BELOW ARE DETAILS OF THE UK FINANCIAL SERVICES COMPENSATION SCHEME. (The fscs scheme has been updated taking the limit to £85,000 for more information a lot of answers are given on the FSCS website)

Financial Services Compensation Scheme. (Bank Compensation Scheme) 1/The compensation limit of £85,000* applies to each depositor for the total of their deposits with an organisation, regardless of how many accounts they hold or whether they are a single or joint account holder. In the case of a joint account, FSCS will assume that the money in that account is split equally between account holders, unless evidence shows otherwise. This means that each account holder in a joint account would be eligible for compensation up to the maximum limit. So for a joint account the limit is £50,000 per account holder so if in joint mames would be £50,000 each. The FSA changed the rules to increase the limit to £35,000 on 1 October 2007. And subsequently to £50,000 in October 2008. For claims against deposit-taking firms declared in default before 1 October 2007, the maximum level of compensation is £31,700 (100% of £2000 and 90% of the next £33,000) 2/For people who hold multiple accounts in banks that are part of a larger group, if each of the banks is separately authorised by the Financial Services Authority: FSCS would pay compensation up to the limit of £85,000 per person, per authorised institution. If each of the banks is not separately authorised but is covered by the parent company's authorisation: FSCS would pay compensation up to the limit of £85,000 once, irrespective of how many different institutions a person held accounts with. 3/A depositor whose total deposits with a failed bank exceed the compensation limit will receive compensation for the amount of their deposit up to the limit (currently £85,000), in the same way as depositors with funds below the limit. However, depositors with deposits above the limit may also receive additional funds above and beyond what comes from the FSCS. Depositors may receive a share of their savings back following any distribution of assets as part of the insolvency process for a failed bank. How much they receive depends on the rate of recoveries (also known as the dividend rate) in the liquidation of the failed bank. The liquidation process can take a long time to complete. Depositors will have to wait until the liquidator has completed the liquidation to find out how much more they might receive in total, and there is no certainty that they will receive any further payments. 4/Amounts owed to the failed firm (for example, loans, mortgage or credit card debts) are taken into account before any compensation is paid. If you are a borrower with the same firm this may affect the amount you can claim, as the amount of your deposits may be 'set-off' against any amounts you owe. If a bank or credit union were to fail, FSCS would consider a depositor's overall net claim. If the borrowings exceeded the depositor's savings, there would be no overall claim against the bank or credit union, and the depositor would not be entitled to any compensation. For example, if a depositor had a mortgage of £200,000 and savings of £115,000 with the same bank, set off would be applied by the Insolvency Practitioner dealing with the bank failure. As a result, the depositor would end up owing the bank £85,000, so there would be no positive balance and no claim. If a building society were to fail, FSCS may provide compensation for the overall net claim (as given in the above example). However, it is important to note that if you are a borrower with a building society, different arrangements may apply as there is no automatic 'set-off' on insolvency. However, contractual set off may still apply (particularly in the context of offset mortgages). and set off in the insolvency might be ordered by the court. 5/ Are offshore deposits covered? deposits outside the European Economic Area (EEA), or in the Channel Islands or Isle of Man are not covered. The Scheme was set up mainly to assist private individuals, although some smaller businesses are also covered. Larger businesses are generally excluded, although there are some exceptions to this for deposit and insurance claims. The above is taken from the The Financial Services Compensation Scheme Limited website and hopefully will help savers to sleep easier without the need for them to withdraw money from financial institutions and keep it under the matress! A link to the FSCS website is on useful tools page.

