Overview Rating Action Rationale CreditWatch Transfer Of The Securities To The New Bank Related Research Ratings List

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1 January 7, 2010 Research Update: S&P Takes Rating Actions On Some ABN AMRO Subordinated And Hybrid Securities Based On View Of Demerged Bank Ratings Primary Credit Analyst: Elisabeth Grandin, Paris (33) Secondary Credit Analyst: Claire Curtin, London (44) Table Of Contents Overview Rating Action Rationale CreditWatch Transfer Of The Securities To The New Bank Related Research Ratings List 1 Standard & Poor's. All rights reserved. No reprint or dissemination without S&P's permission. See Terms of Use/Disclaimer on the last page

2 Research Update: S&P Takes Rating Actions On Some ABN AMRO Subordinated And Hybrid Securities Based On View Of Demerged Bank Ratings Overview We have a clearer view of the creditworthiness of the new ABN AMRO Bank to be created from the legal demerger of ABN AMRO in the first quarter of 2010, and we expect to rate the new bank 'A+/A-1' and assign it a negative outlook. We are affirming the 'A' rating on subordinated debt instruments allocated to the Dutch state-acquired businesses of ABN AMRO that will constitute the new ABN AMRO Bank. On the two related hybrid instruments, we are maintaining the 'BB' junior subordinated debt rating on CreditWatch but revising the implications to negative from developing. The negative CreditWatch implications reflect our view of potentially higher risk of coupon suspension on these hybrid instruments. Rating Action On Jan. 7, 2010, Standard & Poor's Rating Services removed from CreditWatch and affirmed its 'A' subordinated debt rating on instruments that Netherlands-based ABN AMRO Bank N.V. has allocated to the businesses that the Dutch state has acquired. At the same time, on two related hybrid instruments, we maintained the 'BB' junior subordinated debt rating on CreditWatch but revised the implications to negative from developing. (See the Ratings List below for those instruments subject to today's rating action). Rationale The demerger process of ABN AMRO Bank N.V. into businesses that the Dutch state acquired (and other businesses that The Royal Bank of Scotland PLC (RBS; A+/Stable/A-1) acquired) will give birth to a new Dutch bank in The new bank will retain the ABN AMRO Bank N.V. name (referred to as "new ABN AMRO" in this report), and will be fully owned by the State of The Netherlands (AAA/Stable/A-1+). Assets and liabilities comprising this new bank are ABN AMRO's Dutch commercial and retail activities and its private banking division that the Dutch state acquired in We understand that this demerger process is scheduled to take place during the first quarter of The Dutch state will wholly own it through a holding structure named ABN AMRO Group N.V. The legal structure currently named ABN AMRO Bank N.V. will remain wholly owned by the RBS group and will be renamed RBS N.V. Standard & Poor s RatingsDirect on the Global Credit Portal January 7,

3 Research Update: S&P Takes Rating Actions On Some ABN AMRO Subordinated And Hybrid Securities Based On View Of Demerged Bank Ratings Our rating actions today take into consideration the information that ABN AMRO has communicated since the end of September 2009 including: Its planned demerger, Dutch parliamentary approval on Dec. 17, 2009, of a capital injection into the new ABN AMRO, and The agreement that ABN AMRO announced on Dec. 23, 2009, to sell some Dutch commercial banking activities to Deutsche Bank AG (A+/Stable/A-1) that make possible the planned merger of the new ABN AMRO with Fortis Bank (Nederland) N.V. (FBN; A/Developing/A-1) later in Upon completion of the demerger and based on the information we have today, we expect to assign 'A+/A-1' long- and short-term counterparty credit ratings and a negative outlook on the bank to be created. The 'A' rating on the subordinated debt instruments, which are to be transferred to the new bank, reflects our usual notching on dated subordinated debt instruments down from the counterparty credit ratings. The negative CreditWatch implications on the junior subordinated instruments reflect our view of a higher possibility that we may lower the ratings on the hybrid instruments if we consider that the risk of coupon suspension has materially increased. Since spring 2009, ABN AMRO has disclosed earnings and balance sheet items for the Dutch State-acquired businesses that will constitute the new bank. With that information and as a result of discussions with ABN AMRO, we have now a good view of the counterparty credit ratings on the future new ABN AMRO that guides our subordinated debt rating. According to our criteria, we rate dated subordinated debt instruments one notch below the long-term issuer credit rating on a bank. The 'A+/A-1' counterparty credit ratings we expect to assign to the new ABN AMRO would incorporate two notches of uplift for potential parental support above its stand-alone credit profile, in line with our expectations that The State of Netherlands would provide exceptional support if needed. In addition, the ratings would reflect our opinion about the new bank's good market position in Dutch retail and small and midsize enterprise (SME) banking, as well as its adequate funding position and sound capital. However, weaknesses for the ratings are the new bank's relative lack of diversification, the execution risk of the separation from RBS, and mediocre profitability. We will update our view about how we will rate the new bank following its merger with FBN, in the course of 2010, when prospective financials and a business plan are made available for the new combined bank. We are expecting that the new combined bank will continue to benefit from strong support from the full owner, the Dutch state, as is currently the case for FBN and for our expected rating on the new ABN AMRO. The negative outlook we expect to assign on the new ABN AMRO would reflect the execution risk of the planned merger with FBN and the difficulties it would face in establishing itself as stand-alone, profitable entity in the short 3

