Rak Base Prospectus_edisclaimer

8/12/2019 Rak Base Prospectus_edisclaimer

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RAKFUNDING CAYMAN LTD

(incorporated with limited liability in the Cayman Islands)

U.S.$1,000,000,000

Guaranteed Euro Medium Term Note Programme

guaranteed by

THE NATIONAL BANK OF RAS AL-KHAIMAH (P.S.C.)

(incorporated with limited liability in the United Arab Emirates as a public shareholding company)

Under the Guaranteed Euro Medium Term Programme (the Programme) described in this base prospectus (the Base

Prospectus), RAKFUNDING CAYMAN LTD (the Issuer), subject to compliance with all relevant laws, regulations anddirectives may from time to time issue notes (the Notes) guaranteed by The National Bank of Ras Al-Khaimah (P.S.C.) (theBankor the Guarantor). The aggregate nominal amount of Notes outstanding under the Programme will not at any timeexceed U.S.$1,000,000,000 (or its equivalent in other currencies calculated as described in the Dealer Agreement (as definedbelow)), subject to increase as described herein.

The Notes may be issued on a continuing basis to any dealer(s) specified under Overview of the Programme and any additionaldealer(s) appointed under the Programme from time to time by the Issuer (each a Dealer and together the Dealers), whichappointment may be for a specific issue or on an on-going basis. References in this Base Prospectus to the relevant Dealer shall,in the case of an issue of Notes being (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing tosubscribe for such Notes.

This Base Prospectus has been approved by the Central Bank of Ireland (the Central Bank) as competent authority underDirective 2003/71/EC as amended (including the amendments made by Directive 2010/73/EU) (the Prospectus Directive). TheCentral Bank only approves this Base Prospectus as meeting the requirements imposed under Irish and European Union (EU)law pursuant to the Prospectus Directive. Such approval relates only to Notes that are to be admitted to trading on the regulatedmarket of the Irish Stock Exchange (the Main Securities Market) or on another regulated market for the purposes of Directive

2004/39/EC (known as the Markets in Financial Instruments Directive) and/or that are to be offered to the public in any memberstate of the European Economic Area. Application has been made to the Irish Stock Exchange for Notes issued under theProgramme during the period of 12 months from the date of this Base Prospectus to be admitted to its official list (the OfficialList) and trading on the Main Securities Market. References in this Base Prospectus to any Notes being listed (and all relatedreferences) shall mean that, unless otherwise specified in the relevant Final Terms (as defined below), such Notes have beenadmitted to the Official List and trading on the Main Securities Market.

Notice of the aggregate nominal amount of a tranche of Notes, interest (if any) payable in respect of such Notes, the issue priceof such Notes and certain other information that is applicable to such Notes will be set out in a final terms document (the FinalTerms). With respect to each Series (as defined below) of Notes to be listed on the Irish Stock Exchange, the relevant FinalTerms will be filed with the Central Bank. The Programme also permits Notes to be issued on an unlisted basis or to be admittedto listing, trading and/or quotation by such other or further listing authorities, stock exchanges and/or quotation systems as maybe agreed between the Issuer and the relevant Dealer(s).

Each Series of Notes will be issued in bearer form (Bearer Notes) or registered form (Registered Notes). Bearer Notes willbe represented on issue by a temporary global note (a Temporary Global Note) or a permanent global note (a PermanentGlobal Noteand each of the Temporary Global Note and Permanent Global Note, a Global Note). Registered Notes will berepresented by registered certificates (each a Certificate), one certificate being issued in respect of each Noteholders (as

defined below) entire holding of Registered Notes of one Series. Registered Notes issued in global form will be represented byregistered global certificates (Global Certificates).

The rating of certain Tranches (as defined below) of Notes to be issued under the Programme and the credit rating agencyissuing such rating may be specified in the relevant Final Terms. The Programme has been assigned a long term rating of BBB+by Fitch Ratings Ltd. (Fitch) and a long term rating of Baa1 by Moodys Investors Service Ltd. (Moodys). Each of Fitch andMoodys is established in the European Union and is registered under Regulation (EC) No. 1060/2009 (as amended) (the CRARegulation). As such, each of Fitch and Moodys is included in the list of credit rating agencies published by the EuropeanSecurities and Markets Authority (ESMA) on its website in accordance with the CRA Regulation. Where an issue of Notes israted, its rating will not necessarily be the same as the rating applicable to the Programme. A rating is not a recommendation tobuy, sell or hold securities and may be subject to suspension, change or withdrawal at any time by the assigning rating agency.

Investing in the Notes involves risks. Prospective investors should have regard to the factors described under theheading Risk Factors on page 1 of this Base Prospectus.

Arrangers and Dealers

National Bank of Abu Dhabi Standard Chartered BankThe date of this Base Prospectus is 12 June 2014


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This Base Prospectus constitutes a base prospectus for the purposes of Article 5.4 of theProspectus Directive and for the purpose of giving information with regard to the Issuer, theGuarantor, the Guarantor and its subsidiaries taken as a whole (the Group) and the Noteswhich, according to the particular nature of the Issuer, the Guarantor and the Notes, isnecessary to enable investors to make an informed assessment of the assets and liabilities,financial position, profit and losses and prospects of the Issuer and the Guarantor.

The Issuer and the Guarantor accept responsibility for the information contained in this Base

Prospectus. To the best of the knowledge and belief of the Issuer and the Guarantor (eachhaving taken all reasonable care to ensure that such is the case) the information contained inthis Base Prospectus is in accordance with the facts and does not omit anything likely to affectthe import of such information.

This Base Prospectus should be read and construed together with any supplements heretoand, in relation to any Tranche of Notes which is the subject of Final Terms, should be read andconstrued together with the relevant Final Terms.

Certain information contained in Risk Factors, Description of the Bank, Overview of theUnited Arab Emirates and The United Arab Emirates Banking Sector and Regulations (asindicated therein) has been extracted from independent, third party sources. Each of the Issuerand the Guarantor confirms that all third party information contained in this Base Prospectus

has been accurately reproduced and that, as far as it is aware and is able to ascertain frominformation published by the relevant, third party sources, no facts have been omitted whichwould render the reproduced information inaccurate or misleading. The source of any thirdparty information contained in this Base Prospectus is stated where such information appearsin this Base Prospectus.

No person has been authorised to give any information or to make any representation notcontained in or not consistent with this Base Prospectus or any other document entered into inrelation to the Programme or any information supplied by the Issuer or the Guarantor or suchother information as is in the public domain and, if given or made, such information orrepresentation should not be relied upon as having been authorised by the Issuer, theGuarantor, the Arrangers or any of the Dealers.

To the fullest extent permitted by law, neither the Arrangers, the Dealers nor any of their

respective affiliates makes any representation or warranty or accepts any responsibility as tothe accuracy or completeness of the information contained in this Base Prospectus. TheArrangers and the Dealers accordingly disclaim all and any liability that each of them may have(whether in tort, contract or otherwise) in respect of the accuracy or completeness of any suchinformation or statements. Neither the delivery of this Base Prospectus or any Final Terms northe offering, sale or delivery of any Note shall, in any circumstances, create any implication thatthe information contained in this Base Prospectus is true subsequent to the date hereof or thedate upon which this Base Prospectus has been most recently amended or supplemented orthat there has been no adverse change, or any event reasonably likely to involve any adversechange, in the condition (financial or otherwise) of the Issuer or the Guarantor since the datethereof or, if later, the date upon which this Base Prospectus has been most recently amendedor supplemented or that any other information supplied in connection with the Programme is

correct at any time subsequent to the date on which it is supplied or, if different, the dateindicated in the document containing the same.

The distribution of this Base Prospectus and any Final Terms and the offering, sale anddelivery of the Notes in certain jurisdictions may be restricted by law. Persons into whosepossession this Base Prospectus or any Final Terms comes are required by the Issuer, theGuarantor, the Arrangers and the Dealers to inform themselves about and to observe any suchrestrictions. For a description of certain restrictions on offers, sales and deliveries of the Notesand on the distribution of this Base Prospectus or any Final Terms and other offering materialrelating to the Notes, see Subscription and Sale. In particular, the Notes have not been andwill not be registered under the United States Securities Act of 1933 (as amended) (theSecurities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions,the Notes may not be offered, sold or delivered within the United States or to U.S. persons.

