the benefit of any Class of Noteholders in accordance with Condition 6.1 or the exercise by the Issuer of its rights under Condition 18 shall not constitute a modification of these Terms and Conditions.

35 21.2 Save as provided in Condition 21.1, no modification of these Terms and Conditions may be effected unless:

(a) in writing and signed by or on behalf of the Issuer and by or on behalf of the members of the relevant Class of Noteholders holding not less than 66.6%, in nominal amount, of the Notes in that Class for the time being Outstanding; or

(b) sanctioned by an Extraordinary Resolution of the relevant Class of Noteholders.

22. FURTHER ISSUES

The Issuer shall be at liberty from time to time without the consent of the Noteholders to create and issue further Notes having terms and conditions the same as any of the other Notes issued under the Programme or the same in all respects save for the amount and date of the first payment of interest thereon, the Issue Price and the Issue Date, so that the further Notes shall be consolidated to form a single Series with the Outstanding Notes.

23. GOVERNING LAW

Unless otherwise specified in the Applicable Pricing Supplement, the provisions of the Programme Memorandum and the Notes are governed by, and shall be construed in accordance with, the laws of the Republic of South Africa.

36 USE OF PROCEEDS

The net proceeds from each issue of Notes will be applied by the Issuer for its general corporate purposes or as otherwise may be described in the Applicable Pricing Supplement.

37 STANDARD BANK GROUP ORGANISATIONAL STRUCTURE

The Standard Bank Group (the “Group”) comprises Standard Bank Group Limited, The Standard Bank of South Africa Limited, Africa operations, International operations, Stanlib, and the investment in Liberty Group (“Liberty Life”). The organisational structure of the Group is set out below:

Standard Bank Group

The Standard Bank of International Africa operations Liberty Holdings South Africa operations (54,65%)

Retail Banking Liberty(1) • Personal customers Life (50,17%) • SMEs/Agricultural • Transactional banking • Investments • Loans and advances (37,4%) Stanlib(2) (37,4%) • Card services • Asset backed lending • Bancassurance • Medium business banking

Corporate and Investment Banking (1) Standard Bank Group effective holding in • Corporate banking Liberty Life 27,4% • Electronic banking (2) Standard Bank Group effective holding in • Corporate finance Stanlib 47,65% • Stockbroking • Treasury • Project and structured finance • Property finance • Asset management • International services • Financial asset services • Leveraged investments • Large business banking

38 DESCRIPTION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED (“SBSA” or the “Issuer”)

1. HISTORY

The Issuer is one of the oldest banks in South Africa. It was incorporated as The Standard Bank of British South Africa Limited in 1862. SBSA commenced operations in Port Elizabeth and gradually expanded its geographic area of operation to include the whole of South Africa, as well as extensive international operations. Its expansion of its services led to the incorporation of a holding company Standard Bank Group Limited (“Standard Bank”), formerly known as Standard Bank Investment Corporation Limited, in 1961. Standard Bank was a member of The Standard Chartered Bank Group of the United Kingdom until 1987 when this bank sold its 39% shareholding in Standard Bank. From 1987 until January 1999, Liberty Life was the major shareholder in Standard Bank with an approximate holding of 40%. Standard Bank acquired control of Liberty Life with effect from 1 January 1999 and the subsequent unbundling by Liberty Life of its holding in Standard Bank held on shareholders’ account has removed the cross-holding between the two groups. Standard Bank is one of South Africa’s leading banking and financial services groups, ranked by both profit and market capitalisation.

2. OWNERSHIP

SBSA is a wholly-owned subsidiary of Standard Bank. Standard Bank is listed on the JSE Limited and at 31 December 2004, had 1 352 million shares in issue and 41 239 shareholders. The 10 largest shareholders at 31 December 2004 beneficially held 45% of Standard Bank issued ordinary shares.

The four largest shareholders at 31 December 2004 were:

Percentage beneficially(1) held

Old Mutual Group 12,2 Public Investment Corporation 11,6 Tutuwa Group (2) 7,6 Liberty Life (3) 3,7

Notes: (1) Per disclosures in terms of section 140A of the Companies Act, 1973. (2) Holding in terms of the Black Ownership Initiative transaction completed in the second half of 2004. The Tutuwa Group comprises the following groupings and participate approximately to the following extent: Tutuwa Consortium comprising Safika Holdings and Shanduka Group (40%); current and future black managers of Standard Bank (40%); and a community trust (20%). (3) Policyholders funds.

39 3. ACTIVITIES OF SBSA

Background

SBSA consists of the following major divisions:

– Retail Banking; and

– Corporate and Investment Banking

SBSA has a broad franchise and is active in almost all banking markets in the country. It provides a full range of retail, commercial and investment banking services. The contribution of the different divisions to SBSA’s total assets at 31 December 2004 was as follows: Retail 40%, Corporate and Investment Banking 58%, other services 2% (compared with Retail 36%, Corporate and Investment Banking 61%, other services 3% at 31 December 2003).

SBSA contributed approximately 71% to Standard Bank Group Limited’s headline earnings and had total assets of R384 913 million at 31 December 2004.

Retail Banking

Retail Banking provides the full spectrum of retail banking products and services to individual consumers and small and medium enterprises through its branches, agencies and ATMs. It holds approximately 22% of the retail banking market in South Africa. Through the AutoBank E and Mzansi Blue Accounts initiatives, SBSA services the banking needs of the mass market, providing a variety of financial products through a highly automated, easy to use, delivery channel. SBSA aims to remain an important provider of financial services to the mass market sector. Telephone, Internet and cellular platforms have also been adopted to serve SBSA’s customers, who are widely dispersed throughout South Africa. Internet banking activities are growing steadily with the 2004 year reflecting a 24% increase in registrations and a 45% increase in the volume of internet based transactions.

Corporate and Investment Banking

Corporate and Investment Banking is one of South Africa’s leading corporate banks, having consistently been ranked number one in many areas of business by peers in recent independent surveys. Corporate and Investment Banking includes properties. Services provided by Corporate and Investment Banking include the following:

– Treasury;

– Corporate finance and investment banking;

– Project and structured finance;

– Property finance;

– Electronic banking;

– Foreign banking; and

– Stockbroking.

Other services offered include trade finance, infrastructure development and risk and treasury outsourcing.

Corporate and Investment Banking’s clients include large corporates, parastatals, foreign banks and counterparties, and governments in Southern Africa and other parts of sub-Saharan Africa.

40 Earning analysis

The contributions of the different business areas to Standard Bank Group’s headline earnings are reflected in the following table:

At 31 December 2004 2003 % R million R million Headline earnings (1) Change Audited Audited

Domestic Banking (2) 27 5 842 4 602

• Retail Banking 28 3 158 2 476 • Corporate and Investment Banking 24 2 656 2 140 • Other domestic operations 28 (14)

International (21) 685 866

Africa 30 634 489

Stanlib 48 59 40

Central funding and eliminations >100 78 13

Standard Bank Operations 21 7 298 6 010 Liberty Life 30 350 270

Standard Bank Group 22 7 648 6 280

SBSA 32 5 412 4 110 SBSA as a percentage of Domestic Banking 93% 89%

Notes: (1) Headline earnings equal attributable earnings to ordinary shareholders excluding: – goodwill amortisation; – capital profits and losses; and – profits and losses on available-for-sale financial instruments. (2) Domestic banking includes SBSA.

41 4. FINANCIAL HIGHLIGHTS

Overview of SBSA’s performance

Highlights of SBSA’s financial performance for the last two years were as follows:

At 31 December 2004 2003 R million % R million Audited Change Audited

Profit for the year 5 438 28 4 233 Headline earnings 5 412 32 4 110 Total assets 384 913 20 320 853 Total capital and reserves 18 197 19 15 237

Earnings

Headline earnings for the 2004 year of R5 412 million was 32% higher than the previous year. Income attributable to ordinary shareholder for the year of R5 438 million was 28% higher than the previous year. The compound annual growth in SBSA’s attributable earnings over the past six-year period up to 2004 is 22%.

Net interest income before provision for credit losses for the year of R9 547 million was 8% higher. The interest margin, i.e. net interest income before provision for credit losses as percentage of average total assets, of 3,4% was marginally lower than that of the previous year mainly as a result of the margin compression from the interest rate cuts. Gross loans and advances at the year-end of R204 115 million were 31% higher than in 2003, with card debtors 42% up, mortgage advances 41% up, instalment sale and leasing accounts 23% up and loans and overdraft 27% up.

The provision for credit losses in the income statement of R851 million was 37% lower than in 2003. The total provision for credit losses per the income statement, as a percentage of average gross loans and advances was 0,47% (2003: 1,0%). The total accumulated provision per the balance sheet of R2 890 million was 4% higher and represented 1,6% of average gross loans and advances. Non-performing loans at the year-end of R3 251 million are 18% lower than 2003.

Non-interest revenue of R9 345 million was 22% higher and comprised 49% of total income after adding back provision for credit losses. Fees and commissions, which constitute the major portion of non-interest revenue, were 22% up and comprised 37% of total income after adding back provision for credit losses, compared with 35% previously.

Operating expenses of R10 651 million were 16% higher, with staff costs and other operating expenses reflecting increases of 20% and 10% respectively. The cost-to-income ratio (operating expenses divided by total income after adding back provision for credit losses) was 56,4% compared to 55,7% in the prior year.

The tax charge, including indirect taxes, for the year as a percentage of operating profit before tax of 27% improved when compared with 2003’s tax charge of 31%.

Total assets

Total assets at 31 December 2004 of R384 913 million were 20% higher than the prior year, mainly as a result of the increase in loans and advances. Loans and advances, net of credit provisions, of R201 225 million were 31% higher than the comparable balance as at 31 December 2003. Cash and short-term funds of R24 795 million were up 6%. Investment and trading securities of R22 655 million were 4% lower. Deposits and current account balances of R244 423 million were 23% up and, as a percentage of total assets excluding derivatives, represented 87% (2003: 82%). Capital and reserves of R18 197 million were 19% higher than the previous year.

Capital adequacy

The capital requirements of SBSA are regulated by the Bank Supervision Department of the South African Reserve Bank (“SARB”) in terms of the Banks Act, 1990 which observes the internationally accepted Bank for International Settlement’s capital adequacy principles.

With effect from 1 October 2001, South African banks are required to maintain capital equal to 10% of risk adjusted assets and off balance sheet exposures, of which Tier I capital, for the present, must constitute at least 5%. The Central Bank is currently considering increasing the Tier I component to at least 6%.

42 At 31 December 2004, SBSA’s regulatory capital base was 13,4% of risk weighted assets, with Tier I capital of 9,1%. At group level, the group’s banking operations are well capitalised by international standards and, with a total capital adequacy ratio of 15,4% at 31 December 2004, is well above the minimum level prescribed by the SARB.

The table below sets out the capital base of SBSA:

At 31 December 2004 2003 R million R million Audited % Audited %

Qualifying primary capital (Tier I) 18 258 68 14 853 68 Qualifying secondary capital (Tier II) 7 711 29 5 852 27 Qualifying tertiary capital (Tier III) 1 000 3 1 000 5

Total qualifying capital 26 969 100 21 705 100

Capital to risk-weighted assets (%) 13,4 12,5

Deposit and current accounts

Deposit products include cheque accounts, savings accounts, call and notice deposits, fixed deposits and negotiable certificates of deposit. The maturity analysis below is based on the remaining periods from year-end to contractual maturity.

At 31 December 2004 2003 R million R million Audited Audited

Deposits and loans from banks 12 423 8 312

– Deposits from banks and central banks 8 015 4 409

– Deposits from banks under repurchase agreements 4 408 3 903

Customers’ current accounts 82 280 73 993 Customers’ savings accounts 24 589 20 298 Other deposits and loan accounts 96 290 83 067 Negotiable certificates of deposit 26 570 10 077 Customer deposits received under repurchase agreements 2 271 3 235

244 423 198 982

At 31 December 2004 2003 R million R million Audited % Audited %

Repayable on demand 138 398 57 121 022 61 Maturing within one month 28 775 12 22 782 11 Maturing after one month but within six months 43 961 18 35 208 18 Maturing after six months but within 12 months 18 114 7 11 429 6 Maturing after 12 months 15 175 6 8 541 4

244 423 100 198 982 100

43 5. LOAN PORTFOLIO ANALYSIS

SBSA’s loan portfolio comprised 70% of its total asset base excluding derivatives at 31 December 2004 (2003: 64%). SBSA extends advances to the personal, commercial, corporate and public sectors. Advances made to individuals are mostly in the form of mortgages, instalment credit, overdrafts and credit card borrowings. A significant portion of SBSA’s advances to commercial and corporate borrowers consists of advances made to companies engaged in manufacturing, finance and service industries.

A breakdown of SBSA’s loan portfolio over the past two years is set out below:

At 31 December 2004 2003 R million R million Audited % Audited %

Segmental analysis – industry Agriculture 5 939 3 3 593 2 Construction 1 422 1 740 1 Electricity 1 034 1 1 665 1 Finance, real estate and other business services 36 943 18 33 796 22 Individuals 110 306 54 80 159 51 Manufacturing 10 456 5 6 071 4 Mining 2 709 1 2 117 1 Other services 24 204 12 20 954 14 Transport 6 225 3 3 594 2 Wholesale 4 877 2 3 431 2

204 115 100 156 120 100

At 31 December 2004 2003 R million R million Audited % Audited %

Maturity analysis The maturity analysis is based on the remaining period to contractual maturity from year end. Redeemable on demand 17 835 9 13 143 8 Maturing with one month 22 247 11 10 906 7 Maturing after one month but within six months 15 827 7 15 716 10 Maturing after six months but within 12 months 11 798 6 13 027 9 Maturing after 12 months 136 408 67 103 328 66

204 115 100 156 120 100

44 At 31 December 2004 2003 R million R million Audited Audited

Provisions for credit losses Balance at the beginning of the year 2 775 2 526

Movements for the year – Credit losses written off (812) (1 024) – Discount element recycled to interest income (220) (314) – Other movements (4) (9) – Net provisions raised and released 1 151 1 596

Balance at end of the year 2 890 2 775

Comprising: Provisions for non performing loans 1 626 1 685 Provisions for performing loans 1 264 1 090

Balance at the end of the year 2 890 2 775

At 31 December 2004 2003 R million R million Audited % Audited %

Segmental analysis of specific provisions industry Agriculture 48 3 34 2 Construction 33 2 35 2 Electricity – – 1 – Finance, real estate and other business services 310 19 418 25 Individuals 785 49 646 38 Manufacturing 70 4 105 6 Mining 52 3 8 1 Other services 241 15 324 19 Transport 20 1 18 1 Wholesale 67 4 96 6

1 626 100 1 685 100

Non-performing Loans (NPLs) 2004 2003

Growth in credit losses provision charge (36,5%) (1,0%) Credit loss ratio (1) 0,5% 1,0% Balance sheet provision for credit losses as a % of net average loans and advances 1,6% 2,0% Gross NPLs (R million) 3 251 3 950 Net coverage ratio (2) 100% 100%

(1) Provision for credit losses per the income statement as a percentage of average gross loans and advances (2) Non performing loans provision / (Gross non-performing loans – security)

Gross non-performing loans as a percentage of average gross loans and advances reduced from 2,8% to 1,8%.

45 6. CORPORATE GOVERNANCE

Standard Bank Group is fully committed to the principles of transparency, integrity and accountability as advocated and codified by the Code of Corporate practices and Conduct (King Code).

In supporting best practice initiatives, the directors recognise the need to conduct the enterprise with integrity and in accordance with generally accepted corporate practices. This philosophy is adopted by all group companies, including SBSA. The group’s corporate governance culture is implemented through the Standard Bank board committees’ comprehensive reporting procedures. These procedures ensure a constant monitoring of the implementation of group policies and progress towards objectives by subsidiaries. In this way, all subsidiaries operate in accordance with the group’s governance standards.

Standard Bank maintains high ethical standards in its dealings with stakeholders. A code of ethics developed and adopted by the group is in force and remains a dynamic document. In addition, SBSA, as a member of the Banking Council of South Africa, supports the Revised Code of Banking Practice which became effective on 1 October 2004.

