FITCH LOWERS UK SUPPORT RATING FLOORS; DOWNGRADES LLOYDS, RBS TO 'A'

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1 FITCH LOWERS UK SUPPORT RATING FLOORS; DOWNGRADES LLOYDS, RBS TO 'A' Fitch Ratings-London-13 October 2011: Fitch Ratings has lowered its Support Rating Floors (SRF) for systemically important UK banks to 'A' from 'AA-' and 'A+'. As a result, Lloyds Banking Group plc's (LBG) and Royal Bank of Scotland Group plc's (RBSG) Long-term Issuer Default Ratings (IDR) have been downgraded to 'A' from 'AA-'. Separately, Fitch has also placed Barclays plc's IDR and Viability Rating (VR) on Rating Watch Negative (RWN). A full list of rating actions is at the end of this comment. The revision of the SRFs reflects Fitch's view that support dynamics are changing in the UK. The banking system is not only large relative to the UK economy, but there is also more advanced political will to reduce the implicit support for the country's banks, building on The Banking Act 2009 and, more recently the various policy recommendations of the Independent Commission on Banking (ICB). Although Fitch has affirmed the '1' Support Ratings of the largest UK banks, indicating that support for these banks is likely to remain high until elements of the UK banking sector complete their rehabilitation and some of the more practical aspects of bank resolution can be implemented, the lower SRF indicates that the potential for the provision of extraordinary support for senior bank creditors is relatively less certain than before. Most smaller UK banks and building societies already have the lowest Support Ratings of '5', reflecting Fitch's opinion that support for senior creditors cannot be relied upon. The downgrades of LBG and RBSG reflect the revision of their SRF as their current VRs are below that (both at 'bbb'). Both of these banking groups have shown steady improvement in their risk profiles and prospects over the past two years and, assuming there is no major fallout from the euro zone crisis, for example, ought to be able to achieve higher VRs over the medium- and long-term. Fitch preserved a one notch difference between RBSG's Long-term IDR and its major subsidiaries in the US and Ireland but equalised the short-term IDRs of these entities with that of the group to reflect its expectation that the support will remain stronger in the short-term. Barclays IDRs and VRs reflect the group's strong UK franchise, broad business mix, robust profitability, solid liquidity and sophisticated risk management. They also consider the earnings and risk volatility in its investment banking division, Barclays Capital (BarCap). The RWN on Barclays IDRs and VRs reflects Fitch's view that global trading and universal banks have business models that are particularly sensitive to market sentiment and confidence, that are complex and exposed to greater volatility. They will be resolved in a reasonably short timeframe. With the exception of Barclays, where Fitch's rating actions are taken in light of the agency's full criteria, all other rating actions have considered only the parts of the criteria that deal with support. In Fitch's rating framework, a bank's intrinsic creditworthiness is reflected in its Viability Rating, while the potential for extraordinary sovereign support is reflected in its Support Rating Floor. Its IDR is the higher of the two. For additional perspective see the report 'Rating Banks in a Changing World' which will shortly be available on The full list of rating actions is included below: RBSG Senior unsecured market linked securities: downgraded to 'Aemr' from 'AA-emr'

2 Dated subordinated bonds: downgraded to 'BBB+' from 'A' Preference shares (US , US780097AE13, XS ): unaffected at 'BB-' Innovative Tier 1 (US780097AH44): unaffected at 'BB-' All other rated preference shares and Tier 1 securities: unaffected at 'CC' The Royal Bank of Scotland plc Senior unsecured market linked securities: downgraded to 'A emr' from 'AA-emr' ; Guaranteed senior long-term debt: affirmed at 'AAA' Dated subordinated bonds (XS ): downgraded to 'BBB+' from 'A' All other dated (lower Tier 2) subordinated bonds: downgraded to 'A-' from 'A+' Upper Tier 2 securities: unaffected at 'BB-' National Westminster Bank plc Dated subordinated bonds: downgraded to 'A-' from 'A+ Upper Tier 2 securities: unaffected at 'BB-' Royal Bank of Scotland International Limited Royal Bank of Scotland NV Senior unsecured market linked securities: downgraded to 'A emr' from 'AA-emr' Commercial paper and short-term debt: downgraded to 'F1' from 'F1+' Dated subordinated bonds: downgraded to 'A-' from 'A+' RBS Holdings USA Inc Citizens Financial Group, Inc Long-term IDR: downgraded to 'A-' from 'A+'; Outlook Stable Short-term IDR: affirmed at 'F1' Individual Rating: unaffected at 'B/C' RBS Citizens, NA Long-term IDR: : downgraded to 'A-' from 'A+'; Outlook Stable