Neither this Base Prospectus nor any other information supplied in connection with theProgramme or any Notes: (i) is intended to provide the basis of any credit or other evaluation;

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or (ii) should be considered as a recommendation by the Issuer, the Guarantor, the Arrangersor any of the Dealers that any recipient of this Base Prospectus or any other informationsupplied in connection with the Programme or any Notes should purchase any Notes. Eachinvestor contemplating purchasing any Notes should make its own independent investigationof the financial condition and affairs, and its own appraisal of the creditworthiness, of theIssuer and the Guarantor. Neither this Base Prospectus nor any other information supplied inconnection with the Programme or the issue of any Notes constitutes an offer or invitation byor on behalf of the Issuer, the Guarantor, the Arrangers or any of the Dealers to any person tosubscribe for or to purchase any Notes.

Neither the delivery of this Base Prospectus nor the offering, sale or delivery of any Notes shall inany circumstances imply that the information contained herein concerning the Issuer and theGuarantor is correct at any time subsequent to the date hereof or that any other informationsupplied in connection with the Programme is correct as of any time subsequent to the dateindicated in the document containing the same. The Arrangers and the Dealers expressly do notundertake to review the financial condition or affairs of the Issuer or the Guarantor during the life ofthe Programme or to advise any investor in the Notes of any information coming to their attention

This Base Prospectus includes forward-looking statements. All statements other thanstatements of historical facts included in this Base Prospectus may constitute forward-lookingstatements. Forward-looking statements generally can be identified by the use of forward-

looking terminology, such as may, will, expect, intend, estimate, anticipate,believe, continue or similar terminology. Although the Issuer and the Guarantor believe thatthe expectations reflected in their forward-looking statements are reasonable at this time, therecan be no assurance that these expectations will prove to be correct.

The Notes may not be a suitable investment for all investors. Each potential investor in theNotes must determine the suitability of that investment in light of its own circumstances. Inparticular, each potential investor should:

(a) have sufficient knowledge and experience to make a meaningful evaluation of the Notes,the merits and risks of investing in the Notes and the information contained orincorporated by reference in this Base Prospectus or any applicable supplement;

(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context

of its particular financial situation, an investment in the Notes and the impact the Noteswill have on its overall investment portfolio;

(c) have sufficient financial resources and liquidity to bear all of the risks of an investment inthe Notes, including Notes with principal or interest payable in one or more currencies, orwhere the currency for principal or interest payments is different from the potentialinvestors currency;

(d) understand thoroughly the terms of the Notes and be familiar with the behaviour of anyrelevant indices and financial markets; and

(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenariosfor economic, interest rate and other factors that may affect its investment and its abilityto bear the applicable risks.

Some Notes are complex financial instruments. Sophisticated institutional investors generallydo not purchase complex financial instruments as stand-alone investments. They purchasecomplex financial instruments as a way to reduce risk or enhance yield with an understood,measured, appropriate addition of risk to their overall portfolios. A potential investor should notinvest in Notes which are complex financial instruments unless it has the expertise (eitheralone or with a financial adviser) to evaluate how the Notes will perform under changingconditions, the resulting effects on the value of the Notes and the impact this investment willhave on the potential investors overall investment portfolio.

Legal investment considerations may restrict certain investments. The investment activities ofcertain investors are subject to legal investment laws and regulations, or review or regulationby certain authorities. Each potential investor should consult its legal advisers to determine

whether and to what extent (a) Notes are legal investments for it, (b) Notes can be used ascollateral for various types of borrowing, and (c) other restrictions apply to its purchase orpledge of any Notes.

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Financial institutions should consult their legal advisers or the appropriate regulators todetermine the appropriate treatment of Notes under any applicable risk based capital or similarrules.

EACH PROSPECTIVE INVESTOR IS ADVISED TO CONSULT ITS OWN TAX ADVISER, LEGALADVISER AND BUSINESS ADVISER AS TO TAX, LEGAL, BUSINESS AND OTHER RELATEDMATTERS CONCERNING THE PURCHASE OF ANY NOTES.

NOTICE TO RESIDENTS OF THE KINGDOM OF BAHRAIN

In relation to investors in the Kingdom of Bahrain, Notes issued in connection with this BaseProspectus and related offering documents may only be offered in registered form to existingaccount holders and accredited investors as defined by the Central Bank of Bahrain (CBB) inthe Kingdom of Bahrain where such investors make a minimum investment of at leastU.S.$100,000 or any equivalent amount in other currency or such other amount as the CBB maydetermine.

This Base Prospectus does not constitute an offer of securities in the Kingdom of Bahrain interms of Article (81) of the Central Bank and Financial Institutions Law 2006 (decree Law No. 64of 2006). This Base Prospectus and related offering documents have not been and will not beregistered as a prospectus with the CBB. Accordingly, no Notes may be offered, sold or made

the subject of an invitation for subscription or purchase nor will this Base Prospectus or anyother related document or material be used in connection with any offer, sale or invitation tosubscribe or purchase Notes, whether directly or indirectly, to persons in the Kingdom ofBahrain, other than to accredited investors for an offer outside the Kingdom of Bahrain.

The CBB has not reviewed, approved or registered this Base Prospectus or related offeringdocuments and it has not in any way considered the merits of the Notes to be offered forinvestment, whether in or outside the Kingdom of Bahrain. Therefore, the CBB assumes noresponsibility for the accuracy and completeness of the statements and information containedin this Base Prospectus and expressly disclaims any liability whatsoever for any losshowsoever arising from reliance upon the whole or any part of the content of this BaseProspectus. No offer of Notes will be made to the public in the Kingdom of Bahrain and thisBase Prospectus must be read by the addressee only and must not be issued, passed to, or

made available to the public generally.

KINGDOM OF SAUDI ARABIA NOTICE

This Base Prospectus may not be distributed in the Kingdom of Saudi Arabia except to suchpersons as are permitted under the Offer of Securities Regulations issued by the Capital MarketAuthority of the Kingdom of Saudi Arabia (the Capital Market Authority). The Capital MarketAuthority does not make any representations as to the accuracy or completeness of this BaseProspectus, and expressly disclaims any liability whatsoever for any loss arising from, orincurred in reliance upon, any part of this Base Prospectus. Prospective purchasers of Notesissued under the Programme should conduct their own due diligence on the accuracy of theinformation relating to the Notes. If a prospective purchaser does not understand the contentsof this Base Prospectus he or she should consult an authorised financial adviser.

CAYMAN ISLANDS NOTICE

No offer or invitation may be made to the members of the public in the Cayman Islands tosubscribe for the Notes.

STABILISATION

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as theStabilising Manager(s) (or any person acting for the Stabilising Manager(s)) in the relevant FinalTerms (the Stabilising Manager(s)), may over-allot such Notes or effect transactions with a viewto supporting the market price of the Notes at a level higher than that which might otherwiseprevail. However, there is no assurance that the Stabilising Manager(s) (or any person acting onbehalf of a Stabilising Manager) will undertake stabilisation action. Any stabilisation action may

begin on or after the date on which adequate public disclosure of the final terms of the offer ofthe relevant Tranche of Notes is made and, if begun, may be ended at any time but it must end nolater than the earlier of 30 days after the issue date of the relevant Tranche of Notes and 60 days

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after the date of the allotment of the relevant Tranche of Notes. Any stabilisation or over-allotment must be conducted by the relevant Stabilising Manager(s) (or persons acting on behalfof the Stabilising Manager(s) in accordance with applicable laws and rules.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Presentation of financial information

The Bank prepared its audited consolidated annual financial statements as at and for the years ended31 December 2012 (the 2012 Annual Financial Statements) and 31 December 2013 (the 2013Annual Financial Statements) and its unaudited condensed consolidated interim financialstatements as at and for the three months ended 31 March 2014 (the 2014 Interim Financial

Information), which are appended hereto, in accordance with International Financial ReportingStandards as issued by the International Accounting Standards Board (IFRS). The 2013 AnnualFinancial Statements and the 2012 Annual Financial Statements have been audited byPricewaterhouseCoopers and the 2014 Interim Financial Information have been reviewed byPricewaterhouseCoopers in accordance with International Standards on Review Engagements 2410,Review of Interim Financial Information performed by the Independent Auditor of the Entity.

Non-GAAP measures

This Base Prospectus also includes certain references to non-GAAP measures, such as the Bankscapital base and risk weighted assets. The Bank uses these non-GAAP measures to evaluate itsperformance, and this additional financial information is presented in this Base Prospectus. Thisinformation is not prepared in accordance with IFRS and should be viewed as supplemental to the

financial statements. Investors are cautioned not to place undue reliance on this information andshould note that the capital base and risk weighted assets net interest margin, cost to income ratio,return on equity, return on assets, non performing financings ratios, non performing financingprovisions ratio, total loans/total assets, customers deposits/total assets, advance to deposit ratio andliquid assets ratio, as calculated by the Bank may differ materially from similarly titled measuresreported by other companies, including the Banks competitors (see Selected Financial Informationfor further information).

