Announcement of a Consent Solicitation

NATIONWIDE BUILDING SOCIETY

(incorporated in England and Wales under the Building Societies Act 1986, as amended)

(the Issuer)

ANNOUNCEMENT OF A CONSENT SOLICITATION TO COVERED BONDHOLDERS UNDER THE ISSUER'S €45 BILLION COVERED BOND PROGRAMME

€2,000,000,000 Series 2007-01 Tranche 2 Covered Bonds due 2022 (ISIN: XS0289011198, Common Code: 028901119)

kr500,000,000 Series 2010-02 Covered Bonds due 2020 (ISIN: XS0550431083, Common Code: 055043108)

kr500,000,000 Series 2011-01 Covered Bonds due 2021 (ISIN: XS0582521661, Common Code: 058252166)

£750,000,000 Series 2011-02 Covered Bonds due 2026 (ISIN: XS0584363724, Common Code: 058436372)

€1,250,000,000 Series 2011-03 Covered Bonds due 2021 (ISIN: XS0589642049, Common Code: 058964204)

€30,000,000 Series 2011-04 Covered Bonds due 2031 (ISIN: XS0592707615, Common Code: 059270761)

€132,000,000 Series 2011-05 N Covered Bonds due 2025

€50,000,000 Series 2011-06 N Covered Bonds due 2023

kr500,000,000 Series 2011-07 Covered Bonds due 2021 (ISIN: XS0605287217, Common Code: 060528721)

€50,000,000 Series 2011-09 N Covered Bonds due 2032

kr400,000,000 Series 2011-10 Covered Bonds due 2018 (ISIN: XS0622731197, Common Code: 062273119)

€58,000,000 Series 2011-11 N Covered Bonds due 2017

€100,000,000 Series 2011-13 N Covered Bonds due 2026

€40,000,000 Series 2011-14 N Covered Bonds due 2029

€50,000,000 Series 2011-15 N Covered Bonds due 2026

€103,000,000 Series 2011-17 N Covered Bonds due 2027

€40,000,000 Series 2011-18 N Covered Bonds due 2029

€1,500,000,000 Series 2011-19 Covered Bonds due 2016 (ISIN: XS0690482426, Common Code: 069048242)

£100,000,000 Series 2011-20 Covered Bonds due 2026 (ISIN: XS0697790342, Common Code: 069779034)

£100,000,000 Series 2011-21 Covered Bonds due 2028 (ISIN: XS0697790185, Common Code: 069779018)

£50,000,000 Series 2011-22 Covered Bonds due 2031 (ISIN: XS0697790425, Common Code: 069779042)

€77,000,000 Series 2011-23 N Covered Bonds due 2032

€116,000,000 Series 2012-02 N Covered Bonds due 2027

€88,000,000 Series 2012-03 N Covered Bonds due 2030

€157,500,000 Series 2012-06 N Covered Bonds due 2028

€1,000,000,000 Series 2014-01 Covered Bonds due 2019 (ISIN: XS1081041557, Common Code: 108104155)

€750,000,000 Series 2014-02 Covered Bonds due 2029 (ISIN: XS1081100239, Common Code: 108110023)

£750,000,000 Series 2014-03 Covered Bonds due 2017 (ISIN: XS1087802234, Common Code: 108780223)

€56,000,000 Series 2014-04 N Covered Bonds due 2039

€50,000,000 Series 2014-05 N Covered Bonds due 2039

€1,000,000,000 Series 2014-06 Covered Bonds due 2021 (ISIN: XS1130066175, Common Code: 113006617)

€50,000,000 Series 2014-07 Covered Bonds due 2039 (ISIN: XS1151430185, Common Code: 115143018)

€50,000,000 Series 2015-01 Covered Bonds due 2030 (ISIN: XS1177825814, Common Code: 117782581)

€750,000,000 Series 2015-02 Covered Bonds due 2027 (ISIN: XS1207683522, Common Code: 120768352)

