gulf international bank b.s.c. - london stock exchange · gulf international bank b.s.c....

BASE PROSPECTUS dated 18 November 2009

Gulf International Bank B.S.C.(incorporated in Bahrain by an Amiri Decree)

U.S.$4,000,000,000Euro Medium Term Note Programme

Under the U.S.$4,000,000,000 Euro Medium Term Note Programme described in this Base Prospectus (the “Programme”), Gulf International BankB.S.C. (the “Issuer” or “GIB” or the “Bank”), subject to compliance with all relevant laws, regulations and directives, may from time to time issue notes(the “Notes”) on the terms set out herein under “Terms and Conditions of the Notes” (the “Conditions”) as amended and/or supplemented by adocument specific to such Notes called final terms (the “Final Terms”).

The Notes may be issued on a continuing basis to one or more of the Dealers specified under “Overview of the Programme” and any additional Dealerappointed under the Programme from time to time by the Issuer (each, a “Dealer” and together, the “Dealers”), which appointment may be for aspecific issue or for the purposes of the Programme. References in this Base Prospectus to the relevant Dealer shall, in the case of an issue of Notesbeing (or intended to be) subscribed by more than one Dealer, be to all Dealers agreeing to subscribe such Notes.

Investing in Notes issued under the Programme involves certain risks. The principal risk factors that may affect the ability of the Issuer to fulfil itsobligations under the Notes are discussed under “Risk Factors” below.

This Base Prospectus has been approved by the United Kingdom Financial Services Authority (the “FSA”), which is the United Kingdom competentauthority for the purposes of Directive 2003/71/EC (the “Prospectus Directive”) and relevant implementing measures in the United Kingdom, as abase prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in the United Kingdom for the purpose ofgiving information with regard to the issue of Notes under the Programme during the period of twelve months after the date hereof. Applications havebeen made for such Notes to be admitted during the period of twelve months after the date hereof to listing on the Official List of the FSA and to theLondon Stock Exchange plc (the “London Stock Exchange”) for such Notes to be admitted to trading on London Stock Exchange’s regulated market.The London Stock Exchange’s regulated market is a regulated market for the purposes of the Markets in Financial Instruments Directive (Directive2004/39/EC). The Programme also permits Notes to be issued on the basis that they will not be admitted to listing, trading and/or quotation by anycompetent authority, stock exchange and/or quotation system or to be admitted to listing, trading and/or quotation by such other or furthercompetent authorities, stock exchanges and/or quotation systems as may be agreed with the Issuer.

Notes may be issued in bearer form or registered form (respectively, “Bearer Notes” and “Registered Notes”). Each Tranche (as defined herein) ofBearer Notes will initially be in the form of either a temporary global note in bearer form (“Temporary Global Note”) or a permanent global note inbearer form (“Permanent Global Note”), in each case as specified in the relevant Final Terms. Each Temporary Global Note or, as the case may be,Permanent Global Note (each a “Global Note”) will be deposited on or around the relevant issue date with a depositary or a common depositary forEuroclear Bank S.A./N.V. (“Euroclear”) and/or Clearstream Banking, société anonyme, Luxembourg (“Clearstream, Luxembourg”) and/or any otherrelevant clearing system. Each Temporary Global Note will be exchangeable for a Permanent Global Note or, if so specified in the relevant Final Terms,for Bearer Notes in definitive form (“Definitive Notes”) in accordance with its terms. Each Permanent Global Note will be exchangeable for DefinitiveNotes in accordance with its terms. Each Tranche of Registered Notes will be in the form of either individual Note Certificates in registered form(“Individual Note Certificates”) or a global Note in registered form (a “Global Registered Note”), in each case as specified in the relevant Final Terms.Each Global Registered Note will be deposited on or around the relevant issue date with a depositary or a common depositary for Euroclear and/orClearstream, Luxembourg and/or any other relevant clearing system and registered in the name of a nominee for such depositary and will beexchangeable for Individual Note Certificates in accordance with its terms.

The Notes have not been and will not be registered under the United States Securities Act of 1933 (as amended) (the “Securities Act”) and BearerNotes are subject to U.S. tax law requirements. Subject to certain exceptions, Notes may not be offered, sold or delivered within the United States orto U.S. persons (see “Subscription and Sale”).

Tranches of Notes may be rated or unrated. Where a Tranche of Notes is rated, the applicable rating(s) will be specified in the relevant Final Terms. Arating is not a recommendation to buy, sell or hold notes and may be subject to suspension, reduction or withdrawal at any time by the assigning ratingorganisation. Each rating should be evaluated independently of any other rating.