7. RISK MANAGEMENT

The effective management of risk in a diverse and complex organisation such as The Standard Bank of South Africa Limited (SBSA) requires a strong risk management culture. This culture ensures that sound commercial decisions are taken to adequately balance risk and reward.

Approach to risk management

The company follows a risk management approach that balances strong corporate oversight with independent risk management structures within the business units. The risk management framework is based on four main building blocks: risk governance and ownership; risk management culture and capability; risk assurance; and risk reporting:

• Risk governance and ownership

• A risk governance structure is in place to ensure independent oversight of all business activities. It begins with the board of directors (the board). The board reviews and agrees the type and level of risk that the company is willing to take in the pursuit of business.

• Risk ownership is clearly defined in, and between the business units and the centralised risk functions.

• Risk management culture and capability

• Continuous training, development and awareness programmes are followed in the company.

• Policies are formally documented and approved.

• Risk identification and measurement is performed across the company using defined methodologies and, where appropriate, specific to the requirements of the individual business units.

• Risk assurance

In addition to the assurance provided by management, through various reports tabled at risk committees and the board, the internal audit department gives the board independent assurance that risk is appropriately managed through regular audits of areas in the company.

• Risk reporting

The group risk management committee receives regular reports from management covering its assessment of the significant risks and the effectiveness of the systems and controls used to manage these risks.

46 Major risks

The major risks to which the company is exposed are discussed below:

Credit risk – the risk arising from customer or counterparty non-performance or default. In lending transactions, credit risk arises through potential non-performance by counterparties for facilities utilised. These facilities typically take the form of loans and advances, the advancement of securities and contracts to support customer obligations such as letters of credit and guarantees.

In trading activities, credit losses arise due to non-performance by a counterparty on trading-related financial obligations. There are three components to credit risk:

• settlement risk – the risk arises in transactions involving the exchange of values when the company must honour its obligations to deliver without first being able to determine that the company has received the countervalue;

• pre-settlement risk – the risk arises from the potential non-performance by a counterparty to a derivative obligation. The company is exposed to the loss of value through the cost of replacing the transaction which is no longer at market rates; and

• issuer risk – the risk that the issuer of a debt instrument defaults on a particular principal payment or set of payments due under the instrument.

Market risk and credit risk overlap in traded credit products, including debt instruments and credit derivatives. SBSA manages issuer concentration and default risks through the credit and country risk processes and market price sensitivity through market risk processes.

Market risk – the risk of a decrease in the market value of a portfolio of financial instruments caused by an adverse move in market variables such as equity, bond and commodity prices, currency exchange rates, interest rates, credit spreads and implied volatilities on all of the above. Market risk exists wherever the company has trading, banking or investment positions as principal. Major exposures to market risk occur in markets served by formal financial exchanges and over-the-counter markets. These exposures arise from customer-driven business and from proprietary positions.

Market risk exposure on trading positions and capital funds

The board of directors grants general authority to take on market risk exposure to an Africa asset and liability committee (ALCO), which is chaired by the chief executive.

The company manages market risk through risk limits. The company uses a range of risk measurement methodologies and tools to establish limits, including Value at Risk (VaR), stress testing, loss triggers and traditional risk management measures.

Market risk on equity investments

The equity management committee approves investments in listed and unlisted entities within an approval limit framework. Market risk on investments is managed in accordance with the purpose and strategic benefits of such investments, rather than purely on mark to market considerations. Periodic reviews and reassessments are undertaken.

Market risk exposure on banking positions and capital funds

Banking-related market risk exposure is primarily due to structural interest rate risk arising from the differing repricing characteristics of banking assets and liabilities. The independent asset and liability management (ALM) function monitors exposures to interest rate risk. The main analytical techniques used to measure banking book interest rate risk are forward-looking dynamic scenario analyses and static repricing gap analyses, which measure interest rate risk at a point in time. The results obtained from analytical techniques assist the company in evaluating the optimal hedging and yield-enhancing strategies on a risk-return basis.

47 Liquidity risk – the risk that the company will have insufficient funds or marketable assets available to fulfil its future cash flow obligations on time.

The nature of banking, investment and trading activities results in a continuous exposure to liquidity risks. Liquidity obligations arise from requirements to repay deposits, advance committed funds, and make interest and other expense payments. Sound liquidity management is crucial in protecting the company’s depositor base, maintaining market confidence and ensuring future growth.

Guidelines issued by the Financial Services Authority (FSA) in the United Kingdom are adopted to constrain asset versus liability mismatches on a maturity ladder.

Compliance risk – the risk of regulatory sanctions, financial loss, or loss to reputation that a bank may suffer as a result of its failure to comply with all applicable laws, regulations, codes of conduct and standards of good practice. This includes regulations imposed from the company’s lead regulator, the banking supervision department of the SARB, the Financial Services Board and various financial exchanges.

Several significant, new regulatory developments impacted on the company during the year. These developments include the Financial Intelligence Centre Act (FICA) to counter money laundering, as well as the Financial Advisory and Intermediary Services (FAIS) Act.

Operational risk – the risk resulting from inadequate or failed internal processes, people and systems or from external events.

The company recognises operational risk, inclusive of information risk and business continuity, as a significant risk category and manages it within acceptable levels. The company continues to develop and expand its guidelines, standards, methodologies and systems in order to enhance the management of operational risk. This challenge is heightened by the proposed Basel II capital adequacy regulations, which will impose a capital charge for operational risk and will come into effect at the end of 2007. The company has opted to use the standardised approach to calculate its capital charge for operational risk.

Insurance, in general, is a component of the management of operational risk and, where appropriate, insurance cover is purchased to mitigate potential losses associated with such risks. A comprehensive insurance programme is maintained as additional protection against potential losses from fraud, theft, loss of physical assets and professional liability claims.

The company has shifted its focus from a reliance on paper-based business continuity plans to a more practical approach in which the business continuity management methodology prescribes the use of simulations as a major driver. These simulations rehearse a business unit’s executive management structure through to its operational staff ensuring preparedness for unforeseen events. All mission critical areas were exposed to simulations in 2004.

Information risk is defined as the possibility of losses or damage being caused to a business as a result of breach in the confidentiality, integrity or availability of the company’s information. Information risk management includes the practices and procedures necessary to ensure the secure use of information resources by reducing the possibility of harm.

Reputational risk – the risk of damaging the company’s image, which may impair its ability to retain and generate business. The company manages reputational risk through its evaluation and control of the major risk types as set out above. In addition, there is an open communication culture that allows for all issues to be appropriately dealt with in a timely manner.

48 The Basel Capital Accord (Basel II)

During June 2004, the Bank of International Settlement released the final Basel II Capital Adequacy Framework (Basel II). The revision to the capital accord focuses mainly on improvements in the quantification and management of credit and operational risks, enhancements to the supervisory review process and more extensive disclosure of risk. Basel II aims to encourage banks, through lower capital requirements, to improve their risk management processes.

The SARB has announced that the South African implementation date of the new capital adequacy framework will be 1 January 2008, with banks in South Africa and the regulator evaluating the impact of the new framework on the capital requirements and risk management processes during a parallel run to be conducted for one year prior to implementation (that is, commencing on 1 January 2007).

Several projects are in progress in the company to ensure the Basel II risk management principles are incorporated in the day-to-day risk management functions across the company and to ensure that the optimal benefit is obtained through compliance with the new regulations. The projects are mainly in the areas of credit risk rating, collateral management, operational risk methodologies and risk systems.

The Basel II programme of projects is managed through a governance structure, which includes dedicated Basel II coordinators and business unit level Basel II steering committees. The primary function of this structure is to oversee projects and provide regular updates to senior management and the board.

49 8. SOUTH AFRICAN BANKING ENVIRONMENT

The South African Banking industry consists of five substantial banking groups which have an aggregate market share of approximately 88% of advances and deposits. Of these five, the four banks with national reach are SBSA, ABSA, FirstRand and Nedcor, and these four between them have market shares of approximately 82% of advances and deposits. The smaller niche banks generally focus on particular market segments, product types or geographic areas.

SBSA is regulated by the Bank Supervision Department of the SARB. The SARB has strong supervisory systems which aim to ensure the stability of the financial sector and secure the soundness of financial institutions.

The following table sets out the total assets and attributable income on a comparable basis for the banking groups listed:

Standard ABSA FirstRand(1) Nedcor Bank(2) Year ended Year ended Year ended Year ended 31.03.05 30.06.04 31.12.04 31.12.04

Total banking assets (R million) 348 686 342 167 327 238 505 810 Headline earnings (R million) 5 484 4 381 1 447 7 298

Notes: (1) FirstRand Bank Holdings only, excluding Momentum Group Limited and Discovery. (2) Standard Bank Group operations only, excluding Liberty Life.

SBSA has a substantial market share in the major banking asset categories. This is illustrated by the following table which sets out the respective domestic market shares in total advances, private sector advances and mortgage advances as at 30 June 2005, based on the regulatory returns (DI900) submitted to the SARB:

Private Total sector Mortgage advances advances advances (%) (%) (%)

ABSA 21,9 20,5 31,1 FirstRand 18,0 19,3 16,3 Nedcor 18,9 23,3 20,0 SBSA 23,6 18,8 26,6

SBSA’s position in the individual and unincorporated entities deposit market is strong, with a broad deposit base and market leadership in cash, cheque and transmission accounts. The following table sets out the respective market shares with regard to total deposits, cash, cheque and transmission accounts, and savings deposits as at 30 June 2005, based on the regulatory returns (DI900).

Cash, cheque and Total transmission Savings deposits accounts deposits (%) (%) (%)

ABSA 21,7 23,8 25,4 FirstRand 18,6 22,8 20,3 Nedcor 20,3 21,8 28,5 SBSA 22,2 31,2 20,4

50 9. DIRECTORATE as at 30 September 2005

D E Cooper (Chairman)

J H Maree* (Chief Executive)

D D B Band

E Bradley

T Evans

T S Gcabashe

D A Hawton

Sir Paul Judge#

S J Macozoma

R P Menell

Adv K D Moroka

A C Nissen

M C Ramaphosa

M A Ramphele

S P Ridley*

M J Shaw

Sir Robert Smith#

Dr C B Strauss

*Executive director #British

Secretary

L Wulfsohn

The business address of the directors is 9th Floor, Standard Bank Centre, 5 Simmonds Street, Johannesburg, 2001.

51 FINANCIAL INFORMATION ON THE STANDARD BANK OF SOUTH AFRICA LIMITED

The information below has been extracted from the audited financial statements of The Standard Bank of South Africa Limited (here also referred to as the “company”).

BALANCE SHEET AT 31 DECEMBER 2004

2004 2003 Note Rm Rm Assets Cash and balances with banks 2 8 750 8 201 Short-term negotiable securities 3 16 045 15 160 Derivative assets 4 97 619 79 573 Trading assets 5 6 545 9 068 Investment securities 6 16 110 14 566 Loans and advances 7 201 225 153 345 Other assets 8 6 828 7 995 Interest in group companies, associates and joint ventures 9 29 517 30 587 Intangible assets 10 205 209 Property and equipment 11 2 069 2 149 Total assets 384 913 320 853

Equity and liabilities Liabilities 366 716 305 616 Deposit and current accounts 14 244 423 198 982 Trading liabilities 15 1 860 4 757 Derivative liabilities 4 92 349 73 701 Other liabilities and provisions 16 13 137 13 062 Subordinated bonds 17 7 869 5 830 Liabilities to group companies 9 7 078 9 284

Capital and reserves 18 197 15 237 Share capital 12 60 60 Share premium 13 8 137 5 643 Reserves 10 000 9 534

Total equity and liabilities 384 913 320 853

52 INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004

2004 2003 Note Rm Rm Interest income 19.1 30 677 31 517 Interest expense 19.2 21 130 22 652 Net interest income before provisions for credit losses 9 547 8 865 Provisions for credit losses 19.3 851 1 341 Net interest income 8 696 7 524 Non-interest revenue 19.4 9 345 7 672 Income from operations 18 041 15 196 Operating expenses 10 651 9 210 Staff costs 19.5 5 850 4 859 Other operating expenses 19.6 4 801 4 351

Net income from operations 7 390 5 986 Goodwill amortisation 9.2 – (4) Exceptional items 20.3 (8) 114 Income from associates and joint ventures 9.2 79 32 Income before tax 7 461 6 128 Indirect tax expense 21 316 325 Income before direct tax expense 7 145 5 803 Direct income tax expense 21 1 707 1 570 Profit for the year 5 438 4 233

Headline earnings (Rm) 20.3 5 412 4 110 Headline earnings per share (cents) 20.4 9 020 6 852 Earnings per share (cents) 20.4 9 064 7 057 Dividends per share (cents) 20.2 9 998 2 416

53 CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2004

2004 2003 Note Rm Rm Operating activities Cash receipts from customers 22.2 38 942 38 271 Cash paid to customers, employees and suppliers 22.3 (31 102) (31 247) Dividends received 22.4 854 667 Net cash flows from operating activities 22.1 8 694 7 691

Changes in operating funds Increase in income-earning assets 22.5 (44 535) (41 327) Increase in deposits, other liabilities and provisions 22.6 40 050 29 079 Net cash flows used in operating funds (4 485) (12 248)

Tax paid 22.7 (1 790) (1 801)

Investing activities Capital expenditure on – property (3) (2) – equipment, furniture and vehicles (696) (911) – intangible assets (65) (132) Investment in associates and joint ventures – (62) Proceeds from sales of – property 39 355 – equipment, furniture and vehicles 127 193 – shares in business operations 27 38 Net cash flows used in investing activities (571) (521)

Financing activities Proceeds from issue of share capital 13 2 494 498 Increase in subordinated bonds 2 000 – Dividends paid 20.2 (4 850) (1 250) Net cash flows used in financing activities (356) (752)

Effects of exchange rate changes on cash and cash equivalents (58) (91) Net increase/(decrease) in cash and cash equivalents 1 434 (7 722) Cash and cash equivalents at beginning of the year 23 361 31 083 Cash and cash equivalents at end of the year1 24 795 23 361

1Cash and cash equivalents at end of the year is made up of cash, balances with banks and short-term negotiable securities.

54 STATEMENT OF CHANGES IN SHAREHOLDER’S FUNDS FOR THE YEAR ENDED 31 DECEMBER 2004

Share capital Trans- Cash flow Available- and lation hedging for-sale Retained premium reserve reserve reserve earnings1 Total Note Rm Rm Rm Rm Rm Rm Balance at 1 January 2003 as previously reported 5 205 88 20 5 6 463 11 781 Change in accounting policy 23 69 69 Restated balance at 1 January 2003 5 205 88 20 5 6 532 11 850 Items accounted for directly in reserves (91) 3 (6) (94) – currency translation differences (91) (91) – cash flow hedges – net fair value gains 3 3 – mark-to-market of available-for-sale (6) (6) assets Issue of share capital and share 13 498 498 premium Profit for the year 4 233 4 233 Dividends paid 20.2 (1 250) (1 250) Balance at 31 December 2003 5 703 (3) 23 (1) 9 515 15 237

Balance at 1 January 2004 5 703 (3) 23 (1) 9 515 15 237 Reallocation of reserves 21 (21) – Items accounted for directly in reserves (58) (64) (122) – currency translation differences (58) (58) – cash flow hedges – net fair value loss (64) (64) Issue of share capital and share 13 2 494 2 494 premium Profit for the year 5 438 5 438 Dividends paid 20.2 (4 850) (4 850) Balance at 31 December 2004 8 197 (61) (20) (1) 10 082 18 197

All balances are stated net of any applicable tax.

1 No statutory general credit risk reserve is required as the current provisions exceed the SARB DI 500 prudential credit risk requirements. The reserve amounting to R184 million at 31 December 2003, has now been included in retained earnings.

55 ACCOUNTING POLICIES FOR THE YEAR ENDED 31 DECEMBER 2004

The principal accounting policies adopted in the preparation of these financial statements are set out below.

The accounting policies are consistent with those adopted in the previous year, except for changes made as a result of the adoption of the new accounting statement on Secondary Tax on Companies (STC), AC 501, and the transitional requirements of the accounting statement on Business Combinations, AC 140.