€25,000,000 Series 2015-03 N Covered Bonds due 2035

£750,000,000 Series 2015-04 Covered Bonds due 2018 (ISIN: XS1223775716, Common Code: 122377571)

€50,000,000 Series 2015-05 Covered Bonds due 2035 (ISIN: XS1225157533, Common Code: 122515753)

€105,000,000 Series 2015-06 Covered Bonds due 2034 (ISIN: XS1242438742, Common Code: 124243874)

€100,000,000 Series 2015-07 Covered Bonds due 2031 (ISIN: XS1261795378, Common Code: 126179537)

€50,000,000 Series 2015-08 N Covered Bonds due 2035

€45,000,000 Series 2015-09 N Covered Bonds due 2035

€1,000,000,000 Series 2015-10 Covered Bonds due 2020 (ISIN: XS1268460885, Common Code: 126846088)

€1,000,000,000 Series 2015-11 Covered Bonds due 2022 (ISIN: XS1308693867, Common Code: 130869386)

€35,000,000 Series 2015-12 Covered Bonds due 2035 (ISIN: XS1316442992, Common Code: 131644299)

€50,000,000 Series 2015-13 Covered Bonds due 2032 (ISIN: XS1332497616, Common Code: 133249761)

€25,000,000 Series 2015-14 Covered Bonds due 2035 (ISIN: XS1333830005, Common Code: 133383000)

€100,000,000 Series 2015-15 Covered Bonds due 2020 (ISIN: XS1334768733, Common Code: 133476873)

€25,000,000 Series 2016-01 Covered Bonds due 2041 (ISIN: XS1350139439, Common Code: 135013943)

€30,000,000 Series 2016-02 Covered Bonds due 2041 (ISIN: XS1352028432, Common Code: 135202843)

€51,000,000 Series 2016-03 Covered Bonds due 2036 (ISIN: XS1369280661, Common Code: 136928066)

€50,000,000 Series 2016-04 Covered Bonds due 2036 (ISIN: XS1371729259, Common Code: 137172925)

€40,000,000 Series 2016-05 Covered Bonds due 2041 (ISIN: XS1371979284, Common Code: 137197928)

€25,000,000 Series 2016-06 Covered Bonds due 2023 (ISIN: XS1373029856, Common Code: 137302985)

€1,250,000,000 Series 2016-07 Covered Bonds due 2021 (ISIN: XS1374414891, Common Code: 137441489)

€30,000,000 Series 2016-08 Covered Bonds due 2036 (ISIN: XS1378944836, Common Code: 137894483)

€50,000,000 Series 2016-09 Covered Bonds due 2038 (ISIN: XS1380330826, Common Code: 138033082)

€50,000,000 Series 2016-10 Covered Bonds due 2031 (ISIN: XS1380328259, Common Code: 138032825)

€40,000,000 Series 2016-11 Covered Bonds due 2036 (ISIN: XS1384262389, Common Code: 138426238)

€80,000,000 Series 2016-12 Covered Bonds due 2021 (ISIN: XS1385380289, Common Code: 138538028)

£750,000,000 Series 2016-13 Covered Bonds due 2019 (ISIN: XS1397740603, Common Code: 139774060)

€60,000,000 Series 2016-14 Covered Bonds due 2041 (ISIN: XS1397982874, Common Code: 139798287)

€25,000,000 Series 2016-15 Covered Bonds due 2041 (ISIN: XS1407047411, Common Code: 140704741)

(together, the Covered Bonds, and the holders thereof, the Covered Bondholders)

ANNOUNCEMENT OF NOTICE OF MEETING

The Issuer announced today that it is inviting the Covered Bondholders to approve (i) an extraordinary resolution (the First Extraordinary Resolution) with respect to certain proposed swap related changes to the Programme (the First Covered Bondholder Proposal), (ii) an extraordinary resolution (the Second Extraordinary Resolution) with respect to certain proposals relating to amendments to the bank account structure of the Programme (the Second Covered Bondholder Proposal) and (iii) an extraordinary resolution (the Third Extraordinary Resolution, together with the First Extraordinary Resolution and the Second Extraordinary Resolution, the Extraordinary Resolutions and each an Extraordinary Resolution) with respect to certain other proposed amendments to the Programme (the Third Covered Bondholder Proposal, together with the First Covered Bondholder Proposal and the Second Covered Bondholder Proposal, the Covered Bondholder Proposals and each a Covered Bondholder Proposal), which will be proposed at the Meeting.

