LISTING MEMORANDUM, ABBEY NATIONAL Abbey National ple (incorporated with limited liability under the Companies Act 1985, registered number 2294747) Placing of 100,000,000 10% per cent. Non-Cumulative Sterling Preference Shares of £1 each Issue Price 108.935 pence per Sterling Preference Share Application has been made to the London Stock Exchange Limited (the “London Stock Exchange”) for the Sterling Preference Shares (as defined below) to be admitted to the Official List. Copies ofthis Listing Memorandum, which comprises listing particulars which have been approved by the London Stock Ex- change, have been delivered to the Registrar of Companies in England and Wales as required by Section 149 of the Financial Services Act 1986. The Sterling Preference Shares will have a nominal value of £1 each and will be issued fully paid for cash. The terms of, and the rights attaching to, the Sterling Preference Shares will be identical in all respects to the terms of, and the rights attaching to, the 10% per cent. Non-Cumulative Preference Shares of £1 each of Abbey National which were allotted by the Directors of Abbey National on October 23, 1995 (the “Original Sterling Preference Shares”), save in relation to the entitlement to the dividend payable on April 6, 1996. The first dividend instalment on the Sterling Preference Shares will be payable on April 9, 1996 and will be in respect of the period from (and including) February 13, 1996 to (but excluding) April 6, 1996. ‘The Sterling Preference Shares will rank pari passu inter se and with all other shares expressed to rank pari passu therewith (including the Original Sterling Preference Shares, save to the extent described above) and in priority as regards participation in profits or assets to the Ordinary Shares of 10p each (the “Ordinary Shares”) and any other shares of Abbey National. A summary of the provisions of the Articles of Association of Abbey National applicable to, and of the rights attaching to, the 100,000,000 10% per cent. Non-Cumulative Sterling Preference Shares of £1 each (the “Sterling Preference Shares”) is set out under “Description of the Sterling Preference Shares” herein. Merrill Lynch International Limited Kleinwort Benson Limited Barclays de Zoete Wedd Limited HSBC Markets SBC Warburg A Division of Swiss Bank Corporation February 9, 1996the best of the knowledge and belief of the directors (having taken all reasonable care 10 ensure mus suet 1s ine case) the information contained in this Listing Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. In this Listing Memorandum, references to “Abbey National plc”, “Abbey National” and the “Company” are references to Abbey National ple, and references to the “Group” are to Abbey National and its subsidiaries References to “conversion are to the transfer ofthe business of Abbey National Building Society (the “Society”) to Abbey National under Section 97 of the Building Societies Act 1986 wiich became effective on 12 July 1989 on the completion of the offer of shares in Abbey National and the admission of the share capital of Abbey National to the Official List of the London Stock Exchange, ‘The Sterling Preference Shares have not been and will not be registered under the U.S. Securities Act of 1933 as amended (the “Securities Act”). The Sterling Preference Shares are subject to USS. tax law requirements. ‘Subject to certain exceptions, the Sterling Preference Shares may not be offered, sold or delivered within the United States or to U.S. persons. Neither the delivery of this Listing Memorandum nor any sale made hereunder shall, under any circumstances, create any implication or constitute a representation that there has been no change in the affairs of Abbey National or the Group since the date hereof. This Listing Memorandum does not constitute an offer of, or an invitation by or on behalf of Abbey National or the Managers (as defined under “Placing of the ‘Sterling Preference Shares " below) to subscribe for or purchase, any of the Sterling Preference Shares. No person is authorised in connection with the offering of the Sterling Preference Shares to give any information or to make any representation not contained in this document and any information or representation not contained herein must not be relied upon as having been authorised by Abbey National or any of the “Managers. The distribution of this Listing Memorandum in certain jurisdictions may be restricted by law. Neither “Abbey National nor any of the Managers represents that this Listing Memorandum may be lawfully distributed in Compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assumes any responsibilty for facilitating any such distribution or offering. In particular, save for obtaining the approval ofthis Listing Memorandum as listing particulars by the London Stock ‘Exchange and delivery of copies of this Listing Memorandum to the Registrar of Companies in England and Wales, no action has been taken by Abbey National or the Managers which would permit distribution of this Listing Memorandum in any jurisdiction where action for that purpose is required. Accordingly neither this “Listing 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. In connection with the placing of the Sterling Preference Shares Merrill Lynch International Limited may overcalot or effect transactions on the London Stock Exchange which stabilise or maintain the market price of the Sterling Preference Shares at a level which might not othervise prevail on that exchange. Such stabilising, if commenced, may be discontinued at any time. In this Listing Memorandum, unless otherwise specified or the context otherwise requires, all references to “Dollars”, “US. dollars” and “USS” are to the currency of, and the references to “United States” and “U.S.” are to, the United States of America and references to “pounds”, “Sterling” and “E” are to the currency of the United Kingdom of Great Britain and Norther Ireland (the “United Kingdom”),‘TABLE OF CONTENTS Summary Description ofthe Sterling Preference Shares ‘i Rights Attaching to the Share Capital of Abbey National. Original Preference Shares and Exchangeable Capital Securities. . Proceeds of Issue Capitalisation Selected Consolidated Financial and Statistical Data Management's Discussion and Analysis of Financial Condition and Results of Operations of the Group Recent Developments Selected Statistical Information Risk Management Derivatives Business Description Competition Monetary and Fiscal Policies Supervision and Regulation Controlling Interests Management United Kingdom Taxation Placing of the Sterling Preference Shares General Information Financial Statements . Page 15 16 7 18 20 26 B 44 62 66 90 2 93 98. 99 102 104 106 FA