In terms of AC 501 a deferred tax asset is recognised on STC credits to the extent that it is probable that dividends will be declared against which unused STC credits can be utilised. Deferred tax assets were not previously raised on STC credits.

AC 140 prohibits the amortisation of goodwill on acquisitions after 31 March 2004. Goodwill arising on acquisitions on or after 1 January 2000 but before or on 31 March 2004 is amortised over its estimated useful life, not exceeding 20 years.

The impact on the financial results and position of the company following the adoption of these statements is detailed in note 23 on page 51. Comparative financial information has been restated to recognise a deferred tax asset for STC credits.

1. BASIS OF PREPARATION

These financial statements are prepared in accordance with, and comply with, South African Statements of Generally Accepted Accounting Practice (GAAP) and the South African Companies Act of 1973. The financial statements are prepared in accordance with the going concern principle under the historical cost basis as modified by the revaluation of financial instruments classified as instruments available-for-sale, held for trading, instruments held at fair value and derivative instruments. All monetary figures appearing in the financial statements, unless otherwise indicated, are stated in millions of rands (Rm). In line with JSE requirements, Standard Bank Group will be adopting the International Financial Reporting Standards (IFRS) from January 2005.

2. FOREIGN CURRENCY TRANSLATIONS

Foreign entities Foreign entities are branches where the activities are not an integral part of those of the reporting enterprise. Assets and liabilities of foreign branches are translated into South African rands at year-end exchange rates. Capital and reserves are translated at historical rates. Income statement items are translated at the weighted average exchange rates for the year. Translation differences arising from foreign branches are taken directly to equity. On disposal of foreign branches, such translation differences are recognised in the income statement as part of the profit or loss on disposal. Transactions and balances Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transactions. Gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Such balances are translated at year-end exchange rates. Translation differences on available-for-sale financial assets are recognised in equity until disposal.

3. CASH AND BALANCES WITH BANKS

Cash and balances with banks comprise coin and bank notes, balances with central and other banks.

4. SHORT-TERM NEGOTIABLE SECURITIES, TRADING ASSETS AND INVESTMENT SECURITIES

Recognition and measurement Financial assets are held for liquidity, investment, trading or hedging purposes. All financial assets are measured initially at cost including transaction costs. These financial assets are recognised on the date the company commits to

56 purchase the assets (trade date) and are derecognised when the company no longer has control over the assets. Gains or losses on disposal are determined using the average costing method. Classification Management determines the appropriate classification of financial assets on acquisition. Originated Short-term negotiable securities and investment securities originated by the company are financial assets that are created by the company by providing money directly to a debtor, other than those that are originated with the intent to be sold immediately or in the short term. Financial assets classified as originated by the company are carried at amortised cost, using the effective yield method, less any provisions for impairment. Held-to-maturity Short-term negotiable securities and investment securities with fixed maturity, where management has both the intent and the ability to hold the securities to maturity, are classified as held-to-maturity. Financial assets classified as held- to-maturity by the company are carried at amortised cost, using the effective yield method, less any provisions for impairment. Trading Financial assets that the company holds for short-term profit taking are classified as assets held for trading. Subsequent to initial recognition, trading assets are measured at fair value. All related realised and unrealised gains and losses arising from the change in fair value of trading assets are included in trading income in the income statement. Interest earned and dividends received while holding trading assets are included in trading revenue. Held at fair value In terms of AC 133, an accounting option exists to carry any financial asset at fair value. Where the company has elected this option, these financial assets are classified as assets held at fair value and subsequent to initial recognition, are carried at fair value. All related realised and unrealised gains and losses arising from the change in fair value of these financial assets are included in interest income for all dated financial assets and in other income for all undated financial assets. Such classification is not changed subsequent to initial recognition. Available-for-sale Financial assets that are not held for trading purposes, originated by the company or held-to-maturity, are classified as available-for-sale assets. Unrealised gains or losses arising from the changes in the fair value of available-for-sale assets are recognised in equity. On disposal of available-for-sale assets, the fair value adjustments accumulated in equity are recognised in the income statement. Fair value The fair value of trading assets, financial assets held at fair value and available-for-sale assets are based on quoted bid prices, excluding transaction costs. Fair values for unquoted equity financial assets are estimated using applicable fair value models. If a quoted bid price is not available for dated financial assets, the fair value is estimated using pricing models or discounted cash flow techniques. Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate is a market-related rate at the balance sheet date for a financial asset with similar terms and conditions. Where pricing models are used, inputs are based on market-related measures at the balance sheet date. If specific circumstances occur that disqualify a financial asset from continuing to be accounted for at amortised cost, the difference between amortised cost and fair value is accounted for in the period in which it arises in the income statement, if the financial asset is reclassified as a trading asset or held at fair value, or in equity, if the financial asset is reclassified as an available-for-sale instrument. Impairment A review for impairment indicators is carried out at each financial year end. If impairment indicators are present, an impairment test is carried out. A financial asset is impaired if its carrying amount is greater than its estimated recoverable amount. The recoverable amount of a financial asset measured at fair value is the quoted market price for quoted instruments, for unquoted instruments, the present value of expected cash flows discounted at the current market rate of interest for a similar financial asset, or at the original effective interest rate in the case of assets carried at amortised cost.

57 Where an available-for-sale asset, which has been remeasured to fair value directly through equity, is impaired and a loss on the financial asset was previously recognised directly in equity, the cumulative net loss that had been recognised in equity is transferred to the income statement and recognised as part of the impairment loss. Where an available-for-sale asset is impaired, and an increase in the fair value of the financial asset was previously recognised in equity, the increase in fair value of the financial asset recognised in equity is reversed to the income statement to the extent that the asset is impaired and recognised as part of the impairment loss. Any additional impairment loss is recognised in the income statement. If in a subsequent period, the amount relating to an impairment loss decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the income statement.

5. REPURCHASE AND RESALE AGREEMENTS AND LENDING OF SECURITIES

Securities sold subject to linked repurchase agreements are retained in the financial statements as trading or investment securities and valued in terms of accounting policy number 4. The liability to the counterparty is included under deposit and current accounts. Securities purchased under agreements to resell are recorded as loans granted under resale agreements and included under loans and advances to other banks or clients as appropriate. The difference between the sale and repurchase price is treated as interest and accrued over the life of the repurchase agreement using the effective yield method. Securities lent to counterparties are retained in the financial statements and are classified and measured in accordance with accounting policy number 4. Securities borrowed are not recognised in the financial statements unless these are sold to third parties. In these cases, the obligation to return the securities borrowed is recorded at fair value as a trading liability. Income and expenses arising from the securities borrowing and lending business are recognised on an accrual basis over the period of the transactions.

6. DERIVATIVE FINANCIAL INSTRUMENTS

A derivative is a financial instrument whose value changes in response to an underlying variable, that requires little or no initial investment and that is settled at a future date. All derivatives are accounted for as trading instruments unless they meet the criteria for hedge accounting. Derivatives are initially recognised at cost, including transaction costs, and subsequently remeasured to fair value. Fair values are obtained from quoted market prices, dealer price quotations, discounted cash flow models, and option pricing models which consider current market and contractual prices for the underlying instruments as well as time value of money. All derivative instruments of the company are carried as assets when the fair value is positive and as liabilities when the fair value is negative, subject to offsetting principles as described in accounting policy number 19. Realised and unrealised gains and losses are recognised in the income statement. Embedded derivatives included in hybrid instruments are treated as separate derivatives when their risks and characteristics are not closely related to those of the host contract and the host contract is not carried at fair value with fair value changes recognised in the income statement. Where separated from the host contracts, embedded derivatives are accounted for and measured at fair value with any gains or losses from the change in fair value included in the income statement. The host contracts are accounted for and measured applying the rules of the relevant category of that financial instrument.

7. HEDGE ACCOUNTING

On the date that a derivative contract is designated as a hedging instrument, the company designates the derivative as either: • a hedge of the fair value of a recognised asset or liability (fair value hedge); or • a hedge of future cash flow attributable to a recognised asset or liability, a forecast transaction or a firm commitment (cash flow hedge).

58 A hedging relationship exists where: • at the inception of the hedge there is formal documentation of the hedge; • the hedge is expected to be highly effective; • the effectiveness of the hedge can be reliably measured; • the hedge is highly effective throughout the reporting period; and • for a hedge of a forecast transaction, the transaction is highly probable and presents an exposure to variations in cash flows that could ultimately affect net profit. Hedge accounting requires that the hedging instrument be measured at fair value. The fair value of a derivative hedging instrument is calculated in the same manner as the fair value of a trading instrument. Where a hedge relationship is designated as a fair value hedge, the hedged item is stated at fair value in respect of the risk being hedged. Gains or losses on the remeasurement of both the fair value hedge and the hedged item are recognised in the income statement. Fair value adjustments relating to the hedged instrument are allocated to the same income statement category as the related hedged item. The effective portion of changes in the fair value of derivatives that are cash flow hedges are recognised in equity. The ineffective part of any gain or loss is recognised in the income statement. Where a forecast transaction or firm commitment results in the recognition of an asset, liability, income or expense, the cumulative gains or losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset, liability, income or expense. When a hedging instrument or hedge relationship is terminated, but the hedged transaction is still expected to occur, the cumulative gains or losses recognised in equity remains in equity and is recognised in accordance with the above policy. If the hedged transaction is no longer expected to occur, the cumulative gains or losses recognised in equity is immediately recognised in the income statement and is classified as trading income.

8. LOANS AND ADVANCES

Loans and advances originated by the company are classified as originated loans and advances. Purchased loans that the company has the intent and ability to hold to maturity are classified as held-to-maturity assets. Originated loans and loans held-to-maturity are accounted for at amortised cost. Origination transaction costs and origination fees received are capitalised to the value of the loan and amortised through interest income. Where the company has elected to classify and account for any loan at fair value, the movement in the fair value is accounted for in the income statement as interest income.

9. PROVISIONS FOR CREDIT LOSSES

Advances and other assets are stated after the deduction of provisions for loan impairments. Advances and other assets are reviewed at each balance sheet date to determine whether there is objective evidence of impairment. If any such impairment indicators signify that it is probable that the company will be unable to collect all amounts due, a provision for impairment is made to reduce the carrying amount of the asset to its estimated recoverable amount. Provisions for non-performing loans, covering identified doubtful debts, are based on periodic evaluations of advances and take account of past loss experience, economic conditions and changes in the nature and level of risk exposure. Retail loans and advances are considered non-performing when amounts are due and unpaid for three months. Corporate loans are analysed on a case-by-case basis taking into account breaches of key loan conditions. When a loan carried at amortised cost has been identified as impaired or the interest earned is not at a market-related rate, the carrying amount of the loan is reduced to an amount equal to the present value of expected future cash flows, discounted at the original effective interest rate of the loan. The resulting loss is accounted for as a provision for loan impairment in the income statement. Subsequent to impairment, the effects of discounting unwind over time as interest income, based on the original effective interest rate. Portfolio provisions for the impairment of performing loans cover losses which, although not yet specifically identified, are present in any portfolio of bank advances based on historic loss patterns.

59 Increases in the provisions for loan impairments and any subsequent reversals thereof, or recoveries of amounts previously impaired, are reflected in the income statement. Advances are written off using specific provisions for loan impairments once all reasonable attempts at collection have been made and there is no realistic prospect of recovering outstanding amounts.

10. ASSETS LEASED TO CLIENTS AND INSTALMENT SALE CONTRACTS – LESSOR ACCOUNTING

Lease and instalment sale contracts are regarded as financing transactions and rentals and instalments receivable, less unearned finance charges, are included in loans and advances on the balance sheet. Finance charges earned are computed using the effective interest rate method. The benefits arising from investment allowances on assets leased to clients are accounted for in taxation.

11. INTEREST IN ASSOCIATES AND JOINT VENTURES

Associates An associate is an entity, not being a subsidiary, in which an investment is held and over whose financial and operating policies the company is able to exercise significant influence. These investments are accounted for by means of the equity method. Equity accounting involves recognising the company’s share of the associate’s profit or loss for the year in the income statement. This method is applied from the date on which the enterprise becomes an associate, up to the date on which it ceases to be an associate. Where an investment is acquired and held exclusively with a view to its disposal in the near future, it is not accounted for under the equity method. These investments are accounted for on the basis set out in accounting policy number 4. Jointly controlled entities A jointly controlled entity is a contractual arrangement that establishes joint control over the economic activity of an entity. The company’s interests in jointly controlled entities are accounted for using the equity method. Interests in associates and jointly controlled entities are carried in the balance sheet at an amount that reflects the company’s share of the net assets of the associate or jointly controlled entity and includes the unamortised portion of goodwill on acquisitions after 1 January 2000. Inter-company profits and losses are eliminated in determining the company’s share of equity accounted profits. Jointly controlled assets Jointly controlled assets are assets contributed or acquired for the purpose of a joint venture. Each venturer has control over its share of future economic benefits through its share in the jointly controlled assets. The company recognises its share of the jointly controlled assets, liabilities, income and expenses in respect of its interest in the joint venture.

12. GOODWILL

Goodwill represents the excess of the cost of an acquisition over the fair value of the company’s share of the net assets of the acquired associate or joint venture at the date of acquisition. Goodwill arising on the acquisition of associates or joint ventures occurring on or after 1 January 2000, is reported in the balance sheet as an intangible asset. Goodwill arising on acquisitions on or after 1 January 2000 but before or on 31 March 2004 is amortised using the straight-line method over its estimated useful life, not exceeding 20 years and is carried at cost less any accumulated amortisation. The carrying amount of goodwill is reviewed annually and written down for impairment where considered necessary. Negative goodwill relating to identifiable expected losses is recognised in the income statement when the future losses or expenses are recognised. Goodwill arising on acquisitions with an agreement date after 31 March 2004 is not amortised, but allocated to cash generating units and tested annually for impairment. Cash generating units are the smallest identifiable group of assets that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. An impairment loss is recognised if the carrying amount of a cash generating unit exceeds its recoverable amount. Negative goodwill is recognised as income in the period in which it arises. 60 13. INTANGIBLE ASSETS

Computer software Generally, costs associated with developing computer software programs are recognised as an expense as incurred. However, strategic information technology development costs that are clearly associated with an identifiable and unique system, which will be controlled by the company and have a probable benefit exceeding one year, are recognised as intangible assets. Computer software costs recognised as assets are amortised on the straight-line basis at rates appropriate to the expected useful lives of the assets, not exceeding five years, and are carried at cost less any accumulated amortisation and any accumulated impairment losses. The carrying amount of capitalised computer software is reviewed annually and is written down when the carrying amount exceeds the recoverable amount.

14. PROPERTY AND EQUIPMENT

Investment properties are held to earn rentals and for capital appreciation, whereas owner-occupied properties are held for use in the supply of services or for administrative purposes. Equipment, furniture, vehicles and other tangible assets are stated at cost less accumulated depreciation and are depreciated on the straight-line basis over the estimated useful lives of the assets to expected residual values. The carrying value of assets is reviewed regularly to assess whether there is any indication of impairment and where the carrying amounts of assets are greater than their recoverable amounts, the assets are written down to these recoverable amounts. The recoverable amount is the greater of the net selling price of the asset or the value in use. Depreciation and impairment losses are included in the income statement. Maintenance and repairs, which neither materially add to the value of assets nor appreciably prolong their useful lives, are charged against income. Gains and losses on disposal of assets are included in the income statement. Freehold buildings are classified as owner-occupied properties and accounted for in terms of the cost method. These buildings are depreciated on the straight-line basis over their estimated useful lives, not exceeding 40 years. The freehold land portion is not depreciated. Leasehold buildings are depreciated over the period of the lease or over such lesser period as is considered appropriate. The estimated useful lives of tangible assets are as follows: Property – not exceeding 40 years Computer equipment – 3 to 5 years (2003: 5 years) Motor vehicles – 5 years Office equipment – 5 to 8 years Furniture and fittings – 5 to 13 years Capitalised leased assets – over the shorter of the lease term or its useful life

15. LESSEE ACCOUNTING

Leases, where the company assumes substantially all the benefits and risks of ownership, are classified as finance leases. Finance leases are capitalised at the lower of the fair value of the leased asset and the present value of the minimum lease payments. Lease payments are separated using the effective interest rate method to identify the finance cost, which is charged against income over the lease period, and the capital repayment which reduces the liability to the lessor. Leases of assets are classified as operating leases if the lessor effectively retains all the risks and benefits. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the lease.