 

A notice (the Notice of Meeting) convening a meeting of the Covered Bondholders to be held at 10:00 a.m. (London time) on Tuesday, 21 June 2016 (the Meeting) was delivered on 26 May 2016 to Euroclear and Clearstream, Luxembourg for communication to Direct Participants and via this RNS announcement and in respect of N Covered Bonds, to all persons named in the Register as at the Record Date by email, first class mail or facsimile (as the case may be).

 

The Meeting will be held at the offices of Allen & Overy LLP, One Bishops Square, London E1 6AD, for the purpose of considering and, if thought fit, passing the Extraordinary Resolutions, each of which will be proposed as an Extraordinary Resolution in accordance with the provisions of the Trust Deed dated 30 November 2005 (as amended or supplemented from time to time, the Trust Deed) made among the Issuer, Nationwide Covered Bonds LLP (the LLP), Citicorp Trustee Company Limited (the Security Trustee) and Citicorp Trustee Company Limited (the Bond Trustee).

 

Full details of the Covered Bondholder Proposals are set out in a Consent Solicitation Memorandum dated 26 May 2016 (the Consent Solicitation Memorandum) which is available from Citibank, N.A., London Branch (the Information and Tabulation Agent).  Covered Bondholders should read the Consent Solicitation Memorandum in full and in particular read the information in the sections headed "Expected timetable", "Voting and Quorum", "Submission of Instructions or Forms of Proxy" and Section 4-Procedures in Connection with the Consent Solicitation to ensure that they are aware of the mechanics for delivery of an instruction within the applicable time frames.

Capitalised terms used in this notice shall have the meanings given to them in the Consent Solicitation Memorandum. Capitalised terms used but not otherwise defined herein or in the Consent Solicitation Memorandum shall have the meanings ascribed to them in the Conditions set out in the Trust Deed.

 

BACKGROUND

 

The market environment in which Nationwide operates its business has undergone significant changes in the years since 2005 when the Programme was established.

 

Nationwide has not sought to make any material changes to the Programme since its inception and, as such, these Covered Bondholder Proposals are designed, first and foremost, to update the Programme and bring it into line with other UK Regulated Covered Bond programmes.

 

As part of this exercise, Nationwide is seeking to incorporate current Rating Agency swap and counterparty criteria, which will result in updated and simplified disclosure across the LLP's considerable portfolio of Covered Bond Swaps (liability side) by aligning all of these swaps with a single fully updated ISDA document and a similar separate swap agreement for the Interest Rate Swaps (asset side).

 

Nationwide is also seeking to incorporate some structural efficiencies which will help to reduce credit exposure to third parties. These amendments should be familiar to investors from other consent exercises.

 

A number of other proposals, for which there is strong existing market precedent, add features to the Programme that Nationwide would introduce if it was setting up the Programme afresh today.

 

The overriding aim of the Covered Bondholder Proposals, set out in the Consent Solicitation Memorandum, is to ensure the Programme remains a viable and effective funding tool for Nationwide to use for future Covered Bond issuances, while ensuring that the modifications have been reviewed and signed-off by all three Rating Agencies.

 

The modifications outlined in Sections 1 and 2 of the Consent Solicitation Memorandum consist of three separate Extraordinary Resolutions relating to: (i) swap related changes (referred to therein as the First Covered Bondholder Proposal); (ii) Account Bank related changes (referred to therein as the Second Covered Bondholder Proposal); and (iii) other changes (referred to therein as the Third Covered Bondholder Proposal).