4 Research Update: S&P Takes Rating Actions On Some ABN AMRO Subordinated And Hybrid Securities Based On View Of Demerged Bank Ratings term. CreditWatch We expect to resolve the CreditWatch on the two junior subordinated instruments in the coming months, when we will have more details about the terms of the new capital injection and a clearer view of the financial and operational challenges linked to the merger of the new bank with FBN. The rating on the instruments will depend on our opinion about any heightened risk of payment deferral by the issuing bank. In particular, we will review the terms and conditions of each instrument to determine whether the possibility for coupon suspension has increased in light of our opinion about the financial profile of the new ABN AMRO. Our current view is that it will have little chance to be profit-making and distribute dividends in 2010 given substantial integration costs. Coupon payment on the Upper Tier 2 instrument becomes optional in the absence of ordinary dividend. Transfer Of The Securities To The New Bank We understand that the instruments subject to today's action listed below will be transferred--as part of the legal demerger--to the new ABN AMRO Bank to be created from the current ABN AMRO. Shortly after the demerger, the new bank will seek transfer of ownership from the consortium holding structure comprising Banco Santander S.A., RBS, and the Dutch state, to ABN AMRO Group N.V., the holding that will be wholly owned the Dutch state by the end of the first quarter of ABN AMRO filed its demerger with the Amsterdam Chamber of Commerce in September It has received no objection from creditors during the creditor objection period that ended on Oct. 30, 2009, and has obtained the consent of the junior subordinated 1 billion Tier 1 debtholders for the transfer. One lower Tier 2 instrument (US$250 million 7.75% subordinated deposit notes series B due May 15, 2023, (New York branch)), is not covered by the legal demerger documentation. We understand that this instrument will not be transferred to the new ABN AMRO at the moment of legal demerger, but we believe that it will likely take place later in For the transfer, the new ABN AMRO will need to obtain the approval of the related parties, including debtholders. Related Research FI Criteria: Bank Rating Analysis Methodology Profile, March 18, 2004 Use Of CreditWatch And Outlooks, Sept. 14, 2009 Standard & Poor s RatingsDirect on the Global Credit Portal January 7,

5 Research Update: S&P Takes Rating Actions On Some ABN AMRO Subordinated And Hybrid Securities Based On View Of Demerged Bank Ratings Hybrid Capital Handbook: September 2008 Edition, Sept. 15, 2008 Franchise Stability, Confidence Sensitivity, And The Treatment Of Hybrid Securities In A Downturn, Dec. 1, 2008 Ratings List Ratings Affirmed; CreditWatch/Outlook Action To ABN AMRO Bank N.V. From Subordinated A A/Watch Dev US$250 mil 7.75% sub dep nts ser B due 05/15/2023 (New York branch) CUSIP 00077TAA2 ISIN US00077TAA25 US$1 bil fltg rate callable lower tier II sub nts ser 822 due 01/17/2017 CINS N002A32L6 ISIN XS US$100 mil fltg rate callable lower tier II sub med-term nts ser 732 due 10/26/2015 CINS N002A3BB8 ISIN XS EUR103.4 mil fltg rate sub nts ser 267 due 07/21/2020 CINS N04897AA7 ISIN XS EUR82 mil fltg rate sub nts ser 261 due 06/30/2017 CINS N02601AE7 ISIN XS EUR500 mil fltg rate sub nts ser 775 due 05/31/2018 CINS N002A3TM5 ISIN XS EUR1 bil fltg rate lower tier II sub nts due 09/14/2016 CINS N002A3XZ1 ISIN XS Junior Subordinated BB/Watch Neg BB/Watch Dev Junior Subordinated 750 mil var rate fxd/fltg rate callable perp sub (upper Tier 2) hybrid ser 752 ICINS XS Junior Subordinated 1 bil var rate step-up/fxd callable perp secs (Tier 1) hybrid ICINS XS Additional Contact: Financial Institutions Ratings Europe;FIG_Europe@standardandpoors.com Complete ratings information is available to RatingsDirect on the Global Credit Portal subscribers at and RatingsDirect subscribers at All ratings affected by this rating action can be found on Standard & Poor's public Web site at Use the Ratings search box located in the left column. Alternatively, call one of the following Standard & Poor's numbers: Client Support Europe (44) ; London Press Office (44) ; Paris (33) ; Frankfurt (49) ; Stockholm (46) ; or Moscow (7)

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