16. PROVISION FOR LEAVE PAY

Employee benefits in the form of annual leave entitlements are provided for when they accrue to employees with reference to services rendered up to the balance sheet date.

61 17. OTHER PROVISIONS

Provisions are recognised when the company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. When the effect of discounting is material, provisions are discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

18. TAX

Normal tax Income tax and capital gains tax on the profit or loss for the year comprise current and deferred tax and represent the expected tax payable on taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustments to tax payable in respect of previous years. Deferred income tax and deferred capital gains tax are provided for on the comprehensive basis, using the balance sheet liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes, using tax rates enacted at the balance sheet date. Deferred tax assets are recognised to the extent that it is probable that future taxable income will be available against which the unused tax losses can be utilised. Deferred tax assets and liabilities are not discounted. Deferred tax relating to fair value remeasurements of available-for-sale assets and cash flow hedges which are charged or credited directly to equity, is also charged or credited directly to equity and is subsequently recognised in the income statement together with the deferred gain or loss. Secondary tax on companies (STC) To the extent that it is probable that dividends will be declared against which unused STC credits can be utilised, a deferred tax asset is recognised for STC credits. The STC effect of dividends paid on equity instruments is recognised in the period in which the company declares the dividend. For financial instruments that are classified as liabilities, the STC relating to any contractual payments is accrued in the same period as the interest accrual. Indirect tax

Indirect taxes, including non-recoverable value added tax (VAT), regional service council (RSC) levies, skills development levies and other duties for banking operations, are separately disclosed in the income statement.

19. OFFSETTING

Financial assets and liabilities are offset and the net amount reported on the balance sheet when there is a legally enforceable right to set-off the recognised amount and there is an intention to settle on a net basis, or to realise the asset and settle the liability simultaneously.

20. EQUITY

Share issue costs Incremental external costs directly attributable to a transaction that increases or decreases equity is deducted from equity, net of related taxation. All other share issue costs are expensed immediately. Dividends on ordinary shares Dividends are recognised in the period in which they are declared. Dividends declared after balance sheet date are disclosed in the dividends note.

21. EQUITY PARTICIPATION PLANS

No compensation cost is recognised on the issue of equity participation rights in the holding company.

62 22. REVENUE AND EXPENDITURE

Revenues described below represent the most appropriate equivalent of turnover. Revenue is derived substantially from the business of banking and related activities and comprises net interest income and non-interest revenue. Net interest income Interest income and expenses are recognised in the income statement for all interest-bearing instruments on an accrual basis using the effective yield method. Where financial assets have been impaired, interest income continues to be recognised on the impaired value, based on the original effective interest rate. Net interest income includes fair value adjustments on interest-bearing financial instruments held at fair value, excluding financial instruments held for trading. Dividends received on lending activities are included in interest income. External expenses incurred directly as a result of bringing margin-yielding assets on-balance sheet are amortised through interest income over the life of the asset. Non-interest revenue Non-interest revenue includes dividends from investments, fees and commissions from banking, insurance and related transactions, net revenue from exchange and securities trading and net gains on the realisation or revaluation of investment banking assets. Dividends are recognised in the period in which right to receipt is established. Scrip dividends are recognised as dividends received to the extent that they compare to cash dividends in a similar entity, after considering the purpose of the scrip dividends. Fees and commissions are recognised when the related service is performed.

23. POST-RETIREMENT BENEFITS

The company operates a number of defined contribution plans based on a percentage of pensionable earnings funded by both the employer and employees, the assets of which are generally held in separate trustee-administered funds. Contributions to these plans are charged to the income statement in the period to which they relate. The company also operates a number of defined benefit funds, with membership generally limited to employees who were in the employment of the company at specified dates. These funds are governed by the Pension Funds Act 1956. Employer companies contribute to the cost of benefits taking account of the recommendations of the actuaries. Statutory actuarial valuations are required every three years using the projected unit credit method. Interim valuations are also performed annually at the balance sheet date. These obligations are measured at the present value of the estimated future cash outflows using interest rates of government bonds with maturity dates that approximate the expected maturity of the obligations. The company’s current service costs to the defined benefit funds are recognised as expenses in the current year. Past service costs, experience adjustments and the effect of changes in actuarial assumptions are recognised as expenses or income in the current year to the extent that they relate to retired employees or past service. For active employees, these items are recognised as expenses or income systematically over a period not exceeding the expected remaining service period of employees. The company operates unfunded post-retirement medical aid schemes, with membership limited to employees who were retired at specified dates and complying with specific criteria. For past service, the company recognises and provides for the actuarially determined present value of post-retirement medical aid employer contributions on an accrual basis using the projected unit credit method. Independent qualified actuaries carry out valuations of these obligations. Unrecognised actuarial gains or losses are accounted for over a period not exceeding the remaining working life of active employees.

24. SEGMENT REPORTING

A segment is a distinguishable component of the company engaged in providing products or services within a particular economic environment, which is subject to risks and rewards that are different from those of other segments. Segments with a majority of income earned from external clients and whose total income, operating profit or total assets are 10% or more of the company total, are reported separately. Transactions between segments are priced at market-related rates.

25. COMPARATIVE FIGURES

Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year. Details of reclassifications are provided in note 23. 63 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

1. SEGMENT REPORTING Retail Corporate and Other Total Banking Investment services Banking 2004 Rm Rm Rm Rm Net interest income before provisions for credit losses 7 324 2 381 (158) 9 547 Provisions for credit losses 781 28 42 851 Net interest income 6 543 2 353 (200) 8 696 Non-interest revenue 5 873 3 339 133 9 345 Income from operations 12 416 5 692 (67) 18 041 Operating expenses 8 147 2 517 (13) 10 651 – Staff costs 2 859 1 289 1 702 5 850 – Other operating expenses 5 288 1 228 (1 715) 4 801

Net income from operations 4 269 3 175 (54) 7 390 Goodwill amortisation – – – – Exceptional items (23) – 15 (8) Income from associates and joint ventures 77 2 – 79 Income before tax 4 323 3 177 (39) 7 461 Indirect tax expense 180 49 87 316 Income before direct tax expense 4 143 3 128 (126) 7 145 Direct income tax expense 1 266 559 (118) 1 707 Profit for the year 2 877 2 569 (8) 5 438

Headline earnings 2 897 2 569 (54) 5 412

Operating information Total assets 152 197 223 354 9 362 384 913 Total liabilities 143 266 216 905 6 545 366 716 Number of employees 17 092 2 787 6 558 26 437

Other information Interest in associates and joint ventures 104 66 – 170 Capital expenditure 390 99 275 764 Depreciation and amortisation 307 71 335 713 Impairments 14 – 13 27

64

Retail Corporate and Other Total Banking Investment services Banking 2003 Rm Rm Rm Rm Net interest income before provisions 6 755 2 190 (80) 8 865 for credit losses Provisions for credit losses 1 108 176 57 1 341 Net interest income 5 647 2 014 (137) 7 524 Non-interest revenue 5 020 2 396 256 7 672 Income from operations 10 667 4 410 119 15 196 Operating expenses 7 173 2 129 (92) 9 210 – Staff costs 2 435 1 047 1 377 4 859 – Other operating expenses 4 738 1 082 (1 469) 4 351

Net income from operations 3 494 2 281 211 5 986 Goodwill amortisation – – (4) (4) Exceptional items (17) – 131 114 Income from associates and joint ventures 28 4 – 32 Income before tax 3 505 2 285 338 6 128 Indirect tax expense 153 77 95 325 Income before direct tax expense 3 352 2 208 243 5 803 Direct income tax expense 1 040 475 55 1 570 Profit for the year 2 312 1 733 188 4 233

Headline earnings 2 329 1 733 48 4 110

Operating information Total assets 114 378 196 252 10 223 320 853 Total liabilities 106 693 190 001 8 922 305 616 Number of employees 16 167 2 956 6 788 25 911

Other information Interest in associates and joint ventures 63 88 – 151 Capital expenditure 415 100 530 1 045 Depreciation and amortisation 214 77 328 619 Impairments 39 41 57 137

65 The principal business units in the company are as follows:

Business unit Scope of operations

– Retail Banking Banking, investment, insurance and other financial services to individual customers and small – to medium – sized enterprises.

– Corporate and Investment Banking Commercial and investment banking services in South Africa to corporates, foreign banks and international counterparties.

– Other services Support functions to business units and advisory services.

The segment report includes only those business units of which the activities are conducted within SBSA legal entity. No secondary segment information is disclosed, due to the fact that all business activities relates to South Africa. The consolidated results of each business unit, containing all the activities of the business units across SBG, are reflected in the segment reporting in the SBG annual financial statements.

Where reporting responsibility for individual divisions within business units changes, the segmental analysis is reclassified accordingly.

During the year the capital management policy was revised to allocate minimum tier I capital to domestic business units based on 8,5% of risk-weighted assets, including capital adequacy buffers. The 2003 segmental balances have been restated to account for this change effective 1 January 2003.

66 2004 2003 Rm Rm 2. CASH AND BALANCES WITH BANKS

Coins and bank notes 2 479 2 818 Balances with central banks 4 848 3 170 Balances with other banks 1 423 2 213 8 750 8 201

3. SHORT-TERM NEGOTIABLE SECURITIES

Held at fair value 16 045 15 160 16 045 15 160

4. DERIVATIVE FINANCIAL INSTRUMENTS

All derivatives are classified as either derivatives held for trading or derivatives held for hedging. 4.1 Fair values The fair value of a derivative financial instrument represents the present value of the positive or negative cash flows, which would have occurred if the rights and obligations arising from that instrument were closed out in an orderly market place transaction at year end.

4.2 Notional amount The gross notional amount is the sum of the absolute value of all bought and sold contracts. The amount cannot be used to assess the market risk associated with the position and should be used only as a means of assessing the company's participation in derivative contracts.

67 SBSA utilises the following derivative instruments for trading and hedging purposes:

Maturity analysis

< 1 year 1 – 5 years > 5 years 2004 2004 2004 Rm Rm Rm 4.3 Derivative assets and liabilities

Derivatives held for trading

Foreign exchange derivatives 2 740 (597) (585) Forwards 1 622 253 – Futures – (1) – Options 1 118 (849) (585)

Interest rate derivatives 3 236 825 467 Bonds and options 32 26 (445) Caps and floors 16 55 – Future options (2) – – Forwards 38 77 – Swaps 3 164 647 912 Swaptions (12) 20 –

Commodity derivatives (36) 48 13 Forwards (121) – 6 Futures 1 – – Options 84 48 7

Credit derivatives 179 (2) 10 Credit default swaps 117 (2) 10 Total return swaps 62 – –

Equity derivatives (248) (86) (33) Forwards 41 – – Futures 6 – – Index options (295) (139) (52) Options 5 35 11 Swaps (5) 18 8 Other – – –

Total derivative assets/(liabilities) held for trading 5 871 188 (128)

Derivatives held for hedging

Derivatives designated as fair value hedges – interest rate swaps (1 422) 579 644 Derivatives designated as cash flow hedges – currency swaps (1) (21) 2 Derivatives designated as cash flow hedges – interest rate swaps – (3) – Derivatives designated as fair value portfolio hedges – interest rate (541) 15 87 Total derivative assets/(liabilities) held for hedging (1 964) 570 733 Total derivative assets/(liabilities) 3 907 758 605

68 Contract/ Contract/ Fair value of Fair value of notional Fair value of Fair value of notional Net fair value asset liabilities amount Net fair value asset liabilities amount 2004 2004 2004 2004 2003 2003 2003 2003 Rm Rm Rm Rm Rm Rm Rm Rm

1 558 16 976 (15 418) 200 452 (781) 15 454 (16 235) 428 659 1 875 12 685 (10 810) 133 092 (314) 14 812 (15 126) 390 193 (1) – (1) 1 617 – – – 6 728 (316) 4 291 (4 607) 65 743 (467) 642 (1 109) 31 738

4 528 73 286 (68 758) 2 466 241 2 872 54 592 (51 720) 2 444 426 (387) 1 375 (1 762) 113 657 (192) 1 501 (1 693) 76 139 71 176 (105) 38 687 25 160 (135) 44 596 (2) 1 (3) – – – – – 115 978 (863) 526 050 (485) 1 412 (1 897) 934 598 4 723 70 690 (65 967) 1 783 354 3 518 51 491 (47 973) 1 325 076 8 66 (58) 4 493 6 28 (22) 64 017

25 1 468 (1 443) 23 982 438 1 735 (1 297) 86 434 (115) 1 298 (1 413) 15 916 270 1 468 (1 198) 77 814 1 1 – 100 (2) – (2) 108 139 169 (30) 7 966 170 267 (97) 8 512

187 188 (1) 2 113 52 1 203 (1 151) 19 197 125 125 – 2 045 115 1 079 (964) 18 035 62 63 (1) 68 (63) 124 (187) 1 162

(367) 1 359 (1 726) 115 118 1 886 4 363 (2 477) 519 198 41 44 (3) 239 221 241 (20) 158 360 6 19 (13) 79 897 4 5 (1) 10 042 (486) 876 (1 362) 28 913 – – – – 51 383 (332) 4 643 1 354 3 431 (2 077) 350 445 21 37 (16) 1 426 32 32 – 351 – – – – 275 654 (379) –

5 931 93 277 (87 346) 2 807 906 4 467 77 347 (72 880) 3 497 914

(199) 3 506 (3 705) 53 133 1 378 2 199 (821) 28 392 (20) 49 (69) 21 27 27 – 1 550 (3) 47 (50) 800 – – – – (439) 740 (1 179) 3 200 – – – – (661) 4 342 (5 003) 57 154 1 405 2 226 (821) 29 942 5 270 97 619 (92 349) 2 865 060 5 872 79 573 (73 701) 3 527 856

69 4.4 Use and measurement of derivative instruments In the normal course of business, the company enters into a variety of derivative transactions. Derivative financial instruments are entered into for trading purposes and for hedging foreign exchange and interest rate exposure. Derivative instruments used by the company in both trading and hedging activities include swaps, options, forwards, futures, and other similar types of instruments based on foreign exchange rates, interest rates, credit risk and the prices of commodities and equities.

The risks associated with derivative instruments are monitored in the same manner as for the underlying instruments. Risks are also measured across the product range in order to take into account possible correlations.

The fair value of all derivatives is recognised on balance sheet and is only netted to the extent that a legal right of set-off exists and there is an intention to settle on a net basis.

Swaps are transactions in which two parties exchange cash flows on a specified notional amount for a predetermined period. The major types of swap transactions undertaken by the company are as follows:

• Interest rate swap contracts generally entail the contractual exchange of fixed and floating rate interest payments in a single currency, based on a notional amount and an interest reference rate. • Cross currency interest rate swaps involve the exchange of interest payments based on two different currency principal balances and interest reference rates and generally also entail exchange of principal amounts at the start and/or end of the contract. • Credit default swaps are the most common form of credit derivatives, under which the party buying protection makes one or more payments to the party selling protection during the life of the swap in exchange for an undertaking by the seller to make a payment to the buyer following a credit event, as defined in the contract, with respect to a third party. • Total return swaps are contracts in which one party (the total return payer) transfers the economic risks and rewards associated with an underlying asset to another counterparty (the total return receiver). The transfer of risks and rewards is affected by way of an exchange of cash flows that mirror changes in the value of the underlying asset and any income derived therefrom. Options are contractual agreements under which the seller (writer) grants the purchaser the right, but not the obligation, either to buy (call option) or to sell (put option) by or at a set date, a specified amount of a financial instrument or commodity at a predetermined price. The seller receives a premium from the purchaser for this right. Options may be traded over-the-counter (OTC) or on a regulated exchange.

Forwards and futures are contractual obligations to buy or sell financial instruments or commodities on a future date at a specified price. Forward contracts are tailor-made agreements that are transacted between counterparties in the OTC market, whereas futures are standardised contracts transacted on regulated exchanges.