Ratings Implications of Covered Bondholder Proposals

Moody's have reviewed the Covered Bondholder Proposals and will issue a press release immediately following the date of the Consent Solicitation Memorandum confirming that they expect there will be no negative rating impact as a result of the Covered Bondholder Proposals.  The full text of the press release will be available for viewing on their website.

Fitch have reviewed the Covered Bondholder Proposals and will issue a press release immediately following the date of the Consent Solicitation Memorandum confirming that they expect there will be no negative rating impact as a result of the Covered Bondholder Proposals. The full text of the press release will be available for viewing on their website.

S&P have reviewed the Covered Bondholder Proposals and have issued a RAC confirming to the Issuer and LLP that they expect there will be no negative rating impact as a result of the Covered Bondholder Proposals.  Should the Covered Bond Proposals be passed, the Issuer expects S&P to publish an announcement confirming that there has been no impact of the Covered Bondholder Proposals on the credit rating of the Covered Bonds.

CONSENT FEES

The Issuer will pay each Eligible Covered Bondholder (as defined below) a consent fee of 0.01 per cent. of the Principal Amount Outstanding of the Covered Bonds in respect of each Extraordinary Resolution for which the Eligible Covered Bondholder submits a valid Electronic Voting Instruction or form of proxy, received by the Information and Tabulation Agent, prior to the Early Voting Deadline, in favour of and which is passed and the Covered Bondholder Proposal to which any such Extraordinary Resolution relates is implemented (each a Consent Fee). In addition, to the extent that the Eligible Covered Bondholder has validly voted in favour of all three Extraordinary Resolutions and all three Extraordinary Resolutions are passed and implemented, the Issuer will pay to each such Eligible Covered Bondholder an additional consent fee of 0.02 per cent. of the Principal Amount Outstanding of the Covered Bonds (the Additional Consent Fee and together with each Consent Fee, the Consent Fees).

The total amount of aggregate Consent Fees which an Eligible Covered Bondholder will be entitled to receive will be 0.05 per cent. of the Principal Amount Outstanding of the Covered Bonds to the extent that the Eligible Covered Bondholder has submitted a valid Electronic Voting Instruction or form of proxy, received by the Information and Tabulation Agent, prior to the Early Voting Deadline, in favour of and in respect of all three passed and implemented Extraordinary Resolutions.

For a Covered Bondholder to be eligible to receive any Consent Fee the Information and Tabulation Agent must receive valid Electronic Voting Instructions or forms of proxy in favour of the relevant Extraordinary Resolution from such holder before the Early Voting Deadline (as defined herein) which are not subsequently revoked (each an Eligible Covered Bondholder).

No Consent Fee will be payable in respect of any Extraordinary Resolution that is not passed and implemented. For the avoidance of doubt, the First Extraordinary Resolution may be implemented, in accordance with the Consent Solicitation Memorandum, irrespective of whether the Amended External Relevant Swap Agreements are executed. The relevant Consent Fees will be paid to the relevant Direct Participants' cash accounts or to the relevant account of the holder of N Covered Bonds as specified in the Register on one business day following the Implementation Date (being no later than ten (10) Business Days after the date the relevant Extraordinary Resolution is passed and any requisite Consents have been obtained).

Covered Bondholders who submit Electronic Voting Instructions or in the case of N Covered Bonds Forms of Proxy after the Early Voting Deadline, who vote other than by submitting an Electronic Voting Instruction or in the case of N Covered Bonds Forms of Proxy or who vote against or abstain from voting on any Extraordinary Resolution will not be entitled to receive the Consent Fee in respect of each and every passed and implemented Extraordinary Resolution(s).

Expected Timetable of Events

The times and dates below are indicative only.  These dates are subject to the earlier deadlines set by the Clearing Systems and any intermediary through which Covered Bondholders hold their Covered Bonds or N Covered Bonds as the case may be) and to the right of the Issuer to amend any term or condition of the Covered Bond Proposals as provided in the Consent Solicitation Memorandum.