3 Short-term IDR: affirmed at 'F1' Long-term deposits: downgraded to 'A' from 'AA-' Short-term deposits: downgraded to 'F1' from 'F1+' Senior unsecured debt: downgraded to 'A-' from 'A+' Subordinated debt: downgraded to 'BBB+' from 'A' Individual Rating: unaffected at 'B/C' Citizens Bank of Pennsylvania Long-term IDR: downgraded to 'A-' from 'A+'; Outlook Stable Short-term IDR: affirmed at 'F1' Long-term deposits: downgraded to 'A' from 'AA-' Short-term deposits: affirmed at 'F1+' Individual Rating: unaffected at 'B/C' Ulster Bank Ltd Long-term IDR: downgraded to 'A-' from 'A+'; Outlook Stable Viability Rating: unaffected at 'ccc' Individual Rating: unaffected at 'E' Ulster Bank Ireland Limited Long-term IDR downgraded to 'A-' from 'A+'; Outlook Stable Senior unsecured long term notes: downgraded to 'A-' from 'A+' Senior unsecured short term notes: downgraded to 'F1' from 'F1+' Subordinated debt: downgraded to 'BBB+' from 'A' Individual Rating: unaffected at 'E' LBG Lower tier 2 (XS , XS ): downgraded to 'A-' from 'A+' All other (lower Tier 2 and upper tier 2) subordinated bonds: unaffected at 'BB' Lloyds TSB Bank plc Short-term IDR : downgraded to 'F1' from 'F1+' Market linked securities: downgraded to 'A emr' from 'AA-emr' Lower tier 2 subordinated debt: downgraded to 'A-' from 'A+' Upper tier 2 subordinated debt: unaffected at 'CCC' Innovative tier 1 subordinated debt (XS , US539473AE82, XS ): unaffected at 'BB+' Other Innovative tier 1 subordinated debt: unaffected at 'CC'

4 Guaranteed senior Long-term debt: affirmed at 'AAA' Guaranteed senior short-term debt: affirmed at 'F1+' HBOS plc Lower tier 2 debt downgraded to 'A-' from 'A+' Upper tier 2 subordinated debt (XS , XS , XS ): unaffected at 'BB+' Other upper tier 2 subordinated debt: unaffected at 'CCC' Bank of Scotland plc Lower tier 2: : downgraded to 'A-' from 'A+' Upper tier 2 subordinated debt (XS , XS ): unaffected at 'BB+' Other upper tier 2 subordinated debt: unaffected at 'CCC' Preference stock unaffected at 'BB+' Guaranteed senior Long-term (GBP) debt affirmed at 'AAA' Guaranteed senior short-term (GBP) debt affirmed at 'F1+' Guaranteed senior Long-term (AUD) debt affirmed at 'AA+' Guaranteed senior short-term (AUD) debt affirmed at 'F1+' Individual rating: unaffected at 'C' Barclays Bank Plc LT IDR: 'AA-'; placed on RWN Short-term IDR and short-term debt: 'F1+'; placed on RWN Senior debt: 'AA-'; placed on RWN Market linked securities: 'AA-emr'; placed on RWN Guaranteed senior Long-term debt: affirmed at 'AAA' Guaranteed senior Short-term debt: affirmed at 'F1+' Lower Tier 2: 'A+'; placed on RWN Upper Tier 2, preference shares and other hybrid capital: 'A'; placed on RWN Viability Rating: 'aa-'; placed on RWN Individual Rating: unaffected at 'B' Support Rating Floor: revised to 'A' from 'A+' Barclays plc (Barclays Bank plc's holding company parent) Long-term IDR: 'AA-'; placed on RWN Short-term IDR: 'F1+'; placed on RWN Viability Rating: 'aa-'; placed on RWN Support Rating: affirmed at '5' Support Rating Floor: affirmed at 'No Floor' Absa Group Ltd Long-term foreign currency IDR: 'A'; placed on RWN Short-term foreign currency IDR: 'F1'; placed on RWN Long-term local currency IDR: 'A'; placed on RWN National Long-term rating: 'AAA(zaf)'; placed on RWN National Short-term rating: affirmed at 'F1+(zaf)'