Details of the update to the UK scheme (FSCS) 17/12/2010

17 December 2010 The Financial Services Authority (FSA) has today confirmed that the new deposit compensation limit for the United Kingdom will increase from £50,000 to £85,000 per person, per authorised firm, from 31 December 2010.   This is the Sterling equivalent of the €100,000 deposit compensation limit which comes into force in all European Economic Area (EEA) member states at the end of the year. Further changes coming into effect on 31 December 2010 are: Fast payout rules, with a target of a seven day payout for the majority of claimants and the remainder within the required 20 days. Gross payout, which protects customers by ring fencing their deposits if they have savings and loans with the same firm. Currently, any outstanding loan or debt would be deducted from any compensation. This new pan European requirement replaces the existing UK arrangement which has been in place since 2009, and which allowed for separate compensation cover for customers with deposits in two merging building societies. Sheila Nicoll, director of conduct policy at the FSA said: “The need to maintain customer confidence in the banking system is one of the key lessons from the financial crisis. “Today’s announcement completes a radical overhaul of depositor compensation. In future, all the still-separate national compensation schemes across the entire European Economic Area will offer cover at €100,000 or the local currency equivalent - a limit which will protect the vast majority of depositors. “Alongside increasing the amount of depositor compensation, raising awareness of the compensation scheme is vital. The UK’s Financial Services Compensation Scheme will begin a publicity campaign in the New Year to inform customers of the compensation limits and of the importance of ensuring that they are covered, and by which national scheme.” Customers need to understand the type of firm they are doing business with, and how this can affect which scheme would pay the compensation should anything go wrong. The UK’s Financial Services Compensation Scheme (FSCS) covers deposits with UK banks and 'subsidiaries' of foreign banks which operate in the UK. However, deposits in 'branches' of EEA banks operating in the UK will not be covered by the FSCS, but rather by the scheme of the country where the branch has its headquarters.

Details of the update to the UK scheme (FSCS)

03 October 2008 The Financial Services Authority (FSA) has today increased the compensation limit for bank deposits from £35,000 up to a total of £50,000 for each customer's claim. This increase applies from Tuesday 7 October 2008. Customers with joint accounts will be eligible to claim up to £100,000. Hector Sants, FSA's chief executive officer, said: "There has been extensive debate about the compensation levels. In the interests of providing clarity over the minimum level for the long term we have now decided to implement the move to a £50,000 limit from Tuesday. "This change ties in with the introduction of the Government's Banking Bill in Parliament which is due next week, and is also appropriate given the consolidation that has taken place in the banking sector. "In addition, the Chancellor has made clear that the Authorities will do whatever is necessary to maintain financial stability and protect depositors." The Government will shortly be introducing legislation to further enhance consumer confidence in the banking sector. The FSA is also to consult on further reforms, including considering whether the compensation limit should be higher still; the speed with which the FSCS can pay compensation; and the rules surrounding whether deposits are covered on a legal entity, a 'brand' or an 'account' basis. This will provide effective long-term compensation arrangements in which consumers can have confidence. The changes to the compensation limit are detailed in the  Financial Services Compensation Sheme Review of limits consulation paper which is published today. The paper also sets out proposals to improve the overall scheme and to ensure consistency in respect of compensation limits for investment, insurance and home finance.

According to the FSCS, compensation for lost interest depends on a number of complicated factors, including the terms and conditions of individual accounts and how the administrators decide to allocate the remaining assets.  Interest owed to the depositor as at the date the bank is declared "in default" by FSCS will be paid as part of the compensation amount. Notice accounts will be paid as if notice had been served on the day the account was frozen and payment will be made, including interest, at the end of the notice period. Fixed term accounts will be paid at the maturity date with the interest that would have been paid by the bank at maturity date.

It is important to realise that many accounts you have money in might take you above the £85,000. For example The Bank of Scotland/HBOS Licence covers AA FINANCIAL SERVICES BANK OF SCOTLAND BIRMINGHAM MIDSHIRES HALIFAX INTELLIGENT FINANCE SAGA So if you had £20,000 in each of the above you would be over the £85,000 protection

Statement re Channel Islands (Jersey) on financial services compensation.