70 4.5 Derivatives held for trading

The company trades derivative instruments on behalf of customers and for its own positions. The company transacts derivative contracts to address customer demands both as a market maker in the wholesale markets and in structuring tailored derivatives for customers. The company also takes proprietary positions for its own account. Trading derivative products include the following derivative instruments:

4.5.1 Foreign exchange derivatives

Foreign exchange derivatives are used to hedge foreign currency risks on behalf of customers and for the company’s own positions. Foreign exchange derivatives primarily consist of forwards, futures and options.

4.5.2 Interest rate derivatives

Interest rate derivatives are used to modify the volatility and interest rate characteristics of interest-earning assets and interest-bearing liabilities on behalf of customers and for the company’s own positions. Interest rate derivatives primarily consist of bonds and options, caps and floors, future options, forwards, swaps and swaptions.

4.5.3 Commodity derivatives

Commodity derivatives are used to address customer commodity demands and to take proprietary positions for the company’s own account. Commodity derivatives primarily consist of forwards, futures and options.

4.5.4 Credit derivatives

Credit derivatives are used to hedge the credit risk from one counterparty to another and to manage the credit exposure to selected counterparties on behalf of customers and for the company’s own positions. Credit derivatives primarily consist of credit default swaps and total return swaps.

4.5.5 Equity derivatives

Equity derivatives are used to transact customer equity derivative requirements and to take proprietary positions for the company’s own accounts. Equity derivatives primarily consist of either option or forward transactions and include futures, index options, swaps and warrants.

4.6 Derivatives held for hedging

The company enters into derivative transactions, which are designated and qualify as either fair value or cash flow hedges for recognised assets or liabilities or forecast transactions. Derivatives held for hedging consist of:

4.6.1 Derivatives designated as fair value hedges

The company’s fair value hedges principally consist of interest rate swaps that are used to protect against changes in market interest rates.

4.6.2. Derivatives designated as cash flow hedges

The company uses currency swaps and interest rate swaps to protect against changes in cash flows of certain variable rate debt issues. The company applies hedge accounting for its non-trading interest rate risk by analysing expected cash flows. The objective is to protect against changes in future interest cash flows resulting from the impact of changes in market interest rates.

4.6.3. Derivatives designated as fair value portfolio hedges

The company uses interest rate swaps for the portfolio hedge of interest rate risk.

71 2004 2003 Rm Rm 5. TRADING ASSETS

Listed – Securities of, or guaranteed by, the South African Government 2 419 4 145 – Other 2 393 2 674 Unlisted 1 733 2 249 6 545 9 068

Dated assets 5 997 8 794 Undated assets 548 274 6 545 9 068

Maturity analysis

The maturities represent periods to contractual redemption of the trading assets recorded. – Redeemable on demand – 125 – Maturing within 1 month 1 733 3 562 – Maturing after 1 month but within 6 months – 545 – Maturing after 6 months but within 12 months 1 328 – Maturing after 12 months 4 263 4 234 Undated assets 548 274 6 545 9 068

Repurchase commitments Trading assets include assets sold subject to repurchase commitments to the value of R727 million (2003: R1 335 million). Redemption value Dated trading assets had a redemption value at 31 December 2004 of R6 995 million (2003: R10 401 million). Directors' valuation The directors' valuation of unlisted investments is equal to the carrying value. All unlisted investments were valued at 31 December 2004.

72 2004 2003 Rm Rm 6. INVESTMENT SECURITIES

Listed – Securities of, or guaranteed by, the South African Government 11 435 13 189 – Other 504 686 Unlisted 4 171 691 16 110 14 566

Director’s valuation of unlisted investment securities: R4 171 million (2003: R691 million).

Comprising: Investment securities held at fair value 11 287 8 100 Investments designated as available-for-sale 73 38 Investments designated as held-to-maturity1 4 750 6 428 16 110 14 566 1 Investment securities held-to-maturity had a fair value of R4 904 million (2003: R6 621 million).

Dated securities 11 675 13 643 Undated securities 4 435 923 16 110 14 566

Maturity analysis The maturities represent periods to contractual redemption of the investment securities recorded. – Redeemable on demand 189 14 – Maturing within 1 month – 503 – Maturing after 1 month but within 6 months 2 254 129 – Maturing after 6 months but within 12 months 125 1 – Maturing after 12 months 9 107 12 996 Undated securities 4 435 923 16 110 14 566

Repurchase commitments Investment securities include securities sold subject to repurchase commitments to the value of R2 148 million (2003: R2 441 million).

Redemption value Dated investment securities had a redemption value at 31 December 2004 of R11 454 million (2003: R13 607 million).

Investment registers Registers of the investment securities are available for inspection by the member, or its authorised agents, at the registered office of the company

Directors’ valuation The directors’ valuation of unlisted investments is equal to the carrying value. All unlisted investments were valued at 31 December 2004.

73 7. LOANS AND ADVANCES

The company extends advances to the personal, commercial and corporate sectors as well as to the public sector. Advances made to individuals are mostly in the form of mortgages, instalment credit, overdrafts and credit card borrowings. A significant portion of the company's advances to commercial and corporate borrowers consists of advances made to companies engaged in manufacturing, finance and service industries.

2004 2003 Rm Rm 7.1 Loans and advances originated by the company Loans and advances to banks 1 985 2 492 Loans and advances to customers 201 441 152 473 – Loans and overdrafts 55 393 43 634 – Card debtors 6 950 4 885 – Mortgage lending 105 354 74 886 – Instalment finance 32 331 26 375 – Loans granted under resale agreements 1 283 2 570 – Trade, other bills and bankers’ acceptances 130 123

Loans and advances held-to-maturity Loans and advances to customers – Instalment finance 689 1 155 204 115 156 120 Provisions for credit losses (note 7.2) 2 890 2 775 Loans and advances net of provisions for credit losses 201 225 153 345

Loans and advances include net positive fair value adjustments of R1 150 million (2003: R 494 million) relating to originated loans and advances which were subject to specific hedging relationships and were therefore fair valued only for the risk subject to hedging.

Maturity analysis The maturity analysis is based on the remaining periods to contractual maturity from year end. – Redeemable on demand 17 835 13 143 – Maturing within 1 month 22 247 10 906 – Maturing after 1 month but within 6 months 15 827 15 716 – Maturing after 6 months but within 12 months 11 798 13 027 – Maturing after 12 months 136 408 103 328 204 115 156 120

74 2004 2003 Rm Rm Segmental analysis – industry Agriculture 5 939 3 593 Construction 1 422 740 Electricity 1 034 1 665 Finance, real estate and other business services 36 943 33 796 Individuals 110 306 80 159 Manufacturing 10 456 6 071 Mining 2 709 2 117 Other services 24 204 20 954 Transport 6 225 3 594 Wholesale 4 877 3 431 204 115 156 120

Segmental analysis – geographic area The following table sets out the distribution of the company’s loans and advances by geographic area where the loans are recorded.

Eastern Cape 8 328 6 981 Free State 4 660 3 413 Gauteng 109 974 86 468 KwaZulu-Natal 24 032 17 569 Limpopo 4 527 2 234 Mpumalanga 7 919 4 594 North West 5 884 3 516 Northern Cape 1 702 931 Western Cape 30 867 18 930 International 6 222 11 484 204 115 156 120

7.2 Provisions for credit losses Balance at beginning of the year 2 775 2 526 – Credit losses written off (812) (1 024) – Net provisions raised and released (note 19.3) 1 151 1 596 – Discount element recycled to interest income (220) (314) – Exchange and other movements (4) (9) Balance at end of the year 2 890 2 775

Comprising: Loans and advances Provisions for non-performing loans 1 626 1 685 Provisions for performing loans 1 264 1 090 2 890 2 775

75 2004 2003 Rm Rm Segmental analysis of provisions for non-performing loans – industry Agriculture 48 34 Construction 33 35 Electricity – 1 Finance, real estate and other business services 310 418 Individuals 785 646 Manufacturing 70 105 Mining 52 8 Other services 241 324 Transport 20 18 Wholesale 67 96 1 626 1 685

7.3 Unearned finance charges deducted from instalment sale and finance leases 6 562 5 692

8. OTHER ASSETS

Trading settlement assets 2 010 3 797 Items in the course of collection 373 322 Accrued interest 1 606 1 725 Current tax asset 282 140 Deferred tax asset (note 16.2) 50 62 Other debtors 2 507 1 949 6 828 7 995

76 2004 2003 Rm Rm 9. INTEREST IN GROUP COMPANIES, ASSOCIATES AND JOINT VENTURES

9.1 Interest in group companies Holding company – Indebtedness to the company 585 499

Interest in subsidiary companies 2 019 2 211 – Shares at cost 26 26 – Indebtedness to the company 1 993 2 185

Interest in fellow subsidiary companies 26 743 27 726 – Shares at cost 1 1 – Indebtedness to the company 26 742 27 725

29 347 30 436

9.2 Interest in associates and joint ventures Carrying value at beginning of the year 151 64

Movement for the year – Share of profit 79 32 – Net (disposals)/acquisitions (32) 62 – Goodwill amortisation – (4) – Distribution of profit (28) (3) Carrying value at end of the year 170 151

Comprising: Cost of investment 104 118 Share of reserves 66 40 Goodwill amortisation – (7) 170 151 Total interest in group companies, associates and joint ventures 29 517 30 587

Goodwill on acquisition of associates and joint ventures of R2 million (2003: R15 million) is amortised over 5 years.

9.3 Liabilities to group companies Indebtedness by the company to: – Holding company 383 527 – Subsidiary companies 3 132 3 372 – Fellow subsidiary companies 3 563 5 385 7 078 9 284

77 2004 2003 Rm Rm 10. INTANGIBLE ASSETS

10.1 Computer software Cost at beginning of the year 307 281 Additions 65 132 Assets decommissioned (33) (106) Cost at end of the year 339 307

Accumulated amortisation at beginning of the year 98 55 Amortisation (note 19.6) 57 53 Impairments 12 96 Assets decommissioned (33) (106) Accumulated amortisation at end of the year 134 98 Balance at end of the year 205 209

2004 2003 Accumulated Net book Accumulated Net book Cost depreciation value Cost depreciation value Rm Rm Rm Rm Rm Rm 11. PROPERTY AND EQUIPMENT

11.1 Summary Property – Freehold 582 273 309 620 274 346 – Leasehold 9 7 2 9 7 2 591 280 311 629 281 348

Equipment – Computer equipment 1 987 976 1 011 1 965 865 1 100 – Motor vehicles 487 202 285 466 188 278 – Office equipment 161 54 107 158 44 114 – Furniture and fittings 702 347 355 622 313 309 3 337 1 579 1 758 3 211 1 410 1 801 Total 3 928 1 859 2 069 3 840 1 691 2 149

78 Opening net book Closing net value Additions Disposals Depreciation Impairments book value 2004 Rm Rm Rm Rm Rm Rm 11.2 Movement Property – Freehold 346 3 (15) (12) (13) 309 – Leasehold 2 – – – – 2 348 3 (15) (12) (13) 311

Equipment – Computer equipment 1 100 401 (8) (480) (2) 1 011 – Motor vehicles 278 166 (73) (86) – 285 – Office equipment 114 20 (7) (20) – 107 – Furniture and fittings 309 109 (5) (58) – 355 1 801 696 (93) (644) (2) 1 758 Total 2 149 699 (108) (656) (15) 2 069

2003 Property – Freehold 503 2 (104) (14) (41) 346 – Leasehold 3 – – (1) – 2 506 2 (104) (15) (41) 348

Equipment – Computer equipment 1 010 598 (124) (384) – 1 100 – Motor vehicles 286 134 (51) (91) – 278 – Office equipment 62 70 (1) (17) – 114 – Furniture and fittings 272 109 (13) (59) – 309 1 630 911 (189) (551) – 1 801 Total 2 136 913 (293) (566) (41) 2 149

11.3 Valuation

The open-market value of freehold property, based on valuations undertaken during 2004 by valuers registered under the Valuers Act 1982, was estimated at R675 million (2003: R673 million). Registers of property are available for inspection by the member or its authorised agents, at the registered offices of the company. Valuations were generally in terms of the investment method whereby net income is capitalised having regard to tenancy, location and the physical nature of the property.

79 2004 2003 Rm Rm 12. SHARE CAPITAL

12.1 Authorised 80 000 000 (2003: 80 000 000) ordinary shares of R1 each 80 80

1 000 000 000 (2003: Nil) non-redeemable, non-cumulative, non-participating preference shares of R0,01 each. 10 – 90 80

12.2 Issued 59 997 106 (2003: 59 997 103) ordinary shares of R1 each 60 60

During the year, 3 (2003: 80 000) ordinary shares of R1 each were issued at a premium of R833,30 million (2003: R6 249) per ordinary share. 60 60

12.3 Unissued shares 20 002 894 (2003: 20 002 897) ordinary shares of R1 each are under the general authority of the directors, whose authority expires at the annual general meeting to be held on 25 May 2005. 20 20

1 000 000 000 (2003: Nil) non-redeemable, non-cumulative, non-participating preference shares of R0,01 each are under the general authority of the directors, whose authority expires at the annual general meeting to be held on 25 May 2005. 10 – 30 20

13. SHARE PREMIUM – ORDINARY SHARES

Share premium on issue of shares 8 137 5 643

A share issue at a premium of R2 494 million (2003: R498 million) net of stamp duty of R6 million (2003: R2 million) was made during the year. 8 137 5 643

80 2004 2003 Rm Rm 14. DEPOSIT AND CURRENT ACCOUNTS

Deposit products include cheque accounts, savings accounts, call and notice deposits, fixed deposits and negotiable certificates of deposit.

Deposits and loans from banks 12 423 8 312 – Deposits from banks and central banks 8 015 4 409 – Deposits from banks under repurchase agreements 4 408 3 903 Customers’ current accounts 82 280 73 993 Customers’ savings accounts 24 589 20 298 Other deposits and loan accounts 85 236 65 769 Promissory notes 11 054 17 298 Negotiable certificates of deposit 26 570 10 077 Customer deposits received under repurchase agreements 2 271 3 235 244 423 198 982

Deposits and current accounts were increased by fair value adjustments of R2 166 million (2003: R555 million) relating to deposit and current accounts which were subject to specific hedging relationships and were therefore fair valued only for the risk subject to hedging.

Maturity analysis The maturity analysis is based on the remaining periods to contractual maturity from year end. – Repayable on demand 138 398 121 022 – Maturing within 1 month 28 775 22 782 – Maturing after 1 month but within 6 months 43 961 35 208 – Maturing after 6 months but within 12 months 18 114 11 429 – Maturing after 12 months 15 175 8 541 244 423 198 982

15. TRADING LIABILITIES

Listed dated liabilities 1 860 4 757 1 860 4 757

81 2004 2003 Rm Rm 16. OTHER LIABILITIES AND PROVISIONS

16.1 Summary Trading settlement liabilities 1 030 753 Items in the course of transmission 127 416 Accrued interest 4 959 5 463 Current tax liability 396 – Deferred tax 2 390 2 423 Other liabilities and provisions 4 235 4 007 13 137 13 062

16.2 Deferred tax Deferred tax asset (note 8) (50) (62) Deferred tax liability (note 16.1) 2 390 2 423 2 340 2 361

Deferred tax analysis Accrued interest 36 91 Assets on lease 173 424 Depreciation 79 96 Derivatives 1 760 1 714 Fair value adjustments of financial instruments 26 19 Provisions for credit losses (405) (471) Secondary tax on companies (50) (62) Other differences 721 550 Deferred tax liability at end of year 2 340 2 361

16.3 Deferred tax reconciliation Balance at beginning of the year 2 361 2 131 Change in accounting policy – secondary tax on companies (69) Restated balance 2 361 2 062

Various categories of (reversing)/originating temporary differences for the year (21) 299 Accrued interest (55) (20) Assets on lease (251) 25 Depreciation (17) (84) Derivatives 46 579 Fair value adjustments of financial instruments 7 (9) Provisions for credit losses 66 (186) Secondary tax on companies 12 7 Other differences 171 (13)

Deferred tax balance at end of year 2 340 2 361 Subsequent to the financial year end dividends of 4 083 cents per share were declared (2003: 2 166 cents). This declaration will result in a secondary tax on companies charge of R306 million (2003: R162 million).

