Tier 2

Conversion or Write-Off of Subordinated Notes on a Non-Viability Trigger Event

Subordinated Notes will be mandatorily Converted into ANZGHL Ordinary Shares or Written-Off (as specified in the relevant Pricing Supplement and as further described below) where APRA determines that (1) such Conversion or Write-Off is necessary because, without it, the Issuer would become non-viable; or (2) without a public sector injection of capital or equivalent support, the Issuer would become non-viable.

If the Pricing Supplement specifies Conversion but, for any reason, the Subordinated Notes have not been Converted within five Business Days after the Trigger Event Date, the principal amount of such Subordinated Note will not be Converted and instead will be Written-Off with effect on and from the Trigger Event Date.

If a Subordinated Note of a Subordinated Noteholder is Written-Off, the Subordinated Noteholder’s rights under that Subordinated Note are immediately and irrevocably terminated for no consideration and the Subordinated Noteholder will suffer a total loss of their investment as a consequence.

In the event that a Non-Viability Trigger Event occurs, the Deed of Undertaking governs the obligations of ANZGHL to issue any ANZGHL Ordinary Shares to be issued by ANZGHL upon Conversion of Subordinated Notes.

Non-Viability Trigger Event

A “Non-Viability Trigger Event” means the earlier of:

(a) the issuance to the Issuer of a written determination from APRA that conversion or write-off of Relevant Securities is necessary because, without it, APRA considers that the Issuer would become non-viable; or

(b) a determination by APRA, notified to the Issuer in writing, that without a public sector injection of capital, or equivalent support, the Issuer would become non-viable,

each such determination being a “Non-Viability Determination”.

Bail-in

The circumstances under which APRA would determine that the Issuer is non-viable are uncertain

A Non-Viability Trigger Event could occur at any time.

It is a requirement under APRA’s prudential standards that any term subordinated debt, in order to be eligible for inclusion as regulatory capital, contain provisions for conversion or write-off in the event of non-viability. Whether the Issuer is non-viable is determined by APRA. The prudential standards do not define non-viability and APRA has not provided specific guidance on how it would determine non-viability. Non-viability could be expected to include a serious impairment of the Issuer’s financial position. However, it is possible that APRA’s view of non-viability may not be confined to solvency or capital measures and APRA’s position on these matters may change over time. APRA has indicated that non-viability is likely to arise prior to the insolvency of an authorised deposit-taking institution. Non-viability may be significantly impacted by a number of factors, including factors which impact the business, operation and financial condition of the Issuer, such as systemic and non-systemic macro-economic, environmental and operational factors.