Deposit Protection Questions and Answers 1. What has been promised? There are two separate proposals. One is an immediate guarantee that subject to the final approval of the States, residents’ deposits will be fully protected. This is protection of the deposits of Jersey residents should they face any loss if a bank with a branch or subsidiary in Jersey is not supported by its home country and is therefore unable to repay deposits in full. It is not expected that this eventuality would ever arise. The other is to take a deposit compensation scheme to the States for agreement, details of which are being developed in consultation with the finance industry and other stakeholders. 2. Who is covered?  Are small businesses / corporate deposits covered? As stated in the public statement issued on Friday 3 October (which is on the States web-site), the political guarantee will only cover  individuals with retail deposits who are resident in Jersey and who hold their  deposits with a Jersey bank licensed by the Jersey Financial Services Commission. It will not cover deposits held by corporate entities but a person running a business in their own name is likely to be covered. 3. Are all savings and investments covered? No the political guarantee extends to retail deposits in a Jersey bank licensed by the Jersey Financial Services Commission. The risk associated with all other forms of investment remains with the investor who, as and when necessary, should seek the advice of an appropriate investment adviser. 4. What is the limit? The political guarantee is that until such time as there is an agreed depositor compensation scheme, in the extremely unlikely event of being called upon to do so, the bank deposits of individual island residents should be fully protected. This proposal must not be confused with a depositor compensation scheme which is being separately progressed. 5. I live in Spain / France / elsewhere outside Jersey - am I covered? Any scheme put to the States for approval will only address those individuals who are resident in Jersey and with deposits at a Jersey institution. 6. What is the definition of   “ Island Residents”? An Island resident means a person who is so treated as resident for Social Security/Income Tax. 7. Is the promise to protect island residents currently in force? Yes. Ministers have made it clear that as soon as the need arises the States will be asked to approve the necessary action. Ministers are confident that the banks with offices in the island will be supported by their home country and that therefore the likelihood of the need for action is remote. However based upon their confidence in the strength of the banking system in the island, the Chief Minister and the Ministers for Treasury and Economic Development are, subject to the final approval of the States, giving a guarantee that residents’ deposits will be fully protected. What is currently in force is that political guarantee to address matters as they arise. 8. When will we have a Deposit Protection Scheme as in the UK ? Work has commenced to bring forward proposals for a Depositors Compensation Scheme which will be a stand alone scheme. Such a scheme will consider the following matters: the level of cover; eligibility for cover; means of funding and other related matters. 9. Why are Ministers confident in the island’s banking system when banks are failing all around us? All national governments’ comments and actions to date have demonstrated that they are committed to doing whatever it takes to protect their banking systems. The 47 banks that operate in Jersey are all subsidiaries or branches of banks falling within the top 500 banking groups in the world, which have significant retail deposits and the security of which is being confirmed by the promises of national governments. To date the UK government in particular has supported Northern Rock and Bradford and Bingley which are much smaller institutions than those represented in Jersey . It is also working to provide a solution to problems at HBOS which is a top 100 bank. The UK Chancellor on Monday 6th October said “Be in no doubt we will do whatever it takes to stabilise the banking system.” 10. Will the support offered to the parent banks in their home countries be extended to their Jersey branches or subsidiaries? The Financial Services Commission is approaching the home countries of the banks with branches or subsidiaries in Jersey , to seek to ensure that the support they are providing to their domestic banks will extend to the Jersey branch or subsidiary. 11. So what about Lehman bank or Icelandic banks? Lehman bank was a pure investment bank without retail deposits. There are no banks of this nature in Jersey , nor are there any Icelandic banks or any other banks outside of the top 500. 12. So is there no scheme in force? Is there a current law to protect me? Jersey is doing what many other governments are doing - providing the necessary assurance that in the unlikely event of a bank failure, individuals’ money will not be at risk. The circumstances vary by jurisdiction in terms of whether there is concrete legislation already in force or whether, as in Jersey ’s case, the government is giving a political undertaking that in the unlikely event that it is necessary the States will be asked to approve a response to deal with the specific circumstances that arise at that time. Separately, work has commenced to bring forward proposals for a Depositors Compensation Scheme which will be a stand alone scheme. Such a scheme will consider the following matters: the level of cover; eligibility for cover; means of funding and other related matters. 13. What happens if a bank goes down today, will the government's scheme be retrospective? In the extremely unlikely event that a bank were to be allowed to fail by its national government the Ministers have given a political commitment subject to the agreement of the States that the bank deposits of Island residents would be fully protected. 14. How does our scheme compare to the UK ? Jersey does not currently have a compensation scheme and therefore, the Chief Minister and the Ministers for Treasury and Economic Development are, subject to the final approval of the States, giving a guarantee that residents’ deposits will be fully protected. This means that in the unlikely event that a bank is allowed to fail by its national government, the States will be asked to approve a response to deal with the specific circumstances that arise at that time. Separately, work has commenced to bring forward proposals for a Depositors Compensation Scheme which will be a stand alone scheme. Such a scheme will consider the following matters: the level of cover; eligibility for cover; means of funding and other related matters. 15. Why hasn’t a Compensation Scheme been put in place previously? Compensation schemes need to be constructed that are appropriate to the specific circumstances faced by a jurisdiction. Until now the very high quality of the Jersey banking system has meant that it has not been considered necessary by government, the regulator or the finance industry to have such a scheme. All the evidence to date has suggested that the schemes currently in force e.g. in the UK have not been able to deal with the circumstances as they are faced today and we are now considering what would be most helpful in the current circumstances. 16. Who is going to pay for these proposals? In the unlikely event that any proposals are required to be put to the States the requirements for funding will be set out at that time. The political guarantee is to fully protect Island residents’ deposits. Thus the funding required would be to make good any net losses suffered by individuals only after the bank has utilised all of its assets to repay deposits. In practice any residual funding proposals would be a mix of government resources, which could entail government borrowing which would be repaid over time. Jersey is very unusual in that it doesn’t have any government debt. Funding could also call on existing government resources including the stabilisation fund, rainy day fund and or government borrowing as well as any industry levy agreed after consultation, which could be used to repay borrowing or reinstate government resources. Similarly, funding proposals for any compensation scheme will be developed after full consultation with all relevant stakeholders. Senator Frank Walker Chief Minister