5 Absa Bank Ltd: Long-term foreign currency IDR: 'A'; placed on RWN Short-term foreign currency IDR: 'F1'; placed on RWN Long-term local currency IDR: 'A'; placed on RWN National Long-term rating: 'AAA(zaf)'; placed on RWN National Short-term rating: affirmed at 'F1+(zaf)' Senior unsecured: 'A'/'F1'; placed on RWN Senior unsecured National Long-term rating: 'AAA(zaf)'; placed on RWN HSBC Bank Plc Support Rating Floor downgraded to 'A' from 'A+ All other ratings of HSBC Bank Plc are unaffected by today's rating actions Santander UK Plc Support Rating Floor downgraded to 'A' from 'A+ All other ratings of Santander UK Plc and its subsidiary Abbey National Treasury Services Plc are unaffected by today's rating actions Nationwide Building Society Support Rating Floor downgraded to 'A' from 'A+ All other ratings of Nationwide Building Society are unaffected by today's rating actions Contact: Primary Analyst (Barclays plc and Barclays Bank plc, LBG and subsidiaries and Nationwide; Secondary Analyst HSBC Bank, RBSG and UK subsidiaries and Santander UK): Cynthia Chan Senior Director +44 (0) Fitch Ratings Limited 30 North Colonnade London, E14 5GN Primary Analyst (RBSG and UK subsidiaries, Ulster Bank Ltd and Ulster Bank Ireland Ltd, and Santander UK; Secondary Analyst LBG and subsidiaries): Svetlana Petrischeva Director +44 (0) Primary Analyst (HSBC Bank; Secondary Analyst Barclays plc and Barclays Bank plc): Andrew Shenton Associate Director +44 (0) Secondary Analyst (Nationwide Building Society): Claudia Nelson Senior Director +44 (0) Primary Analyst (Citizens Financial Group, RBS Citizens, Citizens Bank of Pennsylvania):

6 Christopher Wolfe Managing Director Primary Analyst (Absa Group Ltd, Absa Bank Ltd) Frederick Fouche Associate Director Secondary Analyst (Absa Group Ltd, Absa Bank Ltd) Eric Dupont Senior Director Secondary Analyst (Citizens Financial Group, RBS Citizens, Citizens Bank of Pennsylvania) Ilya Ivashkov Associate Director Secondary Analyst (Ulster Bank Ltd and Ulster Bank Ireland Ltd) Shaun Miskell Analyst +44 (0) Committee Chairperson (Barclays plc, Barclays Bank plc, Absa Group Ltd and Absa Bank Ltd) Tom Abruzzo Managing Director Committee Chairperson (all other entities) James Longsdon Managing Director +44 (0) Media Relations: Michelle James, London, Tel: , [email protected]. Additional information is available at The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings. Applicable criteria, 'Global Financial Institutions Rating Criteria', dated 16 August 2011, 'Treatment of Hybrids in Bank Capital Analysis', dated 11 July 2011, 'Bank Holding Companies', dated 16 August 2011, and 'Rating Hybrid Securities', dated 28 July 2011 are available at Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria Treatment of Hybrids in Bank Capital Analysis Bank Holding Companies Rating Hybrid Securities ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY

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