Tier 2

Subordinated Notes issued by BNZ will be direct and unsecured obligations of BNZ and will be subordinated to the claims of all Senior Creditors of BNZ in right of payment with respect to the assets of BNZ in the event of a Liquidation of BNZ as defined and further described in Condition 3.3. For the avoidance of doubt, the Terms and Conditions of Subordinated Notes issued by BNZ do not contain a non-viability trigger event and Subordinated Notes issued by BNZ are not subject to mandatory conversion into ordinary shares in the capital of BNZ or writeoff. Subordinated Notes issued by BNZ do not constitute deposit liabilities of BNZ and are not guaranteed or insured by any government, government agency, compensation scheme of Australia, His Majesty the King in right of New Zealand or any other jurisdiction or by any other party.

Redemption for Specified Taxation or Regulatory Events:

Subject to certain conditions (including the prior written approval of the RBNZ) and upon giving not less than 30 days nor more than 60 days of notice to the Noteholders, the Issuer may redeem, in whole or in part, the Subordinated Notes if specified events occur involving certain taxation or regulatory reasons, as described in the Offering Circular, in particular under Condition 7.2 “Redemption for tax reasons” and Condition 7.2B “Redemption for a Regulatory Event – BNZ”, at a redemption price equal to the Early Redemption Amount of such Subordinated Note, together with interest accrued to (but excluding) the date of redemption.

Noteholders should not expect that the RBNZ's approval will be given for any redemption of the Subordinated Notes under Condition 7.2 “Redemption for tax reasons” or Condition 7.2B “Redemption for a Regulatory Event – BNZ”.

For the purpose of this Condition 7.2B, Regulatory Event means:

(a) the receipt by the Directors of BNZ of an opinion from a reputable legal counsel that, as a result of a Regulatory Change, additional requirements would be imposed on BNZ in relation to or in connection with the regulatory treatment of the Subordinated Notes, which additional requirements the Directors of BNZ determine, in their absolute discretion, have, or would have, an unacceptable adverse effect; or

(b) the determination by the Directors of BNZ that, as a result of a Regulatory Change, BNZ is not or will not be entitled to treat some or all Subordinated Notes as Tier 2 Capital (as defined in Condition 7.2).

For the purpose of this Condition 7.2B, Regulatory Change means any amendment to, clarification of or change (including any announcement of a change that will be introduced) in or to:

(a) any law or regulation in New Zealand;

(b) any official administrative pronouncement or action or judicial decision interpreting or applying any law or regulation in New Zealand; or

(c) any order, direction, standard, requirement, guideline or statement of the RBNZ (whether or not having the force of law), in each case provided that such event is not minor and could not reasonably have been anticipated by BNZ as at the Issue Date.