Deposit Guarantee Schemes (GIBRALTAR) With the present financial situation being so prominent in world news events, it is normal for depositors to show a level of concern about the security of their deposits.  Whilst Gibraltar is well positioned to withstand most of the current events, depositors should be aware of the existence of deposit protection arrangements that would come into play  should there be a failure of a bank. The Gibraltar Deposit Protection Scheme covers 90% of a bank's total liability to a depositor,  subject to a maximum payment to any one individual of £18,000 (or EURO 20,000, if greater). A bank's total liability to a depositor is the aggregate of all accounts in the name of that depositor, including the depositor's share in a joint account or a client account. Joint accounts are normally divided equally between account holders. Full details of the scheme are available from www.gdgb.gi. It should be noted that a number of deposit-takers operating in Gibraltar, do so as branches of UK banks or building societies.  In these cases, the deposits are covered by the UK Financial Services Compensation Scheme (details from www.fscs.org.uk).  The branches whose deposits are covered by the UK scheme are: Barclays Bank PLC Leeds Building Society Lloyds TSB Bank plc Newcastle Building Society Norwich & Peterborough Building Society Deposits with all other banks are covered by the Gibraltar scheme. The FSC would like to reassure the general public that it is closely monitoring developments in the financial markets and does not expect these arrangements to have to be brought into effect.