Certain conventions

In this Base Prospectus, unless otherwise specified, references to U.S.$, U.S. dollars or dollars areto United States dollars, references to EUR, or euro are to the single currency introduced at thestart of the third stage of European Economic and Monetary Union pursuant to the Treaty establishingthe European Community, as amended, references to GBP or are to the British Pound, referencesto AED or UAE Dirham are to the United Arab Emirates Dirham and references to SAR are to theSaudi Arabian Riyal. In addition, all references to the UAE are to the United Arab Emirates.

Certain figures included in this Base Prospectus have been subject to rounding adjustments;accordingly, figures shown for the same category presented in different tables may vary slightly andfigures shown as totals in certain tables may not be an arithmetic aggregation of the figures whichprecede them.

Comparability of the Banks Financial Information

The financial information for the year ended 31 December 2013 included in the 2013 Annual FinancialStatements differs from the financial information for the years ended 31 December 2013 and31 December 2012 included in this Base Prospectus and reflects a reclassification to appropriately

reflect the nature of balances and to conform with the presentation of the 2014 Interim Financialinformation, as follows:

a reclassification from income from investment securities to interest income in the amount ofAED 107.1 million for the year ended 31 December 2013;

a reclassification from income from investment securities to income from Islamic financing inthe amount of AED 1.5 million for the year ended 31 December 2013; and

a reclassification from income from investment securities to interest income in the amount ofAED 73.1 million for the year ended 31 December 2012.

Certain Differences between IFRS and IFRS as adopted by the European Union (IFRS EU)

This Base Prospectus includes financial statements and other financial information prepared and

presented in accordance with IFRS. Certain differences exist between IFRS and IFRS EU which mightbe material to the financial statements and other financial information herein. This Base Prospectusdoes not include any reconciliation of the financial statements or any other financial information and

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related footnote disclosures between IFRS and IFRS EU. Further, this Base Prospectus does notinclude any narrative description of the differences between IFRS and IFRS-EU and the Bank hasmade no attempt to identify or quantify such differences that might be applicable to the Bank or itsfinancial statements or other financial information included in this Base Prospectus. It is possible that areconciliation or other qualitative or quantitative analysis would identify material differences betweenthe financial statements and other financial information included in this Base Prospectus were each ofthese to be prepared under IFRS-EU. In making an investment decision, investors must rely upon theirown examination of the Issuer, the Bank and the Group, the terms of the Programme and the financialstatements and other financial information. Potential investors should consult their own professionaladvisors for an understanding of the differences between IFRS and IFRS EU, and how thosedifferences might affect the financial information herein.

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SUPPLEMENTARY BASE PROSPECTUS

The Issuer will, in the event of any significant new factor, material mistake or inaccuracy relating toinformation included in this Base Prospectus which is capable of affecting the assessment of anyNotes, prepare a supplement to this Base Prospectus or publish a new Base Prospectus for use inconnection with any subsequent issue of Notes.

Following the publication of this Base Prospectus a supplement may be prepared by the Issuer and

approved by the Central Bank in accordance with Article 16 of the Prospectus Directive. Statementscontained in any such supplement (or contained in any document incorporated by reference therein)shall, to the extent applicable (whether expressly, by implication or otherwise), be deemed to modify orsupersede statements contained in this Base Prospectus or in a document which is incorporated byreference in this Base Prospectus. Any statement so modified or superseded shall not, except as somodified or superseded, constitute a part of this Base Prospectus.

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TABLE OF CONTENTS

Headings Page

RISK FACTORS 1

OVERVIEW OF THE PROGRAMME 15

TERMS AND CONDITIONS 19

USE OF PROCEEDS 43

FORM OF FINAL TERMS 44

SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM 52

DESCRIPTION OF THE ISSUER 57

DESCRIPTION OF THE BANK 58

SELECTED FINANCIAL INFORMATION 80

FINANCIAL REVIEW 84

MANAGEMENT AND EMPLOYEES 95

OVERVIEW OF THE UNITED ARAB EMIRATES 100THE UNITED ARAB EMIRATES BANKING SECTOR AND REGULATIONS 104

TAXATION 114

SUBSCRIPTION AND SALE 117

GENERAL INFORMATION 122


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RISK FACTORS

Any investment in the Notes is subject to a number of risks and uncertainties. Prospective investorsshould consider carefully the risks and uncertainties associated with the Issuers and the Guarantorsbusiness and any investment in the Notes, together with all of the information that is included in thisBase Prospectus, and should form their own view before making an investment decision with respectto the Notes. In particular, prospective investors should evaluate the risks and uncertainties referred toor described below, which may have a material adverse effect on the Issuers or the Guarantors

business, results of operations, financial condition and prospects. Should one or more of the followingevents or circumstances occur at the same time or separately, the value of the Notes could decline andan investor might lose part or all of its investment.

Each of the Issuer and the Guarantor believes that the factors described below represent the principalrisks inherent in investing in the Notes, but the Issuers and the Guarantors inability to pay interest,principal or other amounts on or in connection with the Notes may occur for other reasons and theIssuer and the Guarantor do not represent that the statements below regarding the risks of holding theNotes are exhaustive. Additional risks not presently known to the Issuer or the Guarantor or that theIssuer or the Guarantor currently deem immaterial may also impair the Issuers or the Guarantorsability to pay interest, principal or other amounts on or in connection with the Notes.

Words and expressions defined in Terms and Conditions of the Notes (theConditions) shall have

the same meanings in this section.Risks relating to the Issuer, the Bank and the Group

Neither the Government of Ras Al-Khaimah nor the federal government of the UAE (the FederalGovernment) is under any obligation to continue to invest in or otherwise engage in business with theBank and either or both may alter their respective relationships with the Bank at any time and for anyreason.

As at the date of this Base Prospectus, the Government of Ras Al-Khaimah (the Government),holds 49.3 per cent. of the Banks share capital with a further 3.4 per cent. owned by a company whollyowned by the Government. By virtue of its shareholding the Government has the ability to influence theBanks business significantly through its ability to control actions that require shareholder approval. Ifcircumstances were to arise where the interests of the Government conflict with the interests of the

Noteholders, the Bank could be disadvantaged by any such conflict.The Bank was incorporated as a public shareholding company by an Emiri Decree dated 15 June 1976in the UAE and commenced its operations in March 1978. As at the date of this Base Prospectus, theGovernment owns 49.3 per cent. of the Bank with a further 3.4 per cent. owned by a company whollyowned by the Government. In 2009, the Bank received funds from the Ministry of Finance of theFederal Government in accordance with an agreement dated 31 December 2009 as part of a facilityset up by the Central Bank of the United Arab Emirates (UAE Central Bank) to provide liquiditysupport to banks operating in the UAE and for stimulating and maintaining economic activity in theUAE. During the year 2012, the subordinated debt amounting to AED 684.5 million was repaid in full bythe Bank.

Despite the Governments and the Federal Governments past investments in and deposits with theBank and funding support, neither the Government nor the Federal Government are under any

obligation to continue to invest in, make deposits with, do business with or otherwise support the Bank.The Government and the Federal Government may, whether directly or through government-ownedentities, at any time and for any reason, dispose of its investments in, withdraw its deposits from, ceaseto do business with or otherwise cease to support the Bank. The reduction or elimination ofgovernment support could have a material adverse effect on the Banks business, results ofoperations, financial condition and prospects.

The Notes will not be guaranteed by the Government

As discussed above, the Government is a majority shareholder in the Bank. Like any othershareholder, the Government has no legal obligation to provide additional funding for any of the Banksfuture operations. The Government is not providing a guarantee of any of the Banks legal obligationsin respect of Notes to be issued under the Programme, nor is the Government under any obligation to

purchase any of the Banks liabilities or guarantee any of the Banks obligations, and the Noteholderstherefore do not benefit from any legally enforceable claim against the Government.

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Revenue of the Bank

A high percentage of the Banks revenue is generated from its Retail Banking division (as at31 December 2013, retail banking accounted for 90.6 per cent. of the Banks operating income) andthe Bank may therefore be at greater risk than certain other banks in the UAE, whose revenue base ismore diversified, in the event of a downturn in the UAE small business sector.

