Important Information

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1 BANK OF NEW ZEALAND INVESTMENT STATEMENT FOR REGISTERED TRANSFERABLE DEPOSITS For the purposes of the Securities Act 1978, this Investment Statement is prepared on 8 October Important Information (The information in this section is required under the Securities Act 1978) Investment decisions are very important. They often have long-term consequences. Read all documents carefully. Ask questions. Seek advice before committing yourself. Choosing an investment When deciding whether to invest, consider carefully the answers to the following questions that can be found on the pages noted below: Contents Page What sort of investment is this? 2 Who is involved in providing it for me? 2 How much do I pay? 3 What are the charges? 3 What returns will I get? 3 What are my risks? 4 Can the investment be altered? 5 How do I cash in my investment? 5 Who do I contact with enquiries about my 5 investment? Is there anyone to whom I can complain if I 5 have problems with the investment? What other information can I obtain about 6 this investment? Glossary 6 In addition to the information contained in this document, important information can be found in the latest General Disclosure Statement of Bank of New Zealand, the Application Form (if any) and the Term Sheet specific to any particular issue of the Registered Transferable Deposits. You may obtain a copy of the General Disclosure Statement at any branch or agency of Bank of New Zealand or they can be viewed at Bank of New Zealand s website: You may obtain a copy of a specific Application Form (if any) and Term Sheet from Bank of New Zealand by contacting the Head of Investor Sales, BNZ Capital, 1 Willis Street, PO Box 2392, Wellington, Telephone: , Facsimile: (04) Engaging an investment adviser An investment adviser must give you a written statement that contains information about the adviser and his or her ability to give advice. You are strongly encouraged to read that document and consider the information in it when deciding whether or not to engage an adviser. Tell the adviser what the purpose of your investment is. This is important because different investments are suitable for different purposes, and carry different levels of risk. The written statement should contain important information about the adviser, including: relevant experience and qualifications, and whether dispute resolution facilities are available to you; and 1

2 what types of investments the adviser gives advice about; and whether the advice is limited to investments offered by 1 or more particular financial institutions; and information that may be relevant to the adviser's character, including certain criminal convictions, bankruptcy, any adverse findings by a court against the adviser in a professional capacity, and whether the adviser has been expelled from, or prohibited from joining, a professional body; and any relationships likely to give rise to a conflict of interest. The adviser must also tell you about fees and remuneration before giving you advice about an investment. The information about fees and remuneration must include: the nature and level of the fees you will be charged for receiving the advice; and whether the adviser will or may receive a commission or other benefit from advising you. An investment adviser commits an offence if he or she does not provide you with the information required. What sort of investment is this? The investments offered under this Investment Statement are unsecured debt securities known as Registered Transferable Deposits ( RTDs ). The Investment Statement covers three types of RTDs: Fixed Rate RTDs Floating Rate RTDs Zero Coupon RTDs. No RTDs which are offered under this Investment Statement have been reserved for any class of applicant or are otherwise not available for application by members of the public. RTDs are available only to investors resident in New Zealand. Refer to What returns will I get? on page 3 for the details of the returns on each of these RTDs, and to the Application Form (if any) and Term Sheet for details relating to each particular issue of RTDs. The RTDs will be constituted and issued pursuant to the Deed Poll. The RTDs will constitute unsecured, unsubordinated obligations of the Bank of New Zealand ranking at least equally in right and priority of payment with all the Bank s present and future unsecured unsubordinated indebtedness other than indebtedness preferred by operation of law. The number of RTDs that will be offered will be set out in the relevant Term Sheet. The Bank may reserve the right to accept oversubscriptions (either unlimited oversubscriptions or a specified amount of oversubscriptions, as stated in the relevant Term