DETAILS ON IRISH BANKING PROTECTION SCHEME

The following information is taken from Government statements: 30 September 2008 The Government has decided to put in place with immediate effect a guarantee arrangement to safeguard all deposits (retail, commercial, institutional and interbank), covered bonds, senior debt and dated subordinated debt (lower tier II), with the following banks: Allied Irish Bank, Bank of Ireland, Anglo Irish Bank, Irish Life and Permanent, Irish Nationwide Building Society and the Educational Building Society and such specific subsidiaries as may be approved by Government following consultation with the Central Bank and the Financial Regulator.  It has done so following advice from the Governor of the Central Bank and the Financial Regulator about the impact of the recent international market turmoil on the Irish Banking system. The guarantee is being provided at a charge to the institutions concerned and will be subject to specific terms and conditions so that the taxpayers’ interest can be protected.  The guarantee will cover all existing aforementioned facilities with these institutions and any new such facilities issued from midnight on 29 September 2008, and will expire at midnight on 28 September 2010.  The decision has been taken by Government to remove any uncertainty on the part of counterparties and customers of the six credit institutions.  The Government’s objective in taking this decisive action is to maintain financial stability for the benefit of depositors and businesses and is in the best interests of the Irish economy. The Financial Regulator has advised that all the financial institutions in Ireland will continue to be subject to normal ongoing regulatory requirements. This very important initiative by the Government is designed to safeguard the Irish financial system and to remedy a serious disturbance in the economy caused by the recent turmoil in the international financial markets. -Ends- 9 October 2008 The Minister for Finance, Mr Brian Lenihan, TD, confirmed today (October, 9th) the Government’s intention that the Guarantee scheme for banks announced last week would be available to certain banking subsidiaries in Ireland with a significant and broadbased footprint in the domestic economy. The Minister said that it is intended that Ulster Bank, First Active, Halifax Bank of Scotland, IIB Bank and Postbank would be eligible for the scheme. The Minister added that the scheme was in the advanced stages of drafting and would be presented to Dáil Éireann as quickly as possible. The Minister said, “clearly, there will be some additional limitations and safeguards in relation to these operations to ensure that the support provided relates to liabilities arising from their position within the national economy, rather than to their wider group”. The Minister took the opportunity to welcome the announcement yesterday of significant interventions in the UK banking market by the UK Government. The Minister said that this broadranging package was another indication of the determination of European Governments, signalled at Tuesday’s ECOFIN meeting, to provide support to systemically relevant financial institutions. The Minister noted that EU Member States indicated their determination to take all necessary measures to enhance the soundness and stability of our banking system and to protect the deposits of individual savers. The Minister said that Ireland would continue to be vigilant to protect the security and stability of its financial system and is convinced of the determination of our partners to do the same.

For anyone with deposits in the Isle of Man the rules are very different and here is a brief overview.   Unlike the equivalent scheme in the United Kingdom, there is no standing fund under the Scheme. A fund for the payment of compensation to depositors is created when the need arises - by virtue of the default of a banking institution. Each such fund is financed by way of contributions which all banking institutions are liable to make.The Scheme is managed by the Financial Supervision Commission in its capacity as Scheme Manager. The financial year of the Scheme runs from 1 April to 31 March and the Scheme Manager is obliged, in respect of each financial year of the Scheme, to make and publish a report to the Isle of Man Treasury on the operation of the Scheme. Compensation Where a banking institution is deemed to be in default under the Scheme, the Scheme Manager is required to pay compensation to depositors out of the fund created in respect of that default. The amount of the compensation payable to each depositor to whom the banking institution in default has an "eligible protected deposit liability" is an amount equal to 75% of the eligible protected deposit liability, subject to a maximum compensation payment to any one epositor of £15,000.The length of time between making a claim and the payment of Compensation by the Scheme Manager depends on the particular circumstances. Under the Regulations, the Scheme Manager is required to decide to pay compensation to a depositor as soon as he is satisfied that the banking institution in question has an eligible protected liability to the depositor and is unable or is likely to be unable to meet that liability However, once the Scheme Manager has decided to make a compensation payment, it will not necessarily be possible for the Scheme Manager actually to pay compensation in full or in part immediately. The method of funding of the Scheme imposes certain constraints on the actual payment of compensation, in that the Scheme Manager is not permitted to pay out compensation in any one financial year of the Scheme which would exceed the amount of contributions to the Scheme from banking institutions in that year.