The Banks growth strategy depends on its ability to successfully manage its growth

The Banks strategy of continuing to expand its existing operations and products in its target markets isdependent on a number of factors. These include its ability to:

maintain, expand or develop relationships with its small business customers, suppliers,contractors, lenders and other third parties;

increase the scope of its operational and financial systems to handle the increased complexity;

identify suitable investments and/or development opportunities;

reach agreements with joint venture and strategic partners on terms satisfactory to it;

recruit, train and retain qualified staff to manage its growing business efficiently and without losingoperational focus; and

maintain necessary permits or approvals from governmental authorities and agencies.These efforts will require significant capital and management resources, further development of theBanks financial and internal controls and information technology systems, and additional training andrecruitment of management and other key personnel. At the same time, the Bank must maintain aconsistent level of customer service across its operations to avoid loss of business or damage to itsreputation. Any failure by the Bank to manage its growth effectively could have a material adverseeffect on its business, financial condition, results of operations and prospects.

The Bank may experience a higher level of customer and counterparty defaults arising from adversechanges in credit and recoverability that are inherent in the Banks business

As a result of the global financial crisis and other adverse economic and political developments,adverse changes in consumer confidence levels, consumer spending, liquidity levels, bankruptcy rates

and commercial and residential real estate prices, among other factors, have impacted the Bankscustomers and counterparties, and, in certain cases, adversely affected their ability to repay their loansor other obligations to the Bank (by way of example, the Bank experienced a significant deterioration inits National Loan Portfolio (as defined below) during the year ended 31 December 2013 and the firstthree months ended 31 March 2014). This, in turn, along with increased market volatility anddecreased pricing transparency, has adversely affected the Banks credit risk profile. As a result, theBank adopted a more conservative provisioning policy during the year ended 31 December 2013,which included increasing its impaired loan coverage ratio. The Banks impaired loan coverage ratio(calculated as the aggregate of impaired loans against provision held) for the year ended 31 December2013 was 73.3 per cent. compared to 62.8 per cent. for the year ended 31 December 2012. Theimpaired loan coverage ratio as at 31 March 2014 was 79.5 per cent. (See also Description of theBankLoan Classification and Impairment Policy).

Although the Bank regularly reviews its credit exposures and has from time to time had to re-priceportions of its loan portfolio and restructured some of its loans under stress, events of default maycontinue to occur. The occurrence of these events has affected, and could continue to materiallyadversely affect, the Banks business, results of operations, financial condition and prospects.

If the Bank is unable to effectively control the level of, or successfully restructure, its nonperformingloans with debtors in financial distress, or its allowances for loan impairment are insufficient to coverloan losses, the Banks financial condition and results of operations could be adversely affected

As at 31 December 2013 and 31 March 2014, the Banks non-performing financings ratio was 2.4 percent. As at 31 December 2013, the Bank had AED 539.8 million of impaired loans and, as at31 December 2013 carried an impairment provision of AED 395.6 million to cover potential loan losses.In accordance with IFRS, the Bank is required to reflect the impairment calculated as an upfront charge

to the income statement. This will be written back to the income statement as and when interest orprincipal (as appropriate) on the debt is recovered. However, the actual loan losses could be materiallydifferent from the loan impairment provisions. The Banks management believes that the levels of

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impairment provisions for impaired loans and loans under stress as at 31 December 2013 are sufficientto cover the Banks potential loan losses as at that date. As at 31 December 2013 and as at 31 March2014, these provisions covered 73.3 per cent. and 79.5 per cent. of the Banks impaired assets,respectively.

Collateral held as security against impaired loans primarily relates to residential property, auto loans,cash and investment securities. Where the estimated fair value of collateral held exceeds theoutstanding loan, any excess is paid back to the customers and is not available for offset against other

loans.

If the Bank fails to appropriately restructure or control the levels of, and adequately provide for, itsimpaired loans and loans under stress, the Bank may need to make further impairment charges and itsbusiness, results of operations, financial condition and prospects could be materially adverselyaffected.

Credit bureaus in the UAE in general are under-developed and any incomplete, unreliable orinaccurate information about the Banks debtors and account holders financial standing, credit historyand ability to repay could impair the Banks ability to assess credit quality

Substantially all of the Banks debtors are located in the UAE. Typically, there is little public informationor financial data available regarding the debtors credit and payment histories in this region, primarilydue to borrowers limited credit histories and the fact that credit bureaus in the UAE are under-

developed. In addition, such credit bureaus typically do not provide the quality and quantity ofinformation sought by the Bank. Furthermore, statistical and other data on the Banks debtors may alsobe less complete than those available in jurisdictions with more mature financial markets. It isanticipated, however, that the creation of the new federal level credit bureau, Al Etihad Credit Bureau,which is expected to be operational in the second half of 2014, will improve the flow and quality ofcredit information available to UAE banks, including the Bank. In the absence of meaningful statisticaldata on its existing and potential debtors, there can be no assurance as to the Banks ability toaccurately assess the credit quality of its loan portfolios.

Accordingly, the Banks inability to accurately assess the financial condition and creditworthiness of itsdebtors may result in an increase in the rate of default for the Banks loan portfolio, which could have amaterial adverse effect on its business, results of operations, financial condition and prospects.

Some of the Banks debtors are unable or unwilling to provide the quality and quantity of financial datasought by the Bank

Although the Bank requires regular disclosure of its debtors financial information, some debtors,especially high net worth individuals (HNWIs) (including the controlled/affiliated entities of theseindividuals) and small to medium-sized enterprises (SMEs), do not, or are unable to, provide thequality and quantity of information sought by the Bank. Furthermore, such financial data may notalways present a complete and comparable picture of each such debtors financial condition. Forexample, the financial statements of the Banks debtors (including HNWIs) are not (unless publiclylisted) required to be presented in accordance with IFRS or audited in accordance with InternationalStandards on Auditing.

Unavailability of adequate quantity or quality of financial data in respect of some of its debtors may

result in the Banks failure to accurately assess the financial condition and creditworthiness of itsdebtors, leading to an increase in the rate of default for the Banks loan portfolio. This could have amaterial adverse effect on the Banks business, results of operations, financial condition and prospects.

Security interests or loan guarantees provided in favour of the Bank may not be sufficient to cover anylosses and may not be legally enforceable

The practice of pledging assets (such as share portfolios in margin lending and real estate assets) toobtain a bank loan is subject to certain limitations and administrative restrictions under UAE law. Inparticular, such security may not be enforced without a court order. As a result, security over certainpledged assets may not be enforced in UAE courts. Accordingly, the Bank may have difficultyforeclosing on collateral (including any real estate collateral) or enforcing guarantees or other thirdparty credit support arrangements when debtors default on their loans.

In addition, even if such security interests are enforceable in UAE courts, the time and costsassociated with enforcing security interests in the UAE may make it uneconomic for the Bank to pursuesuch proceedings, adversely affecting the Banks ability to recover its loan losses. As at 31 December

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2013, the Bank had a loan portfolio totalling AED 22.4 billion most of which was unsecured with only,29 per cent. secured by residential property and commercial real estate, vehicles and investmentsecurities.

The Bank typically requires additional collateral in the form of cash, investment securities and/or otherassets in situations where the Bank may not be able to exercise rights over pledged shares or where itenters into guarantees or other third party credit support arrangements for loans made to individualsand corporations. Any decline in the value or liquidity of such collateral may prevent the Bank from

foreclosing on such collateral for its full value or at all in the event that a borrower becomes insolventand enters bankruptcy, and could thereby adversely affect the Banks ability to recover any losses.

Further, Presidential Resolution No. 3/4/7135 Concerning Cheques dated 23 October 2012 hasgranted immunity to UAE nationals in respect of Article 401 of Federal Law No. 3 of 1987 (the PenalCode). As a result, UAE nationals are not subject to criminal prosecution under the Penal Code forissuing cheques which are not honoured. There remains a possibility that similar provisions may beenacted in respect of non-nationals, in which case the Bank would be likely to face difficulties inenforcing loan repayments for loans supported by way of post-dated cheques.

The occurrence of any of the foregoing could have a material adverse effect on the Banks business,results of operations, financial condition and prospects.

Changes in interest rate levels may affect the Banks net interest margins and borrowing costs, and the

value of assets sensitive to interest rates and spread changes may be adversely affected

Although the majority of the Banks funding is obtained from its deposits, any shortage of liquidity inmarkets that are sources of funding for the Bank could contribute to an increase in the Banks marginalborrowing costs. Similarly, any increase in interbank reference rates could also affect the value ofcertain assets that are subject to changes in applicable interest rates. The Banks interest ratesensitivity position as at 31 December 2013 was based on maturity dates and contractual re-pricingarrangements. If interbank reference rates rise, the interest payable on the Banks floating rateborrowings increases. The Banks marginal cost of funding may increase as a result of a variety offactors, including further deterioration of conditions in the financial markets or further loss of confidenceby and between financial institutions. If the Bank fails to pass on such increase in funding cost to itscustomers in a timely manner or at all due to market, competitive or other conditions, (which may bethe case in respect of modest rises in such funding costs) it could have a material adverse effect on its

business, results of operations, financial condition and prospects.