4:00 pm (London Time) on Wednesday, 25 May 2016	1.		Record Date, for the purposes of the N Covered Bonds.
Thursday, 26 May 2016 (At least 21 clear days before the Meeting)	2.		Commencement of Consent Solicitation. Notice of Meeting to be delivered to Euroclear and Clearstream, Luxembourg for communication to Direct Participants and via an RNS announcement and in respect of N Covered Bonds, to all persons named in the Register as at the Record Date by email, first class mail or facsimile (as the case may be), which shall be deemed valid notice upon the fourth day after the date of mailing, or in the case of email or facsimile (as the case may be), which shall be deemed valid notice on the next Business Day. The Consent Solicitation Memorandum will be available from the Information and Tabulation Agent upon request. Shortly following delivery of the Notice of Meeting, an investor presentation summarising the details of the Consent Solicitation will be made available for inspection to existing Covered Bondholders at www.netroadshow.com (the Investor Presentation). Access to the Investor Presentation will be provided to existing Covered Bondholders upon request to the Information and Tabulation Agent or Barclays Bank PLC, as Solicitation Agent. Each Covered Bondholder may obtain the password to this website upon request to the Information and Tabulation Agent or Barclays Bank PLC, as Solicitation Agent, subject to it satisfying certain conditions including confirmation that it is (i) a Holder or a Beneficial Owner of the Covered Bonds, and (ii) not a person to or from whom it is unlawful to send the Consent Solicitation Memorandum or any related documents to solicit Consents under the Consent Solicitation described herein under applicable laws (collectively, the Consent Solicitation Restrictions).
By 10:00 a.m. (London time) on Thursday, 26 May 2016	3.		A draft of each of the Amendment Documents to be available for collection or inspection, as indicated, at the specified office of the Information and Tabulation Agent.  Copies of each of the Amendment Documents can also be downloaded from the password-protected website of the Information and Tabulation Agent noted above, at https://debtxportal.issuerservices.citigroup.com.  Each Covered Bondholder may obtain the password to this website upon request to the Information and Tabulation Agent, subject to it satisfying the Consent Solicitation Restrictions.
By 4:00 p.m. (London time) on Friday, 10 June 2016	4.		Early Voting Deadline.  Latest time and date for delivery of Consents to the Information and Tabulation Agent valid for eligibility for payment of the relevant Consent Fee, subject to the rights of the Issuer to extend the Early Voting Deadline subject to applicable law and the Meeting Provisions and subject also as provided herein. For the avoidance of doubt, only validly submitted Consents in favour of the relevant Proposal will be eligible to receive the relevant Consent Fee if the relevant Extraordinary Resolution is passed. After this date, Consents which were delivered to the Information and Tabulation Agent at or prior to the Early Voting Deadline are irrevocable and such Consents may be withdrawn or revoked only in the limited circumstances set out herein.
By 4:00 p.m. (London time) on Thursday, 16 June 2016 (At least 48 hours before the Meeting)	5.		Expiration Deadline.  Final time by which the relevant Covered Bondholders have arranged for: (i)   obtaining a voting certificate from the Information and Tabulation Agent to attend and vote at the Meeting in person; (ii)  receipt by the Information and Tabulation Agent of an Electronic Voting Instruction in accordance with the procedures of Euroclear and/or Clearstream, Luxembourg, as applicable; or (iii) receipt by the Information and Tabulation Agent of, in the case of N Covered Bonds, a Form of Proxy; in order for their votes to be eligible to be counted at the Meeting.
	6.		Final time by which the relevant Covered Bondholders who have voted after the Early Voting Deadline have given notice to the Information and Tabulation Agent (via the Clearing Systems) of any intended revocation of, or amendment to, voting instructions previously given by them.
At 10:00 a.m. (London time) on Tuesday, 21 June 2016	7.		SINGLE MEETING OF THE COVERED BONDHOLDERS HELD
As soon as reasonably practicable after the Meeting	8.		Announcement and publication of the results of the Meeting.
If the Meeting is not quorate on the date stated above, the Meeting shall stand adjourned for such period being not less than 13 clear days nor more than 42 clear days, and at such place as may be appointed by the chairman of the Meeting (and approved by the Bond Trustee) and notice of the adjourned Meeting shall be given in the same manner as notice of the original Meeting.
If the First Extraordinary Resolution and/or the Second Extraordinary Resolution and/or the Third Extraordinary Resolution is passed at the Meeting or adjourned Meeting, as applicable, and all other requisite Consents with respect to the relevant Covered Bondholder Proposal have been obtained in order for the Amendment Documents (to the extent that they relate to a Covered Bondholder Proposal that has been approved by an Extraordinary Resolution) to be Executed in full:
Within ten Business Days after the date of the Meeting	9.	Implementation Date.  Execution of the Amendment Documents (to the extent that the amendments set out therein relate to a Covered Bondholder Proposal that has been approved by the passing of the relevant Extraordinary Resolution) provided that the Amended External Relevant Swap Agreements may be executed in accordance with paragraph 11 below. For the avoidance of doubt, the Amended External Relevant Swap Agreements need not be executed for the First Covered Bondholder Proposal to be Executed, implemented and effected in full.
One Business Day after the Implementation Date	10.	Payment of the Consent Fees.  To be paid to Eligible Covered Bondholders in the event the relevant Extraordinary Resolution(s) that the Eligible Covered Bondholder voted in favour of is passed and implemented.
Within sixty calendar days of the date of the Meeting	11.	Each of the Amended External Relevant Swap Agreements may be executed and entered into by each party thereto if the LLP and the relevant external Covered Bond Swap Provider agree to the relevant amendments set out therein (and to the extent that the First Covered Bondholder Proposal has been approved by the passing of the First Extraordinary Resolution). For the avoidance of doubt, the payment of any Consent Fee shall not, in any event, be conditional upon the execution of the Amended External Relevant Swap Agreements.