Arranger

Barclays CapitalDealers

Barclays Capital BNP PARIBASCALYON Crédit Agricole CIB Citi

Deutsche Bank GIB Financial ServicesHSBC J.P. Morgan

Mizuho International plc Nomura InternationalStandard Chartered Bank The Royal Bank of Scotland plc

UBS Investment Bank

Important Notices

This Base Prospectus comprises a base prospectus for the purposes of Article 5.4 of the ProspectusDirective.

The Board of Directors and the management of the Issuer accept responsibility for the informationcontained in this Base Prospectus. To the best of the knowledge and belief of the Board of Directors andthe management of the Issuer (who have taken all reasonable care to ensure that such is the case), theinformation contained in this Base Prospectus is in accordance with the facts and does not omit anythinglikely to affect the import or reliability of such information.

Each Tranche of Notes will be issued on the terms set out herein under “Terms and Conditions of theNotes” as amended and/or supplemented by the relevant Final Terms. This Base Prospectus must be readand construed together with any amendments or supplements hereto and with any informationincorporated by reference herein (see “Information Incorporated by Reference”) and, in relation to anyTranche of Notes, must be read and construed together with the relevant Final Terms.

Copies of Final Terms will be available from the registered office of the Issuer and the specified office setout below of the Fiscal Agent (as defined below) save that, if the relevant Notes are neither admitted totrading on a regulated market in the European Economic Area nor offered in the European Economic Areain circumstances where a prospectus is required to be published under the Prospectus Directive, theapplicable Final Terms will only be obtainable by a Noteholder holding one or more Notes and suchNoteholder must produce evidence satisfactory to the Issuer or, as the case may be, the Fiscal Agent asto its holding of such Notes and identity.

No person has been authorised to give any information or to make any representation not contained inor not consistent with this Base Prospectus or any other document entered into in relation to theProgramme or any information supplied by the Issuer or such other information as is in the public domainand, if given or made, such information or representation should not be relied upon as having beenauthorised by the Issuer or any Dealer.

Neither the Dealers nor any of their respective affiliates have authorised the whole or any part of this BaseProspectus and none of them makes any representation or warranty or accepts any responsibility as tothe accuracy or completeness of the information contained in this Base Prospectus. Neither the deliveryof this Base Prospectus or any Final Terms nor the offering, sale or delivery of any Note shall, in anycircumstances, create any implication that the information contained in this Base Prospectus is truesubsequent to the date hereof or the date upon which this Base Prospectus has been most recentlyamended or supplemented or that there has been no adverse change, or any event reasonably likely toinvolve any adverse change, in the prospects or financial or trading position of the Issuer since the datethereof or, if later, the date upon which this Base Prospectus has been most recently amended orsupplemented or that any other information supplied in connection with the Programme is correct at anytime subsequent to the date on which it is supplied or, if different, the date indicated in the documentcontaining the same. The Dealers expressly do not undertake to review the financial condition or affairsof the Issuer during the life of the Programme or to advise any investor in the Notes of any informationcoming to their attention.

The Central Bank of Bahrain assumes no responsibility for the accuracy and completeness of thestatements and information contained in this Base Prospectus and expressly disclaims any liabilitywhatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents ofthis Base Prospectus.

The distribution of this Base Prospectus and any Final Terms and the offering, sale and delivery of theNotes in certain jurisdictions may be restricted by law. Persons into whose possession this BaseProspectus or any Final Terms comes are required by the Issuer and the Dealers to inform themselvesabout and to observe any such restrictions. For a description of certain restrictions on offers, sales anddeliveries of Notes and on the distribution of this Base Prospectus or any Final Terms and other offeringmaterial relating to the Notes, see “Subscription and Sale”.

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In the case of any Notes which are to be (1) offered to the public in a Member State of the EuropeanEconomic Area in circumstances which would otherwise require the publication of a prospectus underthe Prospectus Directive or (2) admitted to trading on a regulated market within the European EconomicArea, the minimum specified denomination shall be EUR 50,000 (or, if the Notes are denominated in acurrency other than euro, the equivalent amount in such currency).

Neither this Base Prospectus nor any Final Terms constitutes an offer or an invitation to subscribe for orpurchase any Notes and should not be considered as a recommendation by the Issuer, the Dealers or anyof them that any recipient of this Base Prospectus or any Final Terms should subscribe for or purchaseany Notes. Each recipient of this Base Prospectus or any Final Terms shall be taken to have made its owninvestigation and appraisal of the condition (financial or otherwise) of the Issuer.