The increasingly competitive environment in the UAE banking industry may adversely affect the Banksbusiness and results of operations

The Bank faces high levels of competition for all products and services, including products andservices offered to SMEs. The Bank competes primarily with a large number of other domestic banksin the UAE, some of which are also owned, directly or indirectly, by the governments of the relevantEmirates, government-related entities or members of the ruling families of the relevant Emirates. As at31 December 2013, there were a total of 51 banks registered in the UAE. The Banks main domesticcompetitors in terms of size of banking franchise and product and customer segments are Abu DhabiIslamic Bank, Commercial Bank of Dubai, Emirates NBD, First Gulf Bank, Dubai Islamic Bank andMashreqbank. There can be no assurance that the Bank will be able to maintain its current market

share in the future.Further, although the UAE could be viewed as an over-banked market, even by regional standards,there has traditionally been little impetus for consolidation (see The United Arab Emirates BankingSector and RegulationsCharacteristics of the UAE Banking SystemLack of Consolidation).

In addition, the UAEs membership of the World Trade Organization (WTO) will require greatereconomic liberalisation, which may lead to increased competition for the Bank in the future (see TheUnited Arab Emirates Banking Sector and RegulationsSummary).

If the Bank is unable to compete successfully, it could adversely impact the Banks business, results ofoperations, financial condition and prospects.

If the Bank is unable to retain key members of its senior management and/or hire new qualifiedpersonnel in a timely manner, this could have an adverse effect on the business of the Bank

The Banks ability to maintain and grow its business will depend, in part, on its ability to continue torecruit and retain qualified and experienced banking and management personnel. The Bank is likely to

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face challenges in recruiting qualified personnel to manage its business. In common with other banksin the UAE, the Bank experiences a shortage of qualified employees residing in the UAE, whichrequires it to recruit from outside the UAE. In addition, even after hiring its employees, the Bank hasfaced challenges in retaining such employees due to the continued recruitment efforts of itscompetitors. Due to the Banks strong brand image, the Banks competitors have been aggressivelytargeting the Banks employees in recent years by offering more attractive compensation packages.

For the years ended 31 December 2013, 2012, and 2011, the Bank experienced employee attrition

rates of approximately 26 per cent., 23.5 per cent. and 16.5 per cent., respectively. Additionally, if theBank continues to grow, it will be required to continue to increase the number of its employees. TheBank is guided in its human resources decisions by the Federal Governments recommended policythat companies operating in the UAE recruit UAE nationals to increase at least 4 per cent. of their totalpercentage of national employees each year. The Federal Governments policy supporting therecruitment of UAE nationals does not set any upper limit at which the policy would no longer beapplicable. As at 31 December 2013, UAE nationals represented 41.6 per cent. of the Banks totalworkforce. If the Bank is not able to meet or exceed the Federal Governments recommended policy forrecruiting UAE nationals, it may be subject to legal penalties, including with respect to its currentlicenses, and it may be prevented from obtaining additional licenses necessary in order to allow it toexpand its business. Due to UAE federal labour laws, the Bank may face difficulties that could delay orprevent dismissal of a UAE national employee if it finds such an employees performance to be

unsatisfactory.While the Bank believes that it has effective staff recruitment, training and incentive programmes inplace, its failure to recruit, train and/or retain necessary personnel, its inability to dismiss certainemployees or the shortage of qualified UAE nationals or other nationals prepared to relocate to theUAE, could have a material adverse effect on its business, results of operations, financial condition andprospects.

The Bank is exposed to risk of loss as a result of employee misrepresentation, misconduct andimproper practice

The Banks employees could engage in misrepresentation, misconduct or improper practice that couldexpose the Bank to direct and indirect financial loss and damage to its reputation. Such practices mayinclude embezzling clients funds, engaging in corrupt or illegal practices to originate further business,

intentionally or inadvertently releasing confidential information about clients or failing to follow internalprocedures. It is not always possible to detect or deter employee misconduct, and the precautions theBank takes to detect and prevent misconduct may not be effective in all cases. There can be noassurance that measures undertaken to combat employee misconduct will be successful. Such actionsby employees could expose the Bank to financial losses resulting from the need to reimburse clients,co-investors or other business partners who suffered loss or as a result of fines or other regulatorysanctions, and could damage the Banks reputation, which would in turn materially adversely affect theBanks business, results of operations, financial condition and prospects.

The Banks risk management and internal controls may leave it exposed to unidentified orunanticipated risks, which could result in material losses

In the course of its business activities, the Bank is exposed to a variety of risks, the most significant ofwhich are credit risk, market risk, liquidity risk and operational risk (see Description of the BankRisk

Management). Investors should note that any failure to adequately control these risks could result inmaterial adverse effects on the Banks business, results of operations, financial condition andprospects, as well as its general reputation in the market.

The Banks risk management techniques may not be fully effective or consistently implemented inmitigating its exposure in all market environments or against all types of risk, including risks that areunidentified or unanticipated. Some of the Banks methods of managing risk are based upon its use ofhistorical market behaviour. These methods may not always predict future risk exposures, which couldbe significantly greater than such historical measures indicate. Other risk management practices,including know your customer (KYC) practices, depend upon evaluation of information regardingthe markets in which the Bank operates, its clients or other matters that are publicly available orinformation otherwise accessible to the Bank. As such practices are less developed in the countries ofthe Gulf Cooperation Council (GCC) than they are in other markets and may not have beenconsistently and thoroughly implemented in the past, this information may not be accurate, complete,up-to-date or properly evaluated in all cases.

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There can be no assurance that the Banks risk management and internal control policies andprocedures will adequately control, or protect the Bank against, all credit, liquidity, market and otherrisks. In addition, certain risks could be greater than the Banks empirical data would otherwiseindicate. The Bank also cannot give assurance that all of its staff have adhered or will adhere to its riskpolicies and procedures.

The Bank is susceptible to, amongst other things, failure of internal processes or systems,unauthorised transactions by employees and operational errors, including clerical or record keeping

errors or errors resulting from faulty computer or telecommunications systems, and fraud by employeesor outsiders. See The Banks business may be adversely affected if there is any disturbance to itsoperational systems or a loss of business continuity. The Banks risk management and internal controlcapabilities are also limited by the information tools and technologies available to it. Any materialdeficiency in the Banks risk management or other internal control policies or procedures may expose itto significant credit, liquidity, market or operational risk, which may in turn have a material adverseeffect on the Banks business, results of operations, financial condition and prospects.

Notwithstanding the above, the Bank believes that its financial systems are sufficient to ensurecompliance with the requirements of the Central Bank as a company with securities listed on the MainSecurities Market.

The Banks business may be adversely affected if there is any disturbance to its operational systems or

a loss of business continuityThe Bank operates in businesses that are highly dependent on information systems and technologiesand relies heavily on its financial, accounting and other data processing systems. In addition, the Bankis increasingly offering its products and services to customers through remote access banking,including online banking and ATMs. If any of these systems do not operate properly or are disabled, orbecome the target of fraudulent activity, the Bank could suffer financial loss, a disruption of itsbusiness, liability to clients, regulatory intervention and reputational damage. By way of example, inDecember 2012, the Bank fell victim to a sophisticated crime ring which targeted a third party paymentprocessor who provided processing systems for one of the Banks debit cards. This resulted in a lossof U.S.$4.7 million for the Bank, which has, however, been subsequently recovered.

In addition, the Banks current information systems and technologies may not continue to be able toaccommodate the Banks growth unless the Bank continues to invest in upgrading its operational

systems. Such a failure to accommodate growth, or an increase in costs related to such informationsystems, would have a material adverse effect on the Banks business. The cost of improving orupgrading such systems and technologies may be substantial and the cost of maintaining suchsystems is likely to increase from its current level. The Banks business operations and businessprocesses are vulnerable to damage or interruption from fires, floods, extreme weather, power loss,bomb threats, explosions or other forms of terrorist activity and other natural and man-made disastersor other extreme events. These systems may also be subject to criminal damage, vandalism, theft andsimilar wrongdoing. If there is a disaster or other disruption and the Banks disaster recovery plans arefound to be inadequate for any reason (including, for instance, due to the Banks mainly single countryoperation), there could be an adverse impact on the Banks business, results of operations, financialcondition and prospects.