HM TREASURY STATEMENT re ICESAVE 08 October 2008 Landsbanki, Icesave and Heritable 1. Acting on the advice of the Bank and Financial Services Authority (FSA), and in light of announcements made by the Icelandic authorities in recent days, the Chancellor has taken action today to protect the retail depositors in two Icelandic owned banks: Icesave, a UK-based branch of Landsbanki and Heritable, a UK-based banking subsidiary of Landsbanki.  He has taken this action to ensure the stability of the UK financial system.  Savers’ money is safe and secure. Landsbanki/Icesave 2. The UK authorities expect that Landsbanki will soon be declared in default.  Should that occur, the Chancellor has put in place arrangements to ensure that no retail depositor will lose any money as a result of the closure of Icesave.  The Treasury and the Financial Services Compensation Scheme are working with the Icelandic authorities and their Deposit Insurance Scheme to ensure that depositors are paid back as quickly as possible.  The Chancellor has also spoken to the Icelandic Finance Minister about the importance of the Icelandic authorities ensuring that UK depositors in Icesave are given the same protections as depositors in Iceland and receive their deposits back in full promptly.    3. Arrangements are being put in place to ensure that all ISA customers of Icesave will continue to benefit from the tax-free status of their accounts. 4. The Chancellor has also today taken steps to freeze assets of Landsbanki in the UK until the position with respect to the future of the firm and UK creditors becomes clearer. Heritable 5. Heritable is regulated by the FSA. The FSA has determined that Heritable no longer meets its threshold conditions, and is likely to be unable to continue to meet its obligations to depositors. The FSA concluded that it is in default for the purposes of the Financial Services Compensation Scheme. The Treasury has used the Banking (Special Provisions) Act 2008 to ensure a resolution that preserves financial stability and provides protection and continuity of business for depositors. 6. Heritable’s retail deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group. ING Direct is working to rapidly ensure that it is business as normal for all customers. 7. This action by the Tripartite Authorities protects savers’ money and provides certainty for retail depositors. The transfer of the retail deposit book has been backed by cash from HM Treasury and the Financial Services Compensation Scheme. 8. The remainder of Heritable’s business has been put into administration.  Any retail depositors eligible to claim under the Financial Services Compensation Scheme whose business has not been transferred to ING will be paid out in full through the Financial Services Compensation Scheme. 9. This is the right course of action to protect savers, ensure financial stability, and safeguard the interests of the taxpayer.

For Details of the Address to the nation by the Prime Minister of Iceland click here.

HM TREASURY PRESS RELEASE BELOW RELATING TO THE ACTIVATION OF THE FINANCIAL SERVICES COMPENSATION SCHEME WITH REGARD TO BRADFORD & BINGLEY BANK

H M Treasury 29 September 2008 RNS - FINANCIAL SERVICES COMPENSATION SCHEME The FSCS has been triggered following the failure of Bradford & Bingley to meet its regulatory requirements and its declaration of default by the FSA, prior to the making of the Transfer Order.   Under the Transfer Order, the FSCS has paid out approximately £14bn to enable retail deposits held in Bradford & Bingley and covered by the FSCS to be transferred to Abbey Santander. The Treasury has made a payment to Abbey Santander for retail deposit amounts not covered by the FSCS, amounting to approximately £4bn, to be transferred to Abbey Santander. In return, the FSCS and the Treasury have acquired rights in respects of the proceeds of the wind-down and realisation of the assets of the remaining business of Bradford & Bingley in public ownership. The FSCS has financed its payout through a short-term loan from the Bank of England, which it is intended will be replaced with a loan from the Government after a short period of time. The repayment terms of the loan for the first three years provide for repayment of interest at a rate of one-year LIBOR plus 30 basis points, plus the repayment of any recoverables accruing to the FSCS from the wind-down of the business against the principal outstanding. The first payment, for interest from the period from now until end-March 2009, will take place at end-September 2009 and subsequent payments will be made annually thereafter. It is currently estimated that the first payment required in September 2009 by the FSCS under the loan will be approximately £450 million. After the first three years, it is intended that the loan will be refinanced by the Treasury, repayments of the principal to be made over a period of years in the light of prevailing market conditions.   The Chancellor of the Exchequer today confirms that the Government stands behind the FSCS, so it can be relied on to be able to play its role in meeting future claims that arise.

HM TREASURY STATEMENT RE KAUPTHING SINGER & FRIEDLANDER 08 October 2008 Kaupthing Singer & Friedlander 1. Acting on the advice of the Bank and FSA, and in light of announcements made by the Icelandic authorities in recent days, the Chancellor has taken action today to protect the retail depositors in Kaupthing Singer & Friedlander, a UK-based banking subsidiary of Kaupthing Bank.  He has taken this action to ensure the stability of the UK financial system.  Savers’ money is safe and secure. 2. Kaupthing Singer & Friedlander (KSF) is regulated by the FSA. The FSA has determined that Kaupthing Singer & Friedlander no longer meets its threshold conditions, and is likely to be unable to continue to meet its obligations to depositors. The FSA concluded that KSF is in default for the purposes of the Financial Services Compensation Scheme. The Treasury has used the Banking (Special Provisions) Act 2008 to ensure a resolution that preserves financial stability and provides protection and continuity of business for depositors. 3. KSF’s Kaupthing Edge deposit business has been transferred to ING Direct, a wholly-owned subsidiary of ING Group, which operates through its branch in the UK. ING Direct is working to rapidly ensure that it is business as normal for all customers. 4. This action by the Tripartite Authorities protects savers’ money and provides certainty for retail depositors. The transfer of the retail deposit books has been backed by cash from HM Treasury and the Financial Services Compensation Scheme. 5. The remainder of Kaupthing Singer & Friedlander business has been put into administration.  Any retail depositors eligible to claim under the Financial Services Compensation Scheme whose business has not been transferred to ING Direct will be paid out in full through the Financial Services Compensation Scheme.  6. This is the right course of action to protect savers, ensure financial stability, and safeguard the interests of the taxpayer.