Sheet) at its discretion. Products from issuers other than Bank of New Zealand, and products other than RTDs which are offered under this Investment Statement, are not covered by this Investment Statement. If you are in doubt as to whether this Investment Statement applies to your investment please ask the Bank staff member you are dealing with. Who is involved in providing it for me? The issuer of the RTDs is Bank of New Zealand (referred to in this Investment Statement either by its full name or as the Bank ). The Bank s address is BNZ Tower, 125 Queen Street, Auckland until 1 December 2009, and from that date, 80 Queen Street, Auckland. Since its establishment in 1861 the Bank has been carrying on the business of providing banking and financial services in all its aspects in New Zealand and other countries. A comprehensive range of banking and financial services is provided, including deposit taking, credit and debit cards, corporate, domestic and multi-currency based lending, dealing in interest rate and foreign exchange products and their derivatives, trade finance, the distribution of life and general insurance, managed funds, KiwiSaver and superannuation products, and the provision of investment advice. 2

3 The ultimate parent bank of Bank of New Zealand is National Australia Bank Limited, whose address for service is Level 34, 500 Bourke Street, Melbourne, Victoria 3000, Australia. National Australia Bank Limited does not guarantee the obligations of Bank of New Zealand. Bank of New Zealand has a long-term credit rating of AA (Stable outlook) from Standard and Poor s and Aa2 (Stable outlook) from Moody s at the time this Investment Statement was prepared. The Registrar and Paying Agent of the RTDs is Computershare Investor Services Limited, Level 2, 159 Hurstmere Road, Takapuna, North Shore City 0622, Private Bag 92119, Auckland Computershare Investor Services Limited will not be liable for any breach by Bank of New Zealand of any warranty, obligation or undertaking under any agreement, including the non-payment of money due, nor will Computershare Investor Services Limited be liable for any negligent act, error or omission on the part of Bank of New Zealand, nor for acting in accordance with any instruction or direction of Bank of New Zealand or with the consent or approval of Bank of New Zealand. How much do I pay? Minimum Subscription. RTDs will be issued with a minimum face value of NZ$5,000 for any one maturity date, and in multiples of NZ$1,000 thereafter. There is no limit on the maximum amount that may be invested up to the maximum issue amount of the relevant issue of RTDs. Subscription Amount (Purchase Price). You are required to pay to the Bank the subscription amount for each RTD in which you wish to invest. The subscription amount payable for an RTD may differ from the face value. The Application Form (if any) and/or the Term Sheet detail how the subscription amount is to be calculated, and the relevant Bank staff will be able to advise you on the Rate Set Date (which is usually two business days before the investment is made) of the actual amount to be paid for any RTD. The subscription amount must be deposited in full at any branch of the Bank or may be paid in such other manner as the Bank may permit. Bank of New Zealand reserves the right to refuse any application, or to accept an application in part only, without assigning a reason. The Bank will not accept your investment until full payment is received. There is no cooling off period during which an investor can cancel his or her investment in RTDs. What are the charges? No charges are payable by you to the Bank when you apply for your initial investment in the RTDs. However your investment adviser may charge you a fee for arranging this investment. A fee or commission may be charged if RTDs are purchased or sold in the secondary market. Bank of New Zealand takes no responsibility for the pricing actions of secondary market participants, or for any fee or commission, which is negotiated or agreed directly between you and the relevant secondary market participant. Additional Charges for Transfers. Service charges, governmental charges, or certain taxes may apply on the transfer of any RTDs. These charges will be calculated by the Registrar and will be advised to you at the time any new registration notice is issued or the transfer of RTDs occurs (as the case may be). General details of such charges can be obtained at any time from the Registrar, at the address specified above on this page. The Bank will pay all costs and expenses associated with the offer of RTDs, including the legal, accounting and audit fees, printing, distribution and promotional costs, and registry fees. You will be responsible for all other