 

To view the Notice of Meeting, please paste the following URL into the address bar of your browser:

http://www.rns-pdf.londonstockexchange.com/rns/3973Z_-2016-5-26.pdf

Requests for information in relation to the Covered Bondholder Proposals should be directed to:

 

THE ISSUER Nationwide Building Society Nationwide House Pipers Way Swindon SN38 1NW SOLICITATION AGENTS Barclays Bank PLC 5 The North Colonnade Canary Wharf London E14 4BB Tel: +44 203 134 8515 Attention: Liability Management Group Email: [email protected] Nationwide Building Society Nationwide House Pipers Way Swindon SN38 1NW

Requests for information in relation to the procedures for delivering Electronic Voting Instructions or Forms of Proxy should be directed to:

INFORMATION AND TABULATION AGENT CITIBANK, N.A., LONDON BRANCH Citigroup Centre Canada Square London E14 5LB   Attention: Exchange Team Telephone: +44 (0) 20 7508 3867 Email: [email protected]

 

DISCLAIMER:  This announcement must be read in conjunction with the Consent Solicitation Memorandum.  The Consent Solicitation Memorandum contains important information which should be read carefully before any decision is made with respect to the Covered Bondholder Proposals.  If any Covered Bondholder is in doubt as to the action it should take, it is recommended to seek its own legal or financial advice, including in respect of any tax consequences, immediately from its stockbroker, bank manager, solicitor, accountant or other independent financial adviser.  Any individual or company whose Covered Bonds are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to vote in respect of the Covered Bondholder Proposals.  None of the Issuer, the LLP the Tabulation Agent, the Principal Paying Agent, the Solicitation Agents, the Bond Trustee or the Security Trustee for the Covered Bonds makes any recommendation as to whether or not or how holders of the Covered Bonds should vote in respect of the Covered Bondholder Proposal.

 

The distribution of this announcement and the Consent Solicitation Memorandum in certain jurisdictions may be restricted by law and persons into whose possession this announcement and the Consent Solicitation Memorandum comes are requested to inform themselves about, and to observe, any such restrictions.