82 2004 2003 Rm Rm 17. SUBORDINATED BONDS

Unsecured, subordinated, redeemable Qualifying as secondary capital in terms of applicable banking legislation 6 869 4 830 Redeemable in 2010 (SBK 1) 1 1 219 1 264 Redeemable in 2010 (SBK 2) 2 1 500 1 500 Redeemable in 2013 (SBK 3) 3 2 066 2 066 Redeemable in 2016 (SBK 5) 4 2 084 –

Qualifying as tertiary capital in terms of applicable banking legislation Redeemable in 2005 (SBK 4) 5 1 000 1 000 Total bonds 7 869 5 830

The difference of R169 million (2003: R130 million) between the carrying value and nominal value represents subordinated bonds fair valued for interest rate risk as the hedge items in interest rate hedging relationships. Certain hedge relationships expired during the prior year and the fair value adjustment is now amortised over the remaining life of the bonds.

1 15,5% bonds (nominal value: R1 200 million) issued in rands and paying a fixed semi-annual coupon. The bonds carry an option to be called at their nominal amount on 1 June 2005 or on any interest payment date thereafter. After this option date, the coupon switches to floating at the Johannesburg interbank agreed rate plus 260 basis points, until maturity on 1 June 2010.

2 13,75% bonds (nominal value: R1 500 million) issued in rands and paying a fixed semi-annual coupon. The bonds carry an option to be called at their nominal amount on 2 December 2005 or on any interest payment date thereafter. After this option date, the coupon switches to floating at the Johannesburg interbank agreed rate plus 217 basis points, until maturity on 2 December 2010.

3 11,25% bonds (nominal value: R2 000 million) issued in rands and paying a fixed semi-annual coupon. The bonds carry an option to be called at their nominal amount on 31 October 2008 or on any interest payment date thereafter. After this option date, the coupon switches to a floating average mid-market yield rate per annum for three month ZAR deposits plus 209 basis points, until maturity on 31 October 2013.

4 9,5% bonds (nominal value: R2 000 million) issued in rands and paying a fixed annual coupon. The bonds carry an option to be called at their nominal amount on 17 November 2011 or on any interest payment date thereafter. After this option date, the coupon switches to a 3 month floating Johannesburg interbank agreed rate plus 162 basis points, until maturity on 17 November 2016.

5 12,5% bonds (nominal value: R1 000 million) issued in rands and paying a fixed semi-annual coupon. The due date for payment of any principal or interest in respect of the bonds may be defered if so required by the Registrar of Banks. The bonds were redeemed on 15 February 2005.

83 2004 2003 Rm Rm 18. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

18.1 Contingent liabilities Letters of credit 2 059 1 334 Guarantees 14 918 14 448 Irrevocable unutilised facilities 17 845 11 435 34 822 27 217 No material losses are anticipated as a result of these transactions.

18.2 Capital commitments Contracted capital expenditure 182 64 Capital expenditure authorised but not yet contracted 142 486 324 550 The capital expenditure will be funded from the company’s internal resources.

18.3 Operating lease commitments The future minimum lease payments under non-cancellable operating leases are as follows:

Properties Within 1 year 83 61 After 1 year but within 5 years 370 299 After 5 years 472 501 925 861

Equipment Within 1 year 2 8 After 1 year but within 5 years 1 15 3 23

84 2004 2003 Rm Rm 19. SUPPLEMENTARY INCOME STATEMENT INFORMATION

19.1 Interest income Interest on loans and advances and short-term funds 26 895 28 115 Interest on investment securities 2 702 2 484 Discount element recognised from provisions for credit losses 220 314 Fair value adjustments on dated financial instruments 34 (60) Dividends on unlisted investment securities 826 664 30 677 31 517

Dated securities are held in connection with normal banking business and income derived therefrom is included above in interest on loans and advances and interest on investment securities. Dividends on unlisted investment securities as shown above arose as follows:

Subsidiaries and fellow subsidiaries 455 335 Unlisted equities 371 329 826 664

19.2 Interest expense Current accounts 139 354 Savings and deposit accounts 2 017 2 435 Market bid accounts 9 105 12 050 Foreign finance creditors 224 199 Subordinated bonds 830 766 Other interest-bearing liabilities 8 815 6 848 21 130 22 652

19.3 Provisions for credit losses Net provisions raised and released (note 7.2) 1 151 1 596 Recoveries (300) (255) 851 1 341

Comprising: Provisions for non-performing loans 673 955 Provisions for performing loans 178 386 851 1 341

85 2004 2003 Rm Rm 19.4 Non-interest revenue

Fees and commission revenue 7 059 5 779 – Point of representation fees 3 541 2 977 – Card based commission 1 121 915 – Knowledge based fees and commission 158 134 – Electronic banking fees 669 564 – Foreign currency service fees 331 280 – Documentation and administration 208 224 – Subsidiaries and fellow subsidiaries 210 202 – Other 821 483

Trading revenue 1 511 1 113 – Foreign exchange 1 071 1 034 – Debt securities 277 (71) – Commodities 58 98 – Equities 116 70 – Other (11) (18)

Total other revenue 775 780 – Banking, insurance and other revenue 489 562 – Property related revenue 120 117 – Subsidiaries and fellow subsidiaries 166 101

9 345 7 672

19.5 Staff costs Salaries and allowances 5 573 4 579 Retirement benefit costs 277 280 5 850 4 859

86 2004 2003 Rm Rm 19.6 Other operating expenses

Amortisation – intangible assets (note 10) 57 53

Auditors’ remuneration 40 27 – Audit fees 19 16 – Fees for other services 21 11

Depreciation (note 11.2) 656 566 Property – Freehold 12 14 – Leasehold – 1

Equipment – Computer equipment 1 480 384 – Motor vehicles 86 91 – Office equipment 20 17 – Furniture and fittings 58 59

Operating lease charges 473 399 – Property 438 368 – Equipment 35 31

Premises 393 335

Professional fees 281 345 – Managerial 15 12 – Technical and other 266 333

Other expenses 2 901 2 626 4 801 4 351

1 During the year the estimated life of desktop computers was reduced from 5 years to 4 years, this has resulted in an additional charge of R100 million for the year.

87 2004 2003 Rm Rm 20. SUPPLEMENTARY INCOME STATEMENT INFORMATION

20.1 Directors’ emoluments Executive directors Emoluments of directors in respect of services rendered: As directors of SBSA 10 11 While directors of SBSA – otherwise in connection with the affairs of SBSA or its subsidiaries 41 10

Non-executive directors Emoluments of directors in respect of services rendered: As directors of SBSA 1 1 While directors of SBSA – otherwise in connection with the affairs of SBSA or its subsidiaries 3 2

Pensions of past directors – 1 55 25 Full details of directors' emoluments are detailed in the SBG annual report that can be found at www.standardbank.co.za.

20.2 Dividends Ordinary dividends Dividend 87 of 225 cents per share paid on 24 March 2003 to the shareholder registered on 24 March 2003 135 Dividend 88 of 775 cents per share paid on 25 March 2003 to the shareholder registered on 25 March 2003 465 Dividend 89 of 833 cents per share paid on 25 March 2003 to the shareholder registered on 25 March 2003 500 Dividend 90 of 250 cents per share paid on 15 September 2003 to the shareholder registered on 15 September 2003 150 Dividend 91 of 833 cents per share paid on 31 January 2004 to the shareholder registered on 31 January 2004 500 Dividend 92 of 233 cents per share paid on 24 March 2004 to the shareholder registered on 24 March 2004 140 Dividend 93 of 1 100 cents per share paid on 25 March 2004 to the shareholder registered on 25 March 2004 660 Dividend 94 of 2 500 cents per share paid on 14 July 2004 to the shareholder registered on 14 July 2004 1 500 Dividend 95 of 566 cents per share paid on 7 September 2004 to the shareholder registered on 7 September 2004 340 Dividend 96 of 183 cents per share paid on 7 September 2004 to the shareholder registered on 7 September 2004 110 Dividend 97 of 1 833 cents per share paid on 28 September 2004 to the shareholder registered on 28 September 2004 1 100 Dividend 98 of 833 cents per share paid on 28 December 2004 to the shareholder registered on 28 December 2004 500 4 850 1 250 On 1 March 2005 the following dividends were declared: Dividend 99 of 833 cents per share payable on 15 March 2005 to the shareholder registered on 15 March 2005. Dividend 100 of 833 cents per share payable on 7 April 2005 to the shareholder registered on 7 April 2005. Dividend 101 of 2 417 cents per share payable on 8 April 2005 to the shareholder registered on 8 April 2005, bringing the total dividends declared in respect of 2004 to 9 998 cents per share (2003: 2 416 cents).

88 2004 2003 Gross Tax Net Net Rm Rm Rm Rm 20.3 Headline earnings Profit for the year 7 461 (2 023) 5 438 4 233 Adjusted for the following: Exceptional items1 8 (5) 3 (127) – Profit on sale of property (24) 1 (23) (223) – Loss on disposal of businesses and divisions 5 (2) 3 – – Impairment of property and equipment 15 (1) 14 29 – Impairment of intangible assets 12 (3) 9 67 Goodwill amortised – – – 4 Profit on sale of equipment (34) 5 (29) – 7 435 (2 023) 5 412 4 110

1 The 2003 gross exceptional items amounted to a net profit of R114 million, before accounting for tax credits of R13 million.

2004 2003 20.4 Earnings per share The calculations of earnings and headline earnings per share are as follows:

Headline earnings (Rm) 5 412 4 110

Earnings (Rm) 5 438 4 233

Weighted average number of ordinary shares in issue (thousands) 59 997 59 979 Headline earnings per share (cents) 9 020 6 852 Earnings per share (cents) 9 064 7 057

Reconciliation of weighted average number of ordinary shares in issue (thousands) Shares in issue at beginning of the year 59 997 59 917 The effect of shares issued during the year – 62 Weighted average number of ordinary shares in issue (thousands) 59 997 59 979

89 2004 2003 Rm Rm 21. TAX

21.1 Direct income tax expense Current year 1 707 1 570 – South African normal tax 1 705 1 223 – South African deferred tax (33) 292 – Secondary tax on companies (deferred tax) 12 7 – Foreign normal and withholding tax 23 48

Indirect tax expense 316 325 Regional services council levies 75 78 Value added tax 231 217 Duties (9) 14 Skills development levy (net of recoveries) 19 16

Total tax expense 2 023 1 895

21.2 South African tax rate reconciliation (%) The tax charge for the year as a percentage of income before tax 27 31 Regional services council levies and stamp duties (1) (1) Value added tax (3) (4) Duties, STC and skills development levy – – Tax relating to prior years – – Net tax charge 23 26

The charge for the year has been reduced/(increased) as a consequence of: – Dividends received 5 5 – Other non-taxable income 5 3 – Other permanent differences (3) (4) Standard rate of South African tax 30 30

90 2004 2003 Rm Rm 22. CASH FLOW STATEMENT

22.1 Reconciliation of income before tax to cash flows from operating activities Income before tax 7 461 6 128

Adjusted for: 1 233 1 563 – Depreciation – property and equipment 656 566 – Provisions for credit losses 851 1 341 – Profit on sale of equipment (34) (4) – Profit on sale of properties (24) (251) – Amortisation of intangible assets 57 53 – Impairment losses 27 137 – Fair value adjustments on dated financial instruments (34) 60 – Interest recognised on impaired loans (220) (314) – Goodwill amortised – 4 – Income less dividends from associates and joint ventures (51) (29) – Loss on disposal of business units 5 –

Cash flows from operating activities 8 694 7 691

22.2 Cash receipts from customers Interest income and investment income 29 597 30 599 Fees and commission revenue 7 059 5 779 Trading and other revenue 2 286 1 893 38 942 38 271

22.3 Cash paid to customers, employees and suppliers Interest expense (21 130) (22 652) Total operating expenses (9 972) (8 595) (31 102) (31 247)

22.4 Dividends received Dividends from subsidiaries 455 335 Dividends from associates 28 3 Dividends from dated investment securities 371 329 854 667

91 2004 2003 Rm Rm 22.5 (Increase)/decrease in income-earning assets Investment securities (1 510) (4 912) Trading assets 2 523 (676) Loans and advances (48 511) (29 365) Net derivative assets/liabilities 578 (1 160) Investments in group companies 1 088 (11 561) Other assets 1 297 6 347 (44 535) (41 327)

22.6 Increase/(decrease) in deposits and other liabilities and provisions Customers’ current, savings and other deposits, and deposits and loans from banks 29 407 20 574 Deposits received under repurchase agreements (459) 3 034 Negotiable certificates of deposit 16 493 2 646 Trading liabilities (2 897) 1 102 Liabilities to group companies (2 206) 2 643 Other liabilities and provisions (288) (920) 40 050 29 079

22.7 Tax paid Amounts paid/(unpaid) at beginning of the year 140 (65) Income statement charge (2 044) (1 596) Amounts unpaid/(paid) at end of the year 114 (140) (1 790) (1 801)

92 2004 2003 Rm Rm 23. CHANGES IN ACCOUNTING POLICY AND PRIOR YEAR RECLASSIFICATIONS

23.1 Restatements to the opening balance of reserves The impact of complying with AC 501 on opening shareholder’s equity is as follows: Effect of raising a deferred tax asset on adoption of AC 501 62 69 62 69

23.2 Effect on current period income Effect of adopting AC 501 on income before tax – – Tax (12) (7) (12) (7)

23.3 Prior year reclassifications, restatements and change in accounting policy Balance Reclassification previously of trading Balance disclosed STC1 assets2 reclassified Rm Rm Rm Rm Trading assets 6 821 – 2 247 9 068 Other assets 10 180 62 (2 247) 7 995 Effect on assets 62 –

Capital and reserves 15 175 62 15 237 Effect on equity and liabilities 62

1 Recognition of deferred tax asset for secondary tax on companies in terms of AC501. 2 Reclassification of structured debt finance trades from other assets to trading assets.

Emoluments of Standard Bank directors The 2003 comparative relating to gains on exercise of share options and other related payments was restated, to include amounts omitted with respect to payments made to Myles Ruck, under the SCMB Shadow Share Scheme amounting to R4 282 000.

93 24. RELATED PARTY TRANSACTIONS

24.1 Associates and joint ventures During the year, the company and its subsidiaries, in the ordinary course of business, entered into various non- material transactions with associates and joint ventures. These transactions occurred under terms that are not more favourable than those arranged with third parties.

24.2 Subsidiaries SBSA is a wholly-owned subsidiary of SBG. Transactions between subsidiaries are conducted in the ordinary course of business at arms length.

24.3 Directors Details relating to directors' emoluments are disclosed in note 20.1. Further detail is included in the SBG annual financial statements.

2004 2003 Rm Rm 25. POST-RETIREMENT BENEFITS

Amounts recognised in the balance sheet Retirement fund 311 180 Post retirement healthcare benefits – Provider Fund 21 21 – Other 348 342 680 543

Retirement funding Membership of the principal fund, the Standard Bank Group Retirement Fund (SBGRF) exceeds 95% of Standard Bank operations’ permanent staff in South Africa. The fund, one of the largest in South Africa, is a trustee administered defined contribution fund governed by the Pension Funds Act, 1956. Member elected trustees represent 50% of the trustee board. The assets of the fund are held independently of the company's assets.

The fund is subject to statutory financial review by actuaries at an interval of not more than three years. As a result of delays in relevant regulations and pension fund guidelines being published in late 2004, the Financial Services Board (FSB) approved an extension in submitting the 31 December 2001 valuation, which has now been submitted.

Employees who were members of the fund on 31 December 1994, have guaranteed benefits available under the rules of the defined benefit fund. A specific liability has been recognised within the fund to provide for guaranteed benefits which may arise under the rules of the scheme. New members from 1 January 1995 participate only in the benefits of the defined contribution fund.

As reported last year, the employer received approval from the FSB to create an employer surplus account which at 31 December 2004 amounted to R122 million (2003: R338 million). At 31 December 2004, the valuation of the fund, the determination of its financial position and the determination of any shortfall or surplus position are still to be finalised and approved by the Registrar of Pension Funds in terms of the Pension Fund Second Amendment Act, 39 of 2001. Consequently no account has been taken of any potential shortfall or surplus.