costs relating to the RTDs, including any costs associated with the transfer of RTDs. What returns will I get? This section of the Investment Statement should be read in conjunction with the section headed What are my risks?. The returns on an RTD are the repayment of the face amount at maturity and interest (if any) payable in accordance with the terms of issue. Payments will only be made to the registered holder of the RTDs. If any Fixed Rate or Floating Rate RTD is transferred during the period of 10 days prior to an interest payment date, the amount of interest due will be paid to the holder appearing on the register at the close of business immediately prior to that ten day period. The key factors affecting your return are the interest rate payable on the RTD, the term of the investment and any taxes applicable to your investment. The amount of return on any particular RTD may not be quantifiable at the date of this Investment Statement. No particular amount of return is promised by the Bank in this Investment Statement. Fixed Rate RTDs will pay interest on their respective face amounts at the fixed coupon rate specified in the Application Form (if any) and/or the Term Sheet. 3

4 Floating Rate RTDs will bear interest at a variable rate usually determined by reference to the 30, 60, or 90-day bank bill bid rate displayed on page BKBM of the Reuters Monitor Screen. Details of the applicable interest rate will be specified in the Application Form (if any) and/or Term Sheet. Zero Coupon RTDs will be issued at a discount to their respective face amounts. No interest is paid on Zero Coupon RTDs. However, the difference between the initial purchase price paid and the face amount received at maturity will equal the (before tax) return on the RTDs. Returns on any particular issue of RTDs will be due and paid in accordance with the Term Sheet relating to such issue. Taxation. Returns on the RTDs will be affected by taxes. Bank of New Zealand or the Registrar on its behalf will deduct New Zealand resident withholding taxes from the gross interest ( Gross Interest ) amount paid to you unless you provide Bank of New Zealand or the Registrar with the appropriate exemption certificate. For taxation purposes, Gross Interest on a zero coupon RTD will include the difference between the subscription amount payable for a Zero Coupon RTD and the amount payable at maturity. Deductions will be made in accordance with the provisions of the Income Tax Act 2007 applicable at that time. Although the RTDs are offered only to investors resident in New Zealand, if at any time any RTDs are held by a non-resident, nonresident withholding tax will be deducted from the Gross Interest. Non-resident withholding tax will be zero if you have elected for the Bank to pay the approved issuer levy (currently 2% of the Gross Interest) and agreed that the Bank may deduct this amount from your return. In the event of any change in law, the Bank reserves the right not to pay the approved issuer levy but to instead deduct nonresident withholding tax from payments to non-residents. You should consult your own taxation adviser regarding the effect of any relevant taxation legislation on your investment. Bank of New Zealand is legally liable for paying you the returns set out above. Bank of New Zealand has a guarantee under the New Zealand deposit guarantee scheme. The terms of this guarantee may be found in the Crown Deed of Guarantee ( Crown Retail Deed of Guarantee ) dated 5 November 2008 between the Bank and Her Majesty the Queen in right of New Zealand acting by and through the Minister of Finance ( Crown ), a copy of which is available at In order to be eligible to receive payments under the Crown Retail Deed of Guarantee an investor must be a "Creditor" (as defined in the Crown Retail Deed of Guarantee), which does not include financial institutions and related parties of the Bank (as further set out in the Crown Retail Deed of Guarantee). The maximum liability of the Crown to each such Creditor under the Crown Retail Deed of Guarantee is $1,000,000 in aggregate. The guarantee under the Crown Retail Deed of Guarantee expires at 12.01am on 12 October Further information about the New Zealand deposit guarantee scheme is available, free of charge and at all reasonable times, at The most recent audited statement of financial position of the Crown is also available, free of charge and at all reasonable times, at In addition, the Bank and the Crown have entered into a Crown Wholesale Funding Guarantee Facility Deed dated 19 December 2008 and, further to that deed, the Crown executed a deed of guarantee dated 19 December 2008 (as amended by the Crown from time to time, the Crown Wholesale Funding Guarantee ), a copy of which is available