Further, the Bank relies on third-party service providers for certain aspects of its business including but

not limited to Infosys, Oracle, Reuters, Bloomberg, SWIFT and Microsoft. Any interruption ordeterioration in the performance of these third parties or failures of their information systems andtechnology could impair the quality of the Banks operations and could impact its reputation. If any ofthe foregoing were to occur, it could materially adversely affect the Banks businesses, results ofoperations, financial condition and prospects.

Notwithstanding anything in this risk factor, this risk factor should not be taken as implying that eitherthe Issuer or the Bank will be unable to comply with its obligations as a company with securitiesadmitted to the Official List.

The Issuer has a limited operating history and no material assets

At the date of this Base Prospectus, the Issuer is an exempted company with limited liability,incorporated under the laws of the Cayman Islands on 20 May 2014 and has no operating history. TheIssuer will not engage in any business activity other than the issuance of Notes under this Programmeand other borrowing programmes established from time to time by the Bank, the issuance of shares in

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its capital and other activities incidental or related to the foregoing. The Issuer is not expected to haveany income except payments received from the Bank, which will be the only material sources of fundsavailable to meet the claims of the Noteholders. As a result, the Issuer is subject to all of the risks towhich the Bank is subject, to the extent that such risk could limit the Banks ability to satisfy in full andon a timely basis its obligations to the Issuer under the Programme.

As the Issuer is a Cayman Islands company, it may not be possible for Noteholders to effect service ofprocess outside of the Cayman Islands.

Regulatory Risks

The Bank is a highly regulated entity and changes to applicable laws or regulations, the interpretationor enforcement of such laws or regulations or the failure to comply with such laws or regulations couldhave an adverse impact on the Banks business

The Bank is subject to a number of prudential and regulatory controls designed to maintain the safety andsoundness of banks, ensure their compliance with economic, social and other objectives and limit theirexposure to risk. See The United Arab Emirates Banking Sector and Regulation. These regulationsinclude UAE federal laws and regulations (particularly those of the Federal Government and the UAECentral Bank). In particular (but without limitation), the Bank is subject to the following restrictions:

certain credit limits in respect of real estate and construction financing, major shareholders or to asingle customer (based on the Banks customer deposits and/or capital and reserves as

prescribed by the UAE Central Bank);

concentration limits on total credit and other risk exposures to retail customers, banks,investments and country exposure;

investment limit in respect of shares or bonds issued by commercial companies of 25 per cent. oftotal equity;

minimum capital adequacy ratio of 12 per cent.;

minimum Tier I ratio of 8 per cent.;

the Advances to Stable Resources ratio (ASRR) as defined by the UAE Central Bank cannotexceed 100 per cent.;

increase employment by at least 4 per cent. of UAE nationals each year within the Bank, inaccordance with Ministerial Decree No. 10 of 1998 on Increasing National Employment in theBanking Sector in the UAE (see Description of the BankStrategy); and

mandatory cash reserve of 14 per cent. of all current, call and savings deposits and 1 per cent. ofall time deposits, respectively, based on balances calculated on the 15th of each month andnotified in the second month following circulation pursuant to the UAE Central Bank Circular ofDecember 2000.

Such regulations may limit the Banks ability to increase its loan portfolio or raise capital or mayincrease the Banks cost of doing business. Any changes in laws and regulations and/or the manner inwhich they are interpreted or enforced may have a material adverse effect on the Banks business,results of operations, financial condition and prospects.

In particular, by a circular dated 23 February 2011 the (Retail Circular) on retail banking and noticeno. 31/2013 dated 28 October 2013 (which was published in the UAE official gazette (the OfficialGazette) on 28 November 2013 and entered into force on 28 December 2013) (the MortgageRegulations), the UAE Central Bank introduced regulations regarding bank loans and other servicesoffered to individual customers. These regulations, among other things, limit the fees which banks inthe UAE can charge to retail customers and impose maximum loan/income and loan to value ratios forretail products such as residential mortgage loans.

Furthermore, non-compliance with regulatory guidelines could exposure the Bank to potential liabilitiesand fines. As at the date of this Base Prospectus, the Liquidity Notice has not been implemented bythe UAE Central Bank, but might be introduced with or without changes. See TheUnited Arab Emirates Banking Sector and RegulationsRecent Trends in BankingLargeexposures.

If the Bank fails to comply with applicable anti-money laundering, anti-terrorism financing, Office ofForeign Assets Control (OFAC) sanctions and other related regulations, it could face fines anddamage to its reputation

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The Bank is required to comply with applicable anti-money laundering (AML), anti-terrorismfinancing laws, OFAC sanctions and other regulations. These laws and regulations require the Bank,among other things, to adopt and enforce KYC policies and procedures and to report suspicious andlarge transactions to the applicable regulatory authorities. The Bank has adopted KYC/AML policiesand procedures and reviews them regularly in light of any relevant regulatory and marketdevelopments. To the extent the Bank may fail to fully comply with applicable laws and regulations, therelevant government agencies to which it reports have the power and authority to impose fines andother penalties on the Bank. In addition, the Banks business and reputation could suffer if customers

use the Bank for money laundering or illegal purposes.

Risks relating to the UAE and the Middle East

Risks relating to the Emirate of Ras Al-Khaimah and the United Arab Emirates

Although the Emirate of Ras Al-Khaimah (Ras Al-Khaimahor the Emirate) (and the UAE) enjoysdomestic political stability and generally healthy international relations, there is a risk that regionalgeopolitical instability and/or the adverse financial and economic conditions could impact the country.Since 2011 there has been significant political and social unrest in a number of countries in the MiddleEast and North Africa (MENA) region, ranging from public demonstrations, sometimes violent, incountries such as Algeria, Bahrain, Egypt, Tunisia and Turkey, to armed conflict and even civil war, incountries such as Libya and Syria. The situation has caused significant disruption to the economies ofaffected countries and has had a destabilising effect on oil and gas prices. Continued instability

affecting the countries in the MENA region could adversely impact the UAE, although to date there hasbeen no impact on the UAE or Ras Al-Khaimah.

Other potential sources of instability in the region include a worsening of the situation in Iraq, a furtherimpairment in the current poor relations between the United States of America and either or both ofSyria and the Islamic Republic of Iran or an escalation in the Israeli-Palestinian conflict. Such adeterioration in relations, and possible conflict between the United States of America, certain othergovernments and the Islamic Republic of Iran and/or Syria, in particular, should it materialise, couldadversely impact Ras Al-Khaimah, the UAE and broader regional security, potentially including theoutbreak of a regional conflict. Further, there is a risk that regional militant groups could begin to targetforeign nationals or businesses, or government ministers, in Ras Al-Khaimah and the UAE in particular.

In addition, the credit crisis that occurred in the global financial markets, which was particularly acute in

2008 and 2009, and the resultant deterioration in the global economic outlook led to a generalreduction in liquidity and available financing and generally increased financing costs during that period,although the UAEs economy has begun to improve in recent years. According to data published by theEconomic Intelligence United Limited Country Report 2013, the UAEs economic recovery continued in2012 and its external economic position strengthened, with real GDP growth at 4.4 per cent.

While macroeconomic indicators have since significantly improved, there can be no assurance that theeconomic performance of Ras Al-Khaimah or the UAE can or will be sustained in the future. To theextent that economic growth or performance in the UAE slows or begins to decline, this could have anadverse effect on Ras Al-Khaimah.

Investors may experience difficulties in enforcing arbitration awards and foreign judgments in the UAE

The payments under the Notes are dependent upon the Issuer or the Guarantor making payments to

investors in the manner contemplated under the Notes. If the Issuer or the Guarantor (if applicable)fails to do so, it may be necessary for an investor to bring an action against the Issuer or the Guarantor(if applicable) to enforce its obligations and/or to claim damages, as appropriate, which may be costlyand time consuming.

Under current UAE law, the UAE courts are unlikely to enforce an English court judgment without re-examining the merits of the claim and may not observe the choice by the parties of English law as thegoverning law of the transaction. In the UAE, foreign law is required to be established as a question offact and the interpretation of English law, by a court in the UAE, may not accord with the perception ofan English court.

In principle, courts in the UAE recognise the choice of foreign law if they are satisfied that anappropriate connection exists between the relevant transaction agreement and the foreign law whichhas been chosen. They will not, however, honour any provision of foreign law which is contrary to

public policy, order or morals in the UAE, or to any mandatory law of, or applicable in, the UAE.

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The UAE is a civil law jurisdiction and judicial precedents in the UAE have no binding effect onsubsequent decisions. In addition, court decisions in the UAE are generally not recorded. Thesefactors create greater judicial uncertainty.