94 2004 2003 Rm Rm The amounts recognised in the balance sheet are determined as follows: Surplus (122) (338) Present value of unfunded obligations 12 923 10 174 Fair value of plan assets (13 045) (10 512) Unrecognised actuarial gains 433 518 Included in other liabilities and provisions in the balance sheet 311 180

Unrecognised actuarial gains or losses are deferred and recognised in the income statement over a period not exceeding the estimated service lives of the employees.

The amounts recognised in the income statement are determined as follows: Current service cost 227 204 Interest cost 1 024 1 086 Expected return on plan assets (1 086) (1 109) Net actuarial gain recognised in the year (32) – Included in staff costs 133 181

Movement in the liability recognised in the balance sheet: Balance at beginning of the year 180 – Income statement charge 133 181 Contributions paid (2) (1) Balance at end of the year 311 180

Post-retirement healthcare benefits The bank provides the following post-retirement healthcare benefits to its employees:

Provider Fund A post-retirement healthcare benefit fund provides eligible employees, who were employed in South Africa on 1 March 2000, with a lump sum benefit on retirement enabling them to purchase an annuity to be applied towards their post-retirement healthcare costs. This benefit is pre-funded in a provident fund. Any shortfall in the payment to be made by these employees towards their healthcare costs subsequent to retirement is not the responsibility of the bank. The last actuarial valuation was performed on 1 March 2001 and reflected an excess in the fund.

The company received approval from the Financial Services Board to transfer the excess to an employee reserve.

95 Other The largest portion of this liability represents a South African post-retirement healthcare benefit commitment that covers all employees who retired before 1 March 2000. The liability is unfunded and is valued every year using the projected unit credit method. The latest full statutory actuarial valuation was performed on 31 December 2002.

2004 2003 Rm Rm The amounts recognised in the balance sheet in respect of post-retirement healthcare benefits are determined as follows: Unfunded obligations 216 220 Present value of unfunded obligations 1 014 872 Fair value of plan assets (798) (652) Unrecognised actuarial gains 153 143 Included in other liabilities and provisions in the balance sheet 369 363

The amounts recognised in the income statement are determined as follows: Current service cost 28 24 Interest cost 81 105 Expected return on plan assets (65) (54) Net actuarial gain recognised in the year (6) – Included in staff costs 38 75

Movement in the liability recognised in the balance sheet Balance at beginning of the year 363 318 Income statement charge 38 75 Contributions paid (32) (30) Balance at end of the year 369 363

The principal actuarial assumptions used for accounting purposes were:

Retirement Provider Retired fund % Fund % employees % Discount rate 8,5 8,5 9,5 Return on investments 9,5 9,0 Salary/benefit inflation 5,0 6,0 CPI inflation 4,0 4,0 5,0 Medical inflation 7,0 Remaining service life of employees 16 20

96 CAPITALISATION OF THE STANDARD BANK OF SOUTH AFRICA LIMITED

The following table sets out the capital and reserves and long-term liabilities of SBSA as at 31 December 2004:

31 December 2004 Audited R million

Capital and reserves

Share capital 60

Share premium 8 137

Reserves 10 000

Capital and reserves 18 197

Long-term liabilities

Subordinated bonds 7 869

Deposits maturing after more than one year 15 175

Total long-term liabilities 23 044

Capital and reserves and long-term liabilities 41 241

Contingent liabilities

Letters of credit 2 059

Guarantees 14 918

Irrevocable unutilised facilities 17 845

34 822

Save as disclosed above and save for loans to Standard Bank, at 31 December 2004 the Issuer had no long-term borrowings with maturities of more than one year, loan capital outstanding or created but unissued (including term loans), or guarantees. Deferred taxation is excluded from the above table.

There has been no material change in the shareholders’ funds and long-term liabilities or contingent liabilities and guarantees of the Issuer from 31 December 2004 to the date of this Programme Memorandum.

97 REPORT OF THE INDEPENDENT AUDITORS

The financial information set out on pages 52 to 96 has been extracted without material adjustment from theaudited financial statements of The Standard Bank of South Africa Limited for the year ended 31 December 2004.

The following is the text of the report of the independent auditors of The Standard Bank of South Africa Limited in relation to the audited financial statements of The Standard Bank of South Africa Limited for the year ended 31 December 2004. References to page numbers are to the page numbers as they appear in the annual financial statements of The Standard Bank of South Africa Limited as at and for the year ended 31 December 2004.

“To the member of The Standard Bank of South Africa Limited

We have audited the annual financial statements of the company set out on pages 12 to 57 for the year ended 31 December 2004. These financial statements are the responsibility of the company’s directors. Our responsibility is to expressan opinion on these financial statements based on our audit.

SCOPE

We conducted our audit in accordance with statements of South African Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free of material misstatement.

An audit includes:

– examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;

– assessing the accounting principles used and significant estimates made by management; and

– evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

AUDIT OPINION

In our opinion the financial statements fairly present, in all material respects, the financial position of the company at 31 December 2004 and the results of its operations and cash flows for the year then ended in accordance with South African Statements of General Accepted Accounting Practice and in the manner required by the Companies Act in South Africa.

KPMG Inc. PricewaterhouseCoopers Inc.

Registered Accountants and Auditors Registered Accountants and Auditors

Chartered Accountants (SA) Chartered Accountants (SA)

Johannesburg

8 March 2005”

98 SETTLEMENT, CLEARING AND TRANSFERS

Words used in this section headed “Settlement, Clearing and Transfers” shall bear the same meanings as used in the Terms and Conditions, except to the extent that they are separately defined in this section or this is clearly inappropriate from the context.

GLOBAL CERTIFICATES

Notes issued in registered form (“Registered Notes”) and listed on BESA will initially be issued in the form of a single Global Certificate (theGlobal “ Certificate”) which will be lodged and immobilised in STRATE Limited, a company registered as a central securities depository in terms of the Securities Services Act, 2004, or its nominee (the “Central Depository”), which forms part of the settlement system of the Bond Exchange of South Africa, a licensed exchange in terms of the Securities Services Act, 2004 (“BESA”). The Central Depository will be the sole Noteholder in respect of the Global Certificate.

The Central Depository holds Notes subject to the Securities Services Act, 2004 and the Rules of the Central Depository. The Rules of the Central Depository as at the date of this Programme Memorandum have most recently been updated by the Registrar of Securities Services in Government Gazette No. 27758 of 8 July 2005.

While the Notes are held in the Central Depository under the Global Certificate, the Central Depository will be reflected as the Noteholder in the register maintained by the Agent (the “Register”). Accordingly, under the Terms and Conditions relating to the Notes, all amounts to be paid and all rights to be exercised in respect of the Notes held in the Central Depository, will be paid to and may be exercised only by the Central Depository, for the holders of beneficial interests in the Notes held by the Central Depository under the Global Certificate (“Beneficial Interests”).

The Central Depository maintains accounts only for the participants in the Central Depository (“Participants”). The Participants are also approved settlement agents of BESA. As at the date of this Programme Memorandum, the settlement agents are the South African Reserve Bank, ABSA Bank Limited, FirstRand Bank Limited, Nedbank Limited and The Standard Bank of South Africa Limited (“Settlement Agents”). The Participants are in turn required to maintain securities accounts for their clients. The clients of Participants may include the holders of Beneficial Interests or their custodians. The clients of Participants, as the holders of Beneficial Interests or as custodians for such holders, may exercise their rights in respect of the Notes held by them in the Central Depository only through the Participants. Euroclear Bank SA/N.V., as operator of the Euroclear System and Clearstream Banking société anonyme (Clearstream, Luxembourg) may hold Notes through their BESA Settlement Agent, which is currently The Standard Bank of South Africa Limited.

Transfers of Beneficial Interests in the Central Depository to and from clients of Participants, who are also Settlement Agents, occur by electronic book entry in the securities accounts of the clients with Settlement Agents. Transfers among Participants of Notes held in the Central Depository occur through electronic book entry in the Participants’ central security accounts with the Central Depository.

Beneficial Interests in Registered Notes may be exchanged for Individual Certificates in accordance with the Terms and Conditions. Transfers of Registered Notes represented by an Individual Certificate may be made only in accordance with the Terms and Conditions and may be subject to the rules and operating procedures for the time being of the Central Depository, and the rules and operating procedures for the time being of the Settlement Agents and BESA.

Payments of interest and principal in respect of Notes represented by the Global Certificate, or any other Notes represented by a Certificate immobilised in the Central Depository and registered in the name of the Central Depository (“Re-Immobilised Certificate”), will be made in accordance with Condition 9 of the Terms and Conditions to the Central Depository, or such other registered holder of the Global Certificate or the Re-Immobilised Certificate, as the case may be, as shown in the Register and the Issuer will be discharged by proper payment to, or to the order of the registered holder of the Certificate in respect of each amount so paid. Each of the persons shown in the records of the Central Depository and the Participants as the holders of Beneficial Interests, as the case may be, shall look solely to the Central Depository or the Participant, as the case may be, for such person’s share of such payment so made by the Issuer to, or to the order of, the registered holder of such Global Certificate or Re-Immobilised Certificate, as the case may be.

UNLISTED REGISTERED NOTES

Transferable and non-transferable unlisted Registered Notes may be issued under the Programme. Transferable unlisted Registered Notes may be transferable in terms of the applicable rules and procedures of the Agent and/or Condition 16.1 of the Terms and Conditions.

99 INDIVIDUAL CERTIFICATES

All Notes not issued in uncertificated format or not represented by a Global Certificate, including Bearer Notes and Order Notes, (each as defined below) shall be issued in definitive form Individual(“ Certificates”).

Notes issued in bearer form (“Bearer Notes”) or order form (“Order Notes”), and which are interest bearing, may have interest coupons (“Coupons”) and, if specified in the Applicable Pricing Supplement, Talons attached on issue. Notes repayable in instalments may have receipts (“Receipts”) for the payment of the instalments of principal (other than the final instalment) attached on issue.

Title to Bearer Notes and/or any Receipts, Coupons and Talons attached on issue to the Certificate evidencing such Bearer Note will pass by delivery of such Certificate, Receipt, Coupon or Talon (as the case may be). Title to Order Notes and/or any Receipts, Coupons and Talons attached on issue to the Certificate evidencing such Order Note, are transferable by way of endorsement and delivery of such Certificate, Receipt, Coupon orTalon (as the case may be).

Payments of interest and principal in respect of Individual Certificates will be made to Noteholders in accordance with Condition 9 of the Terms and Conditions.

UNCERTIFICATED NOTES

Notes listed on JSE Limited may be issued in the form of uncertificated securities as contemplated in the Securities Services Act, 2004.

100 SOUTH AFRICAN TAXATION

The comments below are intended as a general guide to the current position under the laws of the Republic of South Africa (“South Africa”). The contents of this section headed “South African Taxation” do not constitute tax advice and persons who are in any doubt as to their tax position should consult their professional advisers.

Words used in this section shall have the same meanings as defined in the Terms and Conditions, unless they are defined in this section or this is clearly inappropriate from the context.

For purposes of this section, a “Resident” means a person who or which is a “resident” for tax purposes as defined in section 1 of the Income Tax Act, 1962 (the “Income Tax Act”) and “Taxes” means any present or future taxes, levies, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by, or on behalf of, South Africa, whether in terms of the Income Tax Act, the Stamp Duties Act, 1968, the Uncertificated Securities Tax Act, 1998 or in terms of any other legislation.

STAMP DUTY AND UST ON ISSUE AND TRANSFER OF NOTES

In terms of the Stamp Duties Act, 1968, the original issue and the registration of transfer of Notes qualifying as “instruments” as contemplated in section 24J of the Income Tax Act are exempt from stamp duty.

In terms of the Uncertificated Securities Act, 1998, no uncertificated securities tax is payable on the issue or on the transfer of securities qualifying as “instruments” as contemplated in section 24J of the Income Tax Act.

Accordingly, no stamp duty (as contemplated in the Stamp Duties Act, 1968) and no uncertificated securities tax (as contemplated in the Uncertificated Securities Act, 1998) is payable on the issue or on the transfer of Notes.

INCOME TAX

In South Africa tax is imposed on Residents in respect of their worldwide income. Non-Residents are taxed in South Africa mainly on income from a South African source and on capital gains from South African sources, from the disposal of immovable property in South Africa or in instances where they have permanent establishments in South Africa, on all income and capital gains.

Interest

Any interest in respect of the Notes will be liable to South African income tax if such interest is received by or accrues to any person who is a Resident. In addition, a person other than a Resident is taxed on income from a source within or deemed to be within South Africa, unless that person qualifies for exemption from income tax.

In the case of a natural person, residence is determined by intention or by actual physical presence in South Africa. A natural person who was not at any time during the year of assessment in question ordinarily resident in South Africa (in other words did not regard South Africa as his/her permanent home or fixed place of residence) may nonetheless, in the absence of a double taxation agreement between South Africa and the foreign jurisdiction in question, be a Resident if his/her physical presence meets the physical presence test. If such person was physically present in South Africa for at least 91 days in that year and was, during the preceding years, present in South Africa for at least 91 days in each year and for 549 days in aggregate during such 3 preceding years, then he/she will be a Resident. If a natural person is a South African tax resident, but is physically absent from South Africa for a continuous period of 330 days, he/she will be deemed to not be a Resident, from the day on which he/she ceases to be physically present in South Africa.

A proportionate amount of the net income of a Controlled Foreign Company will also be included in the income of shareholders who are Residents subject to certain exclusions. A company is a Controlled Foreign Company if it is a foreign company and more than 50% of the total participation rights in the company are held by one or more Residents.

A person other than a natural person is a Resident if it is incorporated, established or formed in South Africa or has its place of effective management in South Africa.

101 Exemptions for certain non-Residents

Non-Residents presently enjoy the benefit of an exemption from South African tax on their interest income, unless one of the disqualifications set out below, applies. Any person who is not a Resident will generally be exempt from any Taxes on any interest income paid or accrued in respect of the Notes. (A person who is a resident of the Common Monetary Area (as defined in section 11 of the Income Tax Act) is deemed to be a Resident for the purposes of this exemption). However, this exemption will not apply where:

(a) the non-Resident has (during the relevant year of assessment) carried on business in South Africa through a permanent establishment; or

(b) the non Resident is a natural person and was physically present in South Africa for a period or periods of at least 183 days in aggregate during the year of assessment in question.

Treatment of discount or original issue of Notes

Insofar as the Notes are issued at a discount (by having regard to the difference between the Issue Price and the Aggregate Principal Amount of the Notes), the discount will be treated as interest for tax purposes, and the discount amount will be deemed to accrue to the Noteholder on a yield to maturity basis until the current Noteholder disposes of the Notes or until maturity of the Note, whichever occurs first. Interest is taxed on the basis of the yield to maturity unless a specific election is made in terms of the Income Tax Act, to treat the Notes on another basis.

CAPITAL GAINS TAX

Tax on capital gains was introduced in South Africa with effect from 1 October 2001. Tax on capital gains applies to any capital gains earned on the disposal or deemed disposal of an asset by Residents, as well as to any capital gain resulting from the disposal or deemed disposal of certain assets of non-Residents which are situated in South Africa (such as immovable property and assets of a permanent establishment, (such as a branch or agency) of that non-Resident in South Africa). In the case of natural persons, 25% of the taxable capital gain will be taxed at the applicable marginal rate (the effective rate will range from 0% to 10%). In the case of companies, 50% of the taxable capital gain will be liable to tax at the corporate flat rate of 29%, and hence the effective rate will be 14,5%.

102 SUBSCRIPTION AND SALE

The Notes will be distributed by The Standard Bank of South Africa Limited (acting through its Corporate and Investment Banking Division) (“Standard Bank”), Deutsche Bank AG, Johannesburg Branch, J.P. Morgan Securities South Africa (Proprietary) Limited and/or any person appointed as dealer by the Issuer in terms of the Amended and Restated Programme Agreement dated 20 October 2005 relating to the Programme and as may be further supplemented and/or amended and/or restated from time to time (the “Programme Agreement”). Standard Bank and/or any such person appointed as dealer are referred to in this section titled “Subscription and Sale” as “Dealers”.