The maximum aggregate principal amount of Notes outstanding at any one time under the Programmewill not exceed U.S.$4,000,000,000 (and for this purpose, any Notes denominated in another currencyshall be translated into U.S. dollars at the date of the agreement to issue such Notes (calculated inaccordance with the provisions of the Dealer Agreement as defined under “Subscription and Sale”). Themaximum aggregate principal amount of Notes which may be outstanding at any one time under theProgramme may be increased from time to time, subject to compliance with the relevant provisions ofthe Dealer Agreement.

In this Base Prospectus, unless otherwise specified, references to a “Member State” are references to aMember State of the European Economic Area, references herein to “U.S.$”, “U.S. dollars” and “UnitedStates dollars” are to the lawful currency of the United States of America, reference to “Sterling”, “GBP”or “£” are to the lawful currency of the United Kingdom, references to “EUR”, “euro” and “d” are to thesingle currency introduced at the start of the third stage of European Economic and Monetary Unionpursuant to the Treaty establishing the European Community, as amended, references to “BD” and“Bahrain dinars” are to the lawful currency of the Kingdom of Bahrain, references to “SAR” and “Saudiriyals” are to the lawful currency of the Kingdom of Saudi Arabia and references to “MM” are tomillion/1,000,000. All references to “Bahrain” are to the Kingdom of Bahrain.

Certain amounts (including percentages) included in this Base Prospectus may have been subject torounding adjustments. Accordingly, figures shown as totals in certain tables may not be an exactarithmetic aggregation of the figures to which they relate.

In connection with the issue of any Tranche of Notes, the Dealer or Dealers (if any) named as theStabilising Manager(s) (or persons acting on behalf of any Stabilising Manager(s)) in the applicableFinal Terms may over allot Notes or effect transactions with a view to supporting the market price ofthe Notes at a level higher than that which might otherwise prevail. However, there is no assurance thatthe Stabilising Manager(s) (or persons acting on behalf of a Stabilising Manager) will undertakestabilisation action. Any stabilisation action may begin on or after the date on which adequate publicdisclosure of the terms of the offer of the relevant Tranche of Notes is made and, if begun, may beended at any time, but it must end no later than the earlier of 30 days after the issue date of therelevant Tranche of Notes and 60 days after the date of the allotment of the relevant Tranche of Notes.Any stabilisation action or over-allotment must be conducted by the Stabilising Manager(s) (orpersons acting on behalf of the Stabilising Manager(s)) in accordance with all applicable laws andrules.

Kingdom of Saudi Arabia Notice

This Base Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons asare permitted under the Offers of Securities Regulations issued by the Capital Market Authority of theKingdom of Saudi Arabia (the “Capital Market Authority”).

The Capital Market Authority does not make any representations as to the accuracy or completenessof this Base Prospectus, and expressly disclaims any liability whatsoever for any loss arising from, orincurred in reliance upon, any part of this Base Prospectus. Prospective purchasers of Notes issuedunder the Programme should conduct their own due diligence on the accuracy of the informationrelating to the Notes. If a prospective purchaser does not understand the contents of this BaseProspectus he or she should consult an authorised financial adviser.

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Table of Contents

Page

Overview of the Programme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Information Incorporated by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Forms of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Terms and Conditions of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22Form of Final Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49Summary of Provisions Relating to the Notes while in Global Form . . . . . . . . . . . . . . . . . . . . . . . . . . 61Description of the Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86Subscription and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 902009 Third Quarter Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

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Overview of the Programme

The following overview must be read as an introduction to this Base Prospectus and any decision to investin any Notes should be based on a consideration of this Base Prospectus as a whole, including anydocuments incorporated by reference. This general overview does not purport to be complete and is takenfrom, and is qualified in its entirety by, the remainder of this Base Prospectus and, in relation to the termsand conditions of any particular Tranche of Notes, the applicable Final Terms.

Words and expressions defined in the “Terms and Conditions of the Notes” below or elsewhere in this BaseProspectus have the same meanings in this overview.

Issuer: Gulf International Bank B.S.C.