The Notes, the Guarantee, the Agency Agreement and the Deed of Covenant are governed by Englishlaw and the parties to such documents have agreed to refer any dispute in relation to such documentsto arbitration under the LCIA Arbitration Rules (as defined below), with an arbitral tribunal with its seatin London (or, subject to the exercise of an option to litigate given to certain parties (other than the

Issuer and the Guarantor) the courts of England are stated to have jurisdiction to settle any disputes).

The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (theNew York Convention) entered into force in the UAE on 19 November 2006. In the absence of anyother multilateral or bilateral enforcement convention, an arbitration award rendered in London shouldbe enforceable in the UAE in accordance with the terms of the New York Convention. Under the NewYork Convention, the UAE has an obligation to recognise and enforce foreign arbitration awards,unless the party opposing enforcement can prove one of the grounds under Article V of the New YorkConvention to refuse enforcement, or the UAE courts find that the subject matter of the dispute is notcapable of settlement by arbitration or enforcement would be contrary to the public policy of the UAE.There have been limited instances where the UAE courts, most notably the Fujairah Court of FirstInstance and the Dubai Court of Cassation, have ratified or ordered the recognition and enforcement offoreign arbitration awards under the New York Convention.

How the New York Convention provisions would be interpreted and applied by the UAE courts inpractice and whether the UAE courts will enforce a foreign arbitration award in accordance with theNew York Convention (or any other multilateral or bilateral enforcement convention), remains largelyuntested. The uncertainty regarding the interpretation and application of the New York Conventionprovisions by the courts is further reinforced by the lack of a system of binding judicial precedent in theUAE. In particular, there remains a risk that notwithstanding Article 238 of Federal Law No. 11 of 1992(as amended by Federal Law No. 30 of 2005) (the Law of Civil Procedure) or the terms of anapplicable multilateral or bilateral enforcement convention, the UAE courts may in practice still considerand apply the grounds set out in the Law of Civil Procedure related to the enforcement of domesticarbitral awards or foreign arbitral awards to the enforcement of a foreign arbitral award in any event. Ifthis is the case, it is likely that a foreign arbitral award will be set aside by the UAE courts.

Any alteration to, or abolition of, the foreign exchange peg of the UAE Dirham at a fixed exchangerate to the U.S. dollar will expose the Bank to U.S. dollar foreign exchange movements against theUAE Dirham

The Bank maintains its accounts, and reports its results, in UAE Dirham. As at the date of this BaseProspectus, the UAE Dirham remains pegged to the U.S. dollar. However, there can be no assurancethat the UAE Dirham will not be de-pegged in the future or that the existing peg will not be adjusted in amanner that adversely affects the Banks result of operations and financial condition. Any such de-pegging, particularly if the UAE Dirham weakens against the U.S. dollar, could have an adverse effecton the Banks business, results of operations, financial condition and prospects, and thereby affect theIssuers or the Guarantors ability to perform its obligations in respect of any Notes.

The UAE may introduce corporation tax

The Bank is not currently subject to corporation tax on its earnings within the UAE, although there is noguarantee that this will continue to be the case. Investors should be aware that if the Bank becomessubject to corporation tax, it may have a material adverse effect on the Banks business, results ofoperations and financial condition, which in turn could affect the Banks ability to perform its obligationsunder the Guarantee.

A change of law may adversely affect the Notes

The Conditions of the Notes are based on English law in effect as at the date of this Base Prospectus.No assurance can be given as to the impact of any possible judicial decision or change to English lawor administrative practice after the date of this Base Prospectus.

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Risks relating to the Structure of a Particular Issue of Notes

A wide range of Notes may be issued under the Programme. A number of these Notes may havefeatures that contain particular risks for potential investors. Set out below is a description of some ofsuch features:

If the Issuer has the right to redeem a Series of Notes at its option, then this may limit the market valueof such Notes and an investor might not be able to reinvest the redemption proceeds in a manner thatachieves a similar effective return

An optional redemption feature of Notes is likely to limit their market value. During any period when theIssuer may elect to redeem a Series of Notes, the market value of those Notes generally will not risesubstantially above the price at which they can be redeemed. This may similarly be true prior to anyredemption period.

The Issuer may be expected to redeem a Series of Notes when its cost of borrowing is lower than theinterest rate on such Notes. At those times, an investor might not be able to reinvest the redemptionproceeds at an effective interest rate equivalent to the interest rate on the Notes being redeemed andmight only be able to do so at a significantly lower rate (or through taking on a greater credit risk).Reinvestment risk should be an important element of an investors consideration in investing in Noteswith a redemption feature.

If the Issuer has the right to convert the interest rate on a Series of Notes from a fixed rate to a floatingrate, or vice versa, then this may affect the secondary market and the market value of such Notes

Fixed/Floating Rate Notes are Notes that may bear interest at a rate that converts from a fixed rate to afloating rate or from a floating rate to a fixed rate. Where the Issuer has the right to effect such aconversion with respect to a Series of Notes, this may affect the secondary market and the marketvalue of such Notes since the Issuer would be expected to convert the rate when it is likely to producea lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate in suchcircumstances, then the spread on the Fixed/Floating Rate Notes might be less favourable than thenprevailing spreads on comparable Floating Rate Notes tied to the same reference rate. In addition, thenew floating rate at any time might be lower than the rates on other Notes. If the Issuer converts from afloating rate to a fixed rate in such circumstances, then the fixed rate might be lower than thenprevailing market rates.

Notes that are issued at a substantial discount or premium may experience price volatility in responseto changes in market interest rates

The market values of securities issued at a substantial discount (such as Zero Coupon Notes) orpremium to their principal amount tend to fluctuate more in relation to general changes in interest ratesthan do prices for more conventional interest-bearing securities. Generally, the longer the remainingterm of such securities, the greater the price volatility as compared to more conventional interest-bearing securities with comparable maturities.

Risks relating to the Notes Generally

The Notes may be subject to early redemption for tax reasons

If the Issuer becomes obliged to pay any additional amounts in respect of the Notes or the Guarantor isunable for reasons outside its control to procure payment by the Issuer and in making payment itselfwould be required to pay such additional amounts, in each case as a result of any change in, oramendment to, the laws or regulations of the Cayman Islands (in the case of the Issuer) or the UnitedArab Emirates (in the case of the Guarantor) or any change in the application or official interpretation ofsuch laws or regulations, which change or amendment becomes effective on or after the date on whichagreement is reached to issue the first Tranche of the Notes, the Issuer may redeem all but not someonly of the outstanding Notes of such Tranche in accordance with Condition 8 (Taxation).

In such circumstances, an investor may not be able to reinvest the redemption proceeds in acomparable security with a similar rate of return, which may have an adverse effect on the position ofsuch investor. During any period when the Issuer may elect to redeem the Notes, the market value ofthe Notes generally will not rise substantially above the Early Redemption Amount. Potential investorsshould consider re-investment risk in light of other investments available at that time.

Because the Global Notes and Global Certificates are held by or on behalf of Euroclear and/orClearstream, Luxembourg and/or any other recognised clearing system, investors will have to rely ontheir procedures for transfer, payment and communication with the Issuer

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Notes issued under the Programme may be represented by one or more Global Notes or GlobalCertificates. Such Global Notes and Global Certificates will be deposited with a common depositary (aCommon Depositary) for Euroclear Bank S.A./N.V. (Euroclear) and Clearstream Banking,socit anonyme(Clearstream, Luxembourg) and/or any other recognised clearing system. Exceptin the circumstances described in the relevant Global Note, Global Certificate and/or any otherrecognised clearing system, investors will not be entitled to receive Definitive Notes (as defined below).Euroclear and/or Clearstream, Luxembourg and/or any other recognised clearing system will maintainrecords of the beneficial interests in the Global Notes and Global Certificates. While the Notes are

represented by one or more Global Notes or Global Certificates, investors will be able to trade theirbeneficial interests only through Euroclear and/or Clearstream, Luxembourg and/or any otherrecognised clearing system.

The Issuer will discharge its payment obligations under the Notes by making payments to the CommonDepositary for Euroclear and/or Clearstream, Luxembourg and/or any other recognised clearingsystem for distribution to their account holders. A holder of a beneficial interest in a Global Note orGlobal Certificate must rely on the procedures of Euroclear and/or Clearstream, Luxembourg and/orany other recognised clearing system to receive payments under the relevant Notes. The Issuer has noresponsibility or liability for the records relating to, or payments made in respect of, beneficial interestsin the Global Notes or Global Certificates.