REPUBLIC OF SOUTH AFRICA

The Issuer and each Dealer have represented and agreed that they will not solicit any offers for subscription for the Notes in contravention of the Companies Act, 1973 or the Banks Act, 1990.

UNITED STATES

The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the ‘‘Securities Act’’), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act.

Each Dealer has agreed that, except as permitted by this Programme Memorandum, it will not offer or sell the Notes (i) as part of its distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering of the Notes and the Issue Date (the ‘‘Restricted Period’’) within the United States or to, or for the account or benefit of, U.S. persons, and that it will have sent to each dealer to which it sells Notes during the Restricted Period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons.

In addition, until 40 days after the commencement of the offering of the Notes, an offer or sale of Notes within the United States by a dealer, whether or not participating in the offering, may violate the registration requirements of the Securities Act.

If the Notes are in bearer form they are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a U.S. person, except in certain transactions permitted by United States tax regulations. Terms used in this paragraph have the meanings given to them by the United States Internal Revenue Code and regulations thereunder.

Such Notes will have on their face a statement to the effect that any United States person who holds such Notes will be subject to limitations under the United States income tax laws including the limitations provided in sections 165(j) and 1287(a) of the United States Internal Revenue Code.

UNITED KINGDOM

Each Dealer has represented, warranted and undertaken to the Issuer inter alia, and each further Dealer appointed under the Programme will be required to represent, warrant and undertake, that:

(a) in relation to any Notes which have a maturity of less than one year, (i) it is a person whose ordinary activities involve it in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of its business and (ii) it has not offered or sold and will not offer or sell any Notes other than to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or who it is reasonable to expect will acquire, hold, manage or dispose of investments (as principal or agent) for the purposes of their businesses where the issue of the Notes would otherwise constitute a contravention of Section 19 of the FSMA by the Issuer; (b) 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 Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of FSMA does not apply to the Issuer; and (c) it has complied and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom.

103 IRELAND

Each Dealer has agreed and each additional Dealer appointed under the Programme will be required to agree that it will not underwrite the issue of, or place the Notes otherwise than in conformity with the provisions of the Investment Intermediaries Act, 1995 (as amended) of Ireland, including, without limitation, Sections 9, 23 (including any advertising restrictions made thereunder) and 50 and any codes of conduct made under Section 37.

FRANCE

Each of the Dealers and the Issuer has represented and agreed that it has not offered or sold and will not offer or sell, directly or indirectly, Notes to the public in France, and has not distributed or caused to be distributed and will not distribute or cause to be distributed to the public in France, this Programme Memorandum or any other offering material relating to the Notes, and that such offers, sales and distributions have been and shall only be made in France to qualified investors investisseurs( qualifés) and/or a restrained circle of investors (cercle restraint d’investisseurs), provided that such investors are acting for their own account, all as defined in, and in accordance with, articles L.411-1 and L.411-2 of the French Code monétaire et financier decree no. 98-880 dated 1 October 1998 and their implementing d´ecret. The Notes will not be subject to any approval by or registration (visa) with the French Autorité des Marchés Financiers.

In addition, the Arranger has represented and agreed that it has not distributed or caused to be distributed and will not distribute or cause to be distributed in France this Programme Memorandum or any other offering material relating to the Notes other than to investors to whom offers and sales of the Notes in France may be made as described above.

REPUBLIC OF ITALY

The offering of the Notes has not been registered pursuant to Italian securities legislation and, accordingly, each Dealer has represented and agreed that no action has or will be taken by it which would allow an offering (or a “sollecitazione all’investimento”) of the Notes to the public in the Republic of Italy, and that sales of the Notes to any persons in the Republic of Italy shall be effected in accordance with Italian securities, tax and other applicable laws and regulations.

Each Dealer has represented that it has not offered, sold or delivered and will not offer, sell or deliver any Notes or distribute or make available any Notes or copies of this Programme Memorandum or any other offering material relating to the Notes in the Republic of Italy except:

(i) to professional investors (operatori qualificati), as defined in Article 31, second paragraph, of Regulation No. 11522 of 1st July, 1998 issued by the Commissione Nazionale per le Società e la Borsa (“CONSOB”), as amended; (ii) in circumstances which are exempted from the rules on solicitation of investments pursuant to Article 100 of Legislative Decree No. 58 of 24th February, 1998 (the “Financial Services Act”) and Article 33, first paragraph, of CONSOB Regulation No. 11971 of 14th May, 1999, as amended; or (iii) to an Italian resident who submits an unsolicited offer to purchase such Notes. Any offer, sale or delivery of Notes or distribution of copies of this Programme Memorandum or any other document relating to any Notes in Italy under (i) or (ii) above must be:

(a) made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act and Legislative Decree No. 385 of 1st September, 1993 (the “Banking Act”), as amended; (b) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy pursuant to which the issue or the offer of securities in Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending, inter alia, on the aggregate value of the securities issued or offered in Italy and their characteristics; and (c) in compliance with any other applicable notification, requirement or limitation which may be imposed by CONSOB or the Bank of Italy.

104 EUROPEAN ECONOMIC AREA

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each Dealer has represented and agreed, and each further Dealer appointed under the Programme will be required to represent and agree, that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of Notes to the public in that Relevant Member State except that it may, with effect from and including the Relevant Implementation Date, make an offer of Notes to the public in that Relevant Member State:

(a) in (or in Germany, where the offer starts within) the period beginning on the date of publication of a prospectus in relation to those Notes which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive and ending on the date which is 12 months after the date of such publication; (b) at any time to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities; (c) at any time to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or (d) at any time in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and includes any relevant implementing measure in each Relevant Member State.

JAPAN

The Notes have not been and will not be registered under the Securities and Exchange Law of Japan (the “Securities and Exchange Law”) and each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that it will not offer or sell any such Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organised under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan except pursuant to an exemption from the registration requirements of, and otherwise in compliance with the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

HONG KONG

In Hong Kong this document may only be issued, circulated or distributed and the Notes are only being offered for subscription or purchase: (1) to persons who are “professional investors” within the meaning of section 1 of Part 1 of Schedule 1 to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong); and/or (2) otherwise in accordance with the provisions of Part 1 of the Seventeenth Schedule of the Companies Ordinance (Chapter 32 of the Laws of Hong Kong) as read with the other parts of that Schedule; and/or (3) in any other circumstances which would not result in (a) this document constituting a prospectus as defined in section 2(1) of the Companies Ordinance and (b) the issue or possession of this document constituting an offence under section 103(1) Securities and Futures Ordinance; (all such persons in (1), (2) and (3) together being referred to as “relevant persons”).

This document has not been and will not be registered with any regulatory authority in Hong Kong. The contents of this document have not been reviewed by any regulatory authority in Hong Kong. You are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

The copying, forwarding, reproduction, publication, disclosure or distribution, directly or indirectly, of this document by recipients is strictly prohibited and may result in a breach of the securities laws of Hong Kong.

Persons in Hong Kong who are not relevant persons and who receive a copy of this document should not act on it and should immediately return this document to the Issuer or the Arranger.

105 SINGAPORE

This Programme Memorandum has not been registered as a prospectus with the Monetary Authority of Singapore under the Securities and Futures Act, Chapter 289 of Singapore (the “Securities and Futures Act”). Accordingly, the Notes may not be offered or sold or made the subject of an invitation for subscription or purchase nor may this Programme Memorandum or any other document or material in connection with the offer or sale or invitation for subscription or purchase of such Notes be circulated or distributed, whether directly or indirectly, to the public or any member of the public in Singapore other than (1) to an institutional investor or other person falling within section 275 of the Securities and Futures Act, (2) to a sophisticated investor (as defined in section 275 of the Securities and Futures Act) and in accordance with the conditions specified in section 275 of the Securities and Futures Act or (3) pursuant to, and in accordance with the conditions of, any other applicable provision of the Securities and Futures Act.

GENERAL

Each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that it will not, directly or indirectly, purchase, offer, sell or deliver any Notes or distribute or publish any offering circular, information memorandum, 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 purchases, offers, sales and deliveries of Notes by it will be made on the same terms.

Without prejudice to the generality of the above paragraph, each Dealer has agreed and each further Dealer appointed under the Programme will be required to agree that it will obtain any consent, approval or permission which is, to the best of its knowledge and belief, required for the offer, purchase, sale or delivery by it of Notes under the laws and regulations in force in any jurisdiction to which it is subject or in which it makes such offers, purchases, sales or deliveries and it will, to the best of its knowledge and belief, comply with all such laws and regulations.

With regard to each Tranche, the relevant Dealer(s) will be required to comply with such other additional restrictions as shall be set out in the Applicable Pricing Supplement.

106 GENERAL INFORMATION

Capitalised terms not separately defined in this section headed “General Information” shall bear the meaning given to them in the Terms and Conditions.

AUTHORISATION

All consents, approvals, authorisations or other orders of all regulatory authorities required by the Issuer under the laws of the Republic of South Africa have been given for the establishment of the Programme and the issue of Notes and for the Issuer, Agent, Calculation Agent and Paying Agent to undertake and perform their respective obligations under the Notes, the Programme Memorandum and Agency Agreement.

LISTING

The Programme has been listed by BESA. Notes issued under the Programme may be listed on BESA or such other or further exchange(s) as may be selected by the Issuer. Unlisted Notes may also be issued under this Programme.

DOCUMENTS AVAILABLE

So long as Notes are in issue under the Programme, copies of the following documents will, when published, be available from the registered office of the Issuer:

(a) the audited Annual Financial Statements of the Issuer in respect of the three financial years ended 31 December 2002, 2003 and 2004;

(b) a copy of this Programme Memorandum;

(c) the Programme Agreement and the Agency Agreement (which contains the forms of the Global Certificates and the Individual Certificates); and

(d) any future supplements to this Programme Memorandum and any other documents incorporated herein or therein by reference.

CLEARING SYSTEMS

The Registered Notes listed on BESA will be cleared and settled in accordance with the rules of BESA and the Central Depository, or their successors. STRATE Limited is appointed by BESA to match, clear and facilitate the settlement of transactions concluded on BESA. The Notes may also be accepted for clearance through any additional clearing system as may be selected by the Issuer.

SETTLEMENT AGENTS

As at the date of this Programme Memorandum, the BESA-recognised Settlement Agents, who are also Participants, are the South African Reserve Bank, ABSA Bank Limited, FirstRand Bank Limited, Nedbank Limited and The Standard Bank of South Africa Limited. Euroclear System and Clearstream Banking société anonyme (Clearstream, Luxemborg) will settle offshore transfers through South African Settlement Agents.

MATERIAL CHANGE

Save as disclosed in this Programme Memorandum, there has been no material adverse change in the financial or trading position of the Issuer since 31 December 2004.

LITIGATION AND RISKS

Save as disclosed herein, the Issuer is not engaged (whether as defendant or otherwise) in any legal, arbitration, administration or other proceedings, the results of which might have or have had a material effect on the financial position or the operations of the Issuer, nor is it aware of any such proceedings being threatened or pending.

107 An investment in the Notes by the Noteholder is subject to the risks detailed in this Programme Memorandum and the management by the Issuer of such risks.

AUDITORS

PricewaterhouseCoopers Incorporated and KPMG Incorporated have acted as the auditors of the financial statements of the Issuer for the financial years ending 31 December 2002, 2003 and 2004, and in respect of these years, issued unqualified audit reports in respect of the Issuer.

NON-SOUTH AFRICAN RESIDENT NOTEHOLDERS AND EMIGRANTS FROM THE COMMON MONETARY AREA

The information below is not intended as advice and it does not purport to describe all of the considerations that may be relevant to a prospective purchaser of Notes. Prospective purchasers of Notes that are non-South African residents or emigrants from the Common Monetary Area (as defined below) are urged to seek further professional advice in regard to the purchase of Notes under the Programme.

Blocked Rand may be used for the purchase of Notes. Any principal amounts payable by the Issuer in respect of the Notes purchased with Blocked Rand may not, in terms of the Exchange Control Regulations of 1961, be remitted out of South Africa or paid into any non-South African resident’s bank account. For the purposes of this clause, Blocked Rand is defined as funds which may not be remitted out of South Africa or paid into a non-South African resident’s bank account.

Emigrants from the Common Monetary Area

Any Individual Certificates issued to Noteholders who are emigrants from the Common Monetary Area will be endorsed “non-resident”. In the event that the Beneficial Interest in Notes is held by an emigrant from the Common Monetary Area through the Central Depository and its relevant Participants, the securities account of such emigrant will be designated as a “non-resident” account. Such restrictively endorsed Individual Certificates shall be deposited with an authorised foreign exchange dealer controlling such emigrant’s blocked assets.

Any payments of principal due to an emigrant Noteholder will be deposited into such emigrant’s Blocked Rand account, as maintained by an authorised foreign exchange dealer.

Non-residents of the Common Monetary Area

Any Individual Certificates issued to Noteholders who are not resident in the Common Monetary Area will be endorsed non-“ resident”. In the event that Notes are held by a non-resident of the Common Monetary Area through the Central Depository and its relevant Participants, the securities account of such Noteholder will be designated as a “non-resident” account.

For the purposes of these paragraphs, the Common Monetary Area includes the Republic of South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland.

IMPAIRMENT OF BANK’S CAPITAL IN RESPECT OF NOTES QUALIFYING AS SECONDARY CAPITAL OR TERTIARY CAPITAL

Regulation 21(9) of the Capital Adequacy Regulations (Government Notice R1112, Government Gazette 21726, 8 November 2000) published under section 90 of the Banks Act, 1990 provides that the acquisition of any Notes qualifying as Secondary Capital or Tertiary Capital (as the case may be) by a bank, as defined in the Banks Act, 1990, or by a non-banking subsidiary of a bank shall be regarded as an impairment of the capital of the bank in question, in an amount equal to the book value of such Notes held by that bank when it calculates its capital adequacy requirements.

DEFERRAL OF PAYMENTS OF PRINCIPAL AND INTEREST IN RESPECT OF NOTES QUALIFYING AS TERTIARY CAPITAL

The regulations relating to capital adequacy requirements for banks’ trading activities and financial instruments (Government Notice R1058, Government Gazette 6268, 21 August 1998 as amended by Government Notice R1465, Government Gazette 24088, 22 November 2002) published under section 90 of the Banks Act, 1990 provide that in the event that the qualifying capital (as defined therein) of a bank issuing Notes qualifying as Tertiary Capital falls below the prescribed minimum amount, the Registrar of Banks may require that interest and principal payments in respect of such Notes be deferred for such a period of time and subject to such conditions, if any, that the Registrar of Banks may deem fit.

108 ISSUER

The Standard Bank of South Africa Limited (Registration number 1962/000738/06) Registered Office: 9th Floor Standard Bank Centre 5 Simmonds Street Johannesburg, 2001 South Africa Contact: Mr S Ridley

ARRANGER, DEALER AND SPONSORING MEMBER

The Standard Bank of South Africa Limited (acting though its Corporate and Investment Banking Division) (Registration number 1962/000738/06) 4th Floor Standard Bank Centre 3 Simmonds Street Johannesburg, 2001 South Africa Contact: Ms A Hunter/Mr A Costa

DEALERS

Deutsche Bank AG, Johannesburg Branch J.P. Morgan Securities South Africa (Registration number 1998/003298/10) (Proprietary) Limited 3 Exchange Square (Registration number 1996/015112/07) 87 Maude Street 1 Fricker Road Sandton, 2196 Illovo South Africa Johannesburg, 2196 Contact: Mr D Woods South Africa Contact: Mr M Hussey

LEGAL ADVISERS TO THE ARRANGER AND DEALERS

Bowman Gilfillan Inc. 165 West Street Sandton, 2196 South Africa Contact: Mr E Davids

AUDITORS TO THE ISSUER

KPMG Incorporated PricewaterhouseCoopers Incorporated (Registration number 1999/021543/21) (Registration number 1998/012055/21) KPMG Crescent 2 Eglin Road 85 Empire Road Sunninghill, 2157 Parktown, 2193 South Africa South Africa Contact: Mr P McCrystal Contact: Mr T Hoole

PRINTED BY STANDARD BANK

SBSA 809313 10/05