Description: Euro Medium Term Note Programme

Risk Factors: There are certain factors that may affect the Issuer’s ability tofulfil its obligations under the Notes issued under the Programme.These are set out under “Risk Factors” and include market riskarising from adverse changes in market conditions such asinterest rate fluctuations, equity risk, liquidity risk, foreign-exchange risk and other exposures and operational risk. Inaddition, there are certain factors which are material for thepurpose of assessing the market risks associated with the Notesissued under the Programme. These are set out under “RiskFactors” and include the fact that the Notes may not be a suitableinvestment for all investors, certain risks relating to the structureof a particular series of Notes and certain market risks.

Arranger: Barclays Bank PLC

Dealers: Barclays Bank PLCBNP ParibasCALYONCitigroup Global Markets LimitedDeutsche Bank AG, London BranchGIB Financial Services L.L.C.HSBC Bank plcJ.P. Morgan Securities Ltd.Mizuho International plcNomura International plcStandard Chartered BankThe Royal Bank of Scotland plcUBS Limited

and any other Dealer appointed from time to time by the Issuereither generally in respect of the Programme or in relation to aparticular Tranche of Notes.

Fiscal Agent: Deutsche Bank AG, London Branch

Registrar: Deutsche Bank Luxembourg S.A.

Listing and Trading: Application has been made for Notes to be admitted during theperiod of twelve months after the date hereof to listing on theOfficial List of the FSA and to trading on the London StockExchange’s regulated market.

Notes may be listed or admitted to trading, as the case may be, onother or further stock exchanges or markets agreed between theIssuer and the relevant Dealer in relation to the Series. Notes

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which are neither listed nor admitted to trading on any marketmay also be issued.

The applicable Final Terms will state whether or not the relevantNotes are to be listed and/or admitted to trading and, if so, onwhich stock exchanges or markets.

Clearing Systems: Euroclear and/or Clearstream, Luxembourg and/or, in relation toany Tranche of Notes, any other clearing system as may bespecified in the relevant Final Terms.

Initial Programme Amount: Up to U.S.$4,000,000,000 (or its equivalent in other currencies)aggregate principal amount of Notes outstanding at any onetime. The Issuer may increase the amount of the Programme inaccordance with the provisions of the Dealer Agreement.

Issuance in Series: Notes will be issued in Series. Each Series may comprise one ormore Tranches issued on different issue dates. The Notes of eachSeries will all be subject to identical terms, except that the issuedate and the amount of the first payment of interest may bedifferent in respect of different Tranches. The Notes of eachTranche will be subject to identical terms in all respects save thata Tranche may comprise Notes of different denominations.

Forms of Notes: Notes may be issued in bearer form or in registered form.Registered Notes will not be exchangeable for Bearer Notes andvice versa.

Each Tranche of Bearer Notes will initially be in the form of eithera Temporary Global Note or a Permanent Global Note, in eachcase as specified in the relevant Final Terms. Each Global Note willbe deposited on or around the relevant issue date with adepositary or a common depositary for Euroclear and/orClearstream, Luxembourg and/or any other relevant clearingsystem. Each Temporary Global Note will be exchangeable for aPermanent Global Note or, if so specified in the relevant FinalTerms, for Definitive Notes. If the TEFRA D Rules are specified inthe relevant Final Terms as applicable, certification as to non-U.S.beneficial ownership will be a condition precedent to anyexchange of an interest in a Temporary Global Note or receipt ofany payment of interest in respect of a Temporary Global Note.Each Permanent Global Note will be exchangeable for DefinitiveNotes only in accordance with its terms. Definitive Notes will, ifinterest-bearing, have Coupons attached and, if appropriate, oneor more Talons for further Coupons.

Each Tranche of Registered Notes will be in the form of eitherIndividual Note Certificates or a Global Registered Note, in eachcase as specified in the relevant Final Terms. Each GlobalRegistered Note will be deposited on or around the relevant issuedate with a depositary or a common depositary for Euroclearand/or Clearstream, Luxembourg and/or any other relevantclearing system and registered in the name of a nominee for suchdepositary and will be exchangeable for Individual NoteCertificates in accordance with its terms.

Currencies: Notes may be denominated in any currency agreed between theIssuer and the relevant Dealer(s), subject to compliance with allapplicable legal and/or regulatory and/or central bank

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requirements. Payments in respect of Notes may, subject to suchcompliance, be made in and/or linked to, any currency orcurrencies other than the currency in which such Notes aredenominated.

Status of the Senior Notes: The Senior Notes will constitute direct, unconditional,unsubordinated and (subject to the provisions of Condition 5(Negative Pledge)) unsecured obligations of the Issuer and willrank pari passu among themselves and (save for certainobligations required to be preferred by law) equally with all otherunsecured obligations (other than subordinated obligations, ifany) of the Issuer from time to time outstanding.