at However, no RTDs have the benefit of the Crown Wholesale Funding Guarantee unless the Crown issues a Guarantee Eligibility Certificate (as defined in the Crown Wholesale Funding Guarantee) in respect of those RTDs. The RTDs which are offered under this Investment Statement do not have the benefit of the Crown Wholesale Funding Guarantee. No other person guarantees the obligations of the Bank in respect of the RTDs. What are my risks? The principal risks of you not recovering the sum which you paid for the investment in RTDs or of not receiving the returns described above in What are my returns? will only arise if Bank of New Zealand is placed in receivership, liquidation or statutory management. In that event: you may not recover all your principal investment or receive the agreed returns; you will not be obliged to pay any more than your investment in the RTDs; you will not be entitled to any payment of principal or interest on your RTDs until all secured creditors (if any) (and those creditors preferred by law) have been paid in full; and your claim on the assets of Bank of New Zealand will thereafter rank equally with the claims of all other unsecured unsubordinated creditors of Bank of New Zealand. Bank of New Zealand considers this risk to be low. At the date of this Investment Statement the Bank has long-term credit ratings of AA (Stable outlook) by Standard & Poor s and Aa2 (Stable outlook) by Moody s, which is described as a very strong ability to pay. The credit rating is not a recommendation to purchase, sell, or hold an investment. Credit ratings are subject to change at any time. 4

5 Another risk associated with the RTDs is that the price at which you are able to sell your RTDs may be less than the price you paid, due to market volatility or other reasons. If you transfer your RTDs before maturity (as described in How do I cash in my investment? below), the price that you obtain for them may differ from the amount you paid to purchase them. This is because changes in the market interest rates can affect the market value of your RTDs. For instance, if market rates go up, the market value of your RTDs may go down, and vice versa. The loss or gain of capital is a function of the effect of a change in underlying market interest rates on the value of your investment over which Bank of New Zealand has no control. Can the investment be altered? The terms of the Deed Poll can be altered by Bank of New Zealand without notice to the holders of RTDs, and any alterations will be binding on holders of RTDs. However, the terms and conditions of the RTDs cannot be altered unless agreed to by both Bank of New Zealand and the holders of the relevant RTDs. How do I cash in my investment? Early Termination. Bank of New Zealand has no right to repay the RTDs in full or in part before their respective maturity dates, and you have no right to have your RTDs repaid early. Transfer or Sale of RTDs. As a holder of an RTD, you will be entitled to sell your interest in that RTD. Once you have purchased the RTDs, the only way that you can cash them in, or reduce your investment prior to the maturity of the RTDs, is by selling part or all of the RTDs to Bank of New Zealand or another party with whom you may choose to deal privately (subject to the condition that RTDs may only be transferred in integral multiples of NZ$1,000 with at least NZ$5,000 being transferred at any one time and any residual holding being not less than NZ$5,000 unless the total RTD is being transferred). In the opinion of the Bank there is an established market for such sales. A holder of any RTD may negotiate with Bank of New Zealand for Bank of New Zealand to purchase RTDs on any market at any price. Any RTDs so purchased may be retained or sold or surrendered for cancellation at the discretion of the Bank. However, RTDs are not issued with the intention of being bought back prior to their maturity date and Bank of New Zealand is under no obligation to purchase RTDs at any time from any person. Transfer of the RTDs can be achieved by the completion of either the Registrar s then standard form or by book entry for those RTD holders who are members of Austraclear. For transfer to be effective the Registrar s then standard procedures must be followed whilst not resulting in a breach of the provisions of the Deed Poll relating to the transfer of the RTDs. The Registrar will make all necessary entries in the register. You should note that charges may apply on any transfer, as highlighted in What are the charges? Who do I contact with enquires about my investment? If you have any queries about the RTDs, please contact your usual investment adviser or branch of the Bank of New Zealand, or Head of Investor Sales BNZ Capital 1 Willis Street PO Box 2392 WELLINGTON Telephone: Facsimile: (04) Is there anyone to whom I can complain if I have problems with the investment? The first step is to raise your concern with the person you dealt with initially (or, if unavailable, another staff member). Our staff should be able to resolve the majority of problems and will listen to and investigate your concern. If our staff are unable to resolve your problem on the spot, they will personally follow it up and keep you informed about action being taken on your behalf. If your complaint about the RTD is not satisfactorily dealt with you can direct your complaint to: Head of Investor Sales BNZ Capital 1 Willis Street PO Box 2392 WELLINGTON 5