DUTCH GOVERNMENT REINFORCES ING’S POSITION AS ONE OF THE WORLD'S STRONGEST BANKS You will all be aware of the extraordinary market conditions that are affecting banks worldwide. Today (Sunday 19 October) our parent company ING and the Dutch government issued two press releases (click on link for full versions) that announce that ING will sell €10 billion in ING bonds to the Dutch Government in order to reinforce its position as a healthy and strong bank. This investment by the Dutch government is good news for ING Direct savers as it means that your savings are ultimately with an even stronger bank. This joint initiative by ING and the Dutch Government comes at a time when governments all over the world are taking steps to support major banks as it becomes obvious that they have a major role to play in bringing stability back to the financial system. I thought you would appreciate a personal update from myself. See below for some questions and answers on this announcement. I would like to draw your attention to a recent quote from the Dutch Minister of Finance Wouter Bos stating that "The strange thing about the situation now is that distrust of banks towards each other is so big that even healthy companies can become a victim of circumstances... That's got nothing to do with their performance. We want to protect healthy companies that we need in our economy." Kind regards, Johan De Wit CEO, ING Direct UK What does the Dutch government investment/participation in ING mean for me? For you this is good news. It means that your savings continue to be safeguarded and secured by ING’s strengthened financial position and by the Dutch government’s increased commitment to ensure that its number one financial institution continues to be a healthy and prudent bank. This means you will be dealing with an even stronger bank backed by a government of one of the world’s leading economic powers. The Dutch economy is rated at the maximum-possible rating of triple-A (AAA) just like the UK. For you nothing will change in the way you access your account and your savings. You can continue to count on our service as you are used too. Does this impact my savings guarantee scheme? Absolutely not. Your savings are protected by: Local guarantee scheme / Dutch Deposit Guarantee Scheme of up to €100,000 per person (£77,700 approx). By the solvency and strength of ING. By the support of the Dutch government. By the commitment of worldwide leaders and governments to restore the stability of the financial system. Furthermore, you should feel confident about your money with solid banks as governments around the world have clearly demonstrated that customer savings deposits are safe. Why has the Dutch government made this €10 billion investment in ING? The current market environment has changed over the past weeks and has led to an international belief that governments must be more involved to secure the health of all banks and therefore protect consumers such as you. We welcome that move in these unusual market circumstances. One of the key measures of a company’s strength is the so-called ‘Capital Ratio’. ING’s ‘Capital Ratio’, our financial buffer, was already well above the target set by European regulators. Amid the current turmoil, governments and regulators have concluded that bigger buffers are needed as a precaution measure. This way governments can guarantee the health of banks and protect consumers such as you. The investment by the Dutch Government gives ING a more comfortable financial buffer that protects our business and our customers. At a time when all major banks in the world are increasing their capital ratios to adapt to current conditions, it’s only natural for ING to be a part of this move. Is this investment by the Dutch government connected to the financial performance of ING and its ratings? No. It shows the confidence of the Dutch government on the strength of ING’s financial position, reflected in its high ratings. But, in today’s market circumstances even the most healthy financial services companies, like ING have chosen to use the government’s support to reinforce our position of strength as the world’s third largest savings bank and the largest financial institution in Holland. Is the Dutch government nationalising ING? No, ING is in a position of strength. This investment is a sign of confidence from the government and a reinforcement of ING’s financial position amid market turmoil.