Holders of beneficial interests in the Global Notes and Global Certificates will not have a direct right to

vote in respect of the relevant Notes. Instead, such holders will be permitted to act only to the extentthat they are enabled by Euroclear and/or Clearstream, Luxembourg and/or any other recognisedclearing system to appoint appropriate proxies. Similarly, holders of beneficial interests in the GlobalNotes and Global Certificates will not have a direct right under the Global Notes and Global Certificatesto take enforcement action against the Issuer in the event of a default under the relevant Notes but willhave to rely upon their rights under the Deed of Covenant.

The Conditions contain provisions that may permit their modification without the consent of allNoteholders in the applicable series

The Conditions of the Notes contain provisions for calling meetings of Noteholders to consider mattersaffecting their interests generally. These provisions permit defined majorities to bind all Noteholdersincluding Noteholders who did not attend and vote at the relevant meeting and Noteholders who votedin a manner contrary to the majority.

EU Savings Directive

Under EC Council Directive 2003/48/EC on the taxation of savings income (the Directive), eachMember State is required to provide to the tax authorities of another Member State details of paymentsof interest or other similar income paid or secured by a person established in a Member State to or forthe benefit of an individual resident or certain limited types of entity established in another MemberState; however, for a transitional period, Austria and Luxembourg may instead apply a withholdingsystem in relation to such payments, deducting tax at a rate of 35 per cent. The transitional period is toterminate at the end of the first full fiscal year following agreement by certain non-EU countries to theexchange of information relating to such payments. Luxembourg has announced that it will no longerapply the withholding tax system as from 1 January 2015 and will provide details of payments ofinterest (or similar income) as from this date.

A number of non-EU countries and certain dependent or associated territories of certain MemberStates including Switzerland, have adopted similar measures (either provision of information ortransitional withholding) in relation to payments made by a person within its jurisdiction to, or collectedby such a person for, an individual resident or certain limited types of entity established in a MemberState. In addition, the Member States have entered into provision of information or transitionalwithholding arrangements with certain of those dependent or associated territories in relation topayments made by a person in a Member State to, or collected by such a person for, an individualresident or certain limited types of entity established in one of those territories. The European Councilformally adopted a Council Directive amending the Directive on 24 March 2014 (the AmendingDirective). The Amending Directive broadens the scope of the requirements described above.Member States have until 1 January 2016 to adopt the national legislation (which national legislationmust apply from 1 January 2017) necessary to comply with the Amending Directive. The changes

made under the Amending Directive include extending the scope of the Directive to payments made to,or collected for, certain other entities and legal arrangements. They also broaden the definition ofinterest payment to cover income that is equivalent to interest.

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If a payment were to be made or collected through a Member State (or, in certain cases, through arelevant non-EU country or territory) which has opted for a withholding system and an amount of, or anamount in respect of, tax were to be withheld from that payment, none of the Issuer, the Guarantor norany Paying Agent nor any other person would be obliged to pay additional amounts with respect to anyNote as a result of the imposition of such withholding tax. If a withholding tax is imposed on paymentmade by a Paying Agent, the Issuer will be required to maintain a Paying Agent in a Member State thatwill not be obliged to withhold or deduct tax pursuant to the Directive.

U.S. Foreign Account Tax Compliance Withholding

In certain circumstances payments made on or with respect to the Notes after 31 December 2016 maybe subject to U.S. withholding tax under Sections 1471 through 1474 of the U.S. Internal RevenueCode (commonly referred to as FATCA). As a general matter, the FATCA rules are designed torequire U.S. persons direct and indirect ownership of non-U.S. accounts and non- U.S. entities to bereported to the U.S. Internal Revenue Service (the IRS). The 30 per cent. withholding tax regimeapplies if there is a failure to provide required information regarding U.S. ownership or otherwiseestablish an exemption from the withholding. This withholding does not apply to payments on Notesthat are issued prior to 1 July 2014 (or, if later, the date that is six months after the date on which thefinal regulations that define foreign passthru payments are published) unless the Notes arematerially modified after that date or are characterised as equity for U.S. federal income taxpurposes.

Whilst the Notes are in global form and held within Euroclear and Clearstream, Luxembourg (together,the ICSDs), in all but the most remote circumstances, it is not expected that FATCA will affect theamount of any payment received by the ICSDs (see TaxationU.S. Foreign Account Tax ComplianceWithholding). However, FATCA may affect payments made to custodians or intermediaries in thesubsequent payment chain leading to the ultimate investor if any such custodian or intermediarygenerally is unable to receive payments free of FATCA withholding. It also may affect payment to anyultimate investor that is a financial institution that is not entitled to receive payments free of withholdingunder FATCA, or an ultimate investor that fails to provide its broker (or other custodian or intermediaryfrom which it receives payment) with any information, forms, other documentation or consents that maybe necessary for the payments to be made free of FATCA withholding. Investors should choose thecustodians or intermediaries with care (to ensure each is compliant with FATCA or other laws oragreements related to FATCA), and provide each custodian or intermediary with any information,

forms, other documentation or consents that may be necessary for such custodian or intermediary tomake a payment free of FATCA withholding. Investors should consult their own tax adviser to obtain amore detailed explanation of FATCA and how FATCA may affect them. The Issuers obligations underthe Notes (and the Guarantors obligations under the Guarantee) are discharged once it has paid theCommon Depositary for the ICSDs (as holder of the Notes) and therefore, neither the Issuer nor theGuarantor have any responsibility for any amount thereafter transmitted through the hands of theICSDs and custodians or intermediaries.

The Cayman Islands entered into a Model 1 intergovernmental agreement (the IGA) with the UnitedStates on 29 November 2013 (which came into force on 14 April 2014). The terms of the IGA arebroadly similar to those agreed with the United Kingdom and the Republic of Ireland. Under the termsof the IGA the Issuer will not be required to enter an agreement with the IRS, but may instead berequired to register with the IRS to obtain a Global Intermediary Identification Number (GIIN) and

then comply with Cayman Islands legislation (although the IGA has come into force, local legislationand regulations will be introduced to provide guidance and detail on the application of the IGA). Theterms of such legislation and regulations are at this stage still uncertain and it is not yet clear whetherthe Issuer will be a certified deemed compliant entity with no reporting required or a registered deemedcompliant entity which would require the Issuer to report to the Cayman Islands Tax InformationAuthority, which will exchange such information with the IRS under the terms of the IGA. To the extentthe Issuer cannot be treated as a certified deemed compliant entity, the Issuer would be a ReportingCayman Islands Financial Institution (as defined in the IGA). Under the terms of the IGA, withholdingwill not be imposed on payments made to the Issuer, or on payments made by the Issuer to theNoteholders (other than perhaps certain passthru withholding), unless the IRS has specifically listedthe Issuer as a non-participating financial institution, or the Issuer has otherwise assumedresponsibility for withholding under United States tax law.

The value of the Notes could be adversely affected by a change in English law or administrativepractice

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The Conditions of the Notes are based on English law in effect as at the date of this Base Prospectus.No assurance can be given as to the impact of any possible judicial decision or change to English lawor administrative practice after the date of this Base Prospectus.

The Guarantors waiver of immunity may not be effective under UAE law

The Guarantor has waived its rights in relation to sovereign immunity; however, there can be noassurance as to whether such waivers of immunity from execution or attachment or other legal processby it under the Guarantee, the Agency Agreement, the Dealer Agreement and the Deed of Covenantare valid and binding under the laws of the UAE and applicable in Abu Dhabi.

Bearer Notes where denominations involve integral multiples: Definitive Notes

In relation to any issue of Bearer Notes which have denominations consisting of a minimum SpecifiedDenomination plus one or more integral multiples of a smaller amount there above, it is possible thatsuch Notes may be traded in amounts that are not integral multiples of such minimum SpecifiedDenomination. In such a case a holder who, as a result of trading such amounts, holds an amountwhich is less than the minimum Specified Denomination in his account with the relevant clearingsystem at the relevant time may not receive a Definitive Note in respect of such holding (shouldDefinitive Notes be printed) and would need to purchase a principal amount of Notes such that itsholding amounts to a Specified Denomination.

If Definitive Notes are issued, holders should be aware that Definitive Notes which have adenomination that is not an integral multiple of the minimum Specified Denomination may be illiquidand difficult to trade.

Risks relating to the Market Generally

An active secondary market in respect of the Notes may never be established or may be illiquid, whichwould adversely affect the value at which an investor could sell Notes

Notes may have no established trading market when issued and one may never develop. If a marketdoes develop, it may not be very liquid. Therefore, investors might not be able to sell investments in theNotes easily or at prices that will provide them with a

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