6 Telephone: Facsimile: (04) If after raising the matter with the Bank, you are still not satisfied, the option is available to contact the Banking Ombudsman. The Banking Ombudsman has been appointed by all the banks subscribing to the New Zealand Bankers Association Code of Banking Practice. As an independent party, the Ombudsman will help reach agreement if this cannot be achieved through the Bank s own complaints system. The telephone number of the Banking Ombudsman is Any correspondence should be addressed to: The Banking Ombudsman PO Box Wellington 6015 help@bankombudsman.org.nz Bank of New Zealand subscribes to the Code of Banking Practice, which sets out the minimum standards for resolving complaints. The Code of Banking Practice requires disputes to be resolved as quickly and equitably as possible and that banks will be held accountable to these standards. What other information can I obtain about this investment? Further information about the Bank can be obtained by consulting the Bank s General Disclosure Statement published under section 81 of the Reserve Bank of New Zealand Act 1989, including in the financial statements contained in that disclosure statement. A copy of that disclosure statement can be obtained free of charge from any branch or agency of the Bank or it can be found on the Bank s website A copy of the Bank s General Disclosure Statement is also filed on a public register at the Companies Office of the Ministry of Economic Development and is available for public inspection. The Registrar will send to a holder of RTDs a statement of any amounts payable to that holder at the same time that payments to that holder are made. The statement will include details of gross amounts paid and the amount of any deduction or withholding made from that amount for, or on account of, New Zealand resident or non-resident witholding tax. In the case of a deduction of resident witholding tax the statement shall be prepared to constitute a resident withholding tax statement deduction certificate in terms of the Income Tax Act 2007 and the Tax Administration Act 1994 and shall include (without limitation) the information set out in section 25(6) of the Tax Administration Act The Registrar will provide an annual statement on the amount of any deduction for resident or non-resident withholding tax. The Bank is exempt under the Securities Act 1978 from the requirement to register a prospectus in relation to the offer of RTDs, and from the requirements to appoint a trustee in respect of the RTDs. Copies of the General Disclosure Statement, the Agency Agreement, the Deed Poll and Term Sheet and Application Form (if any) pursuant to which the RTDs are issued, and further copies of the Investment Statement can be obtained free of charge, on request, by contacting the Head of Investor Sales, BNZ Capital, 1 Willis Street, PO Box 2392, Wellington, Telephone: , Facsimile: (04) Other information about Bank of New Zealand can be found on the Bank s website GLOSSARY Agency Agreement means the Registrar and Paying Agency Agreement between Bank of New Zealand and Computershare Investor Services Limited dated 8 April 2004 as amended and restated on 31 May Application Form means, for a particular issue of RTDs, the form to be completed by the investor (if requested by the Bank) at the time an application is made for such issue and accepted by the Bank. Bank means Bank of New Zealand. Deed Poll means the Deed Poll dated 12 February 1996 for the constitution and issue of Registered Transferable Deposits as amended and restated on 12 March Issuer means Bank of New Zealand. Registrar means Computershare Investor Services Limited, acting in its capacity as registrar and paying agent. Registration Notice means a notice to a holder of an RTD from the Registrar confirming the terms of the issue of those RTDs. RTD means Registered Transferable Deposits and RTDs has corresponding meaning. Term Sheet means, for a particular issue of RTDs, the document prepared by the Bank that sets out conditions and details for such issue. 6