The Subordinated Notes will constitute subordinated obligationsof the Issuer, ranking pari passu without any preference amongstthemselves. In the event of the forced liquidation of the Issuer forthe purposes of Article 156 of The Central Bank of Bahrain andFinancial Institutions Law, Decree No. 64/2006 (“forcedliquidation”), the payment obligations of the Issuer under theSubordinated Notes shall rank after unsubordinated andunsecured creditors of the Issuer but pari passu with all othersubordinated obligations of the Issuer that are not expressed torank junior or senior to the Subordinated Notes and in priority tothe claims of all shareholders of the Issuer (including the holdersof all preference shares of the Issuer, if any).

Issue Price: Notes may be issued at any price and either on a fully or partlypaid basis, as specified in the relevant Final Terms. The price andamount of Notes to be issued under the Programme will bedetermined by the Issuer and the relevant Dealer(s) at the time ofissue in accordance with prevailing market conditions.

Maturities: Notes may have any maturity as agreed between the Issuer andthe relevant Dealer(s), subject, in relation to specific currencies, tocompliance with all applicable legal and/or regulatory and/orcentral bank requirements.

Redemption: Notes may be redeemable at par or at such other RedemptionAmount (detailed in a formula, index or otherwise) as may bespecified in the relevant Final Terms. Notes may also beredeemable in two or more instalments on such dates and in suchmanner as may be specified in the relevant Final Terms.

Optional Redemption: Notes may be redeemed before their stated maturity at the optionof the Issuer (either in whole or in part) and/or the Noteholdersto the extent (if at all) specified in the relevant Final Terms.

Tax Redemption: Except as described in “Optional Redemption” above, earlyredemption will only be permitted for tax reasons as described inCondition 10(b) (Redemption and Purchase – Redemption for taxreasons).

Interest: Notes may be interest-bearing or non-interest bearing. Interest(if any) may accrue at a fixed rate or a floating rate or othervariable rate or be index-linked and the method of calculatinginterest may vary between the issue date and the maturity date ofthe relevant Series.

Status of theSubordinated Notes:

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Denominations: Notes will be issued in such denominations as may be specified inthe relevant Final Terms, subject to compliance with all applicablelegal and/or regulatory and/or central bank requirementsprovided, however, that in the case of any Notes which are to be(1) offered to the public in a Member State of the EuropeanEconomic Area in circumstances which would otherwise requirethe publication of a prospectus under the Prospectus Directive or(2) admitted to trading on a regulated market within theEuropean Economic Area, the minimum specified denominationshall be EUR 50,000 (or, if the Notes are denominated in acurrency other than euro, the equivalent amount in suchcurrency).

Negative Pledge: The Senior Notes will have the benefit of a negative pledge asdescribed in Condition 5 (Negative Pledge). The SubordinatedNotes will not have the benefit of any negative pledge.

Cross Default: The Senior Notes will have the benefit of a cross default asdescribed in Condition 14.1 (Events of Default for Senior Notes).The Subordinated Notes will not have the benefit of any crossdefault.

Taxation: All payments in respect of Notes will be made free and clear ofwithholding taxes of the Kingdom of Bahrain, unless thewithholding is required by law. In that event, the Issuer will(subject as provided in Condition 13 (Taxation)) pay suchadditional amounts as will result in the Noteholders receivingsuch amounts as they would have received in respect of suchNotes had no such withholding been required.

Governing Law: English law, except for Condition 4(b) (Status of the SubordinatedNotes), which will be governed by, and construed in accordancewith, Bahraini law.

Enforcement: In the case of any Global Notes and Global Registered Notes,individual investors’ rights against the Issuer will be governed bya Deed of Covenant dated 18 November 2009, a copy of which willbe available for inspection at the specified office of the FiscalAgent.

Ratings: The rating of certain Series of Notes to be issued under theProgramme may be specified in the applicable Final Terms. Arating is not a recommendation to buy, sell or hold Notes any maybe subject to suspension, reduction or withdrawal at any time bythe assigning rating agency.

Selling Restrictions: For a description of certain restrictions on offers, sales anddeliveries of Notes and on the distribution of offering material inthe United States of America, the European Economic Area, theUnited Kingdom, the Kingdom of Bahrain, and Japan, see“Subscription and Sale”.

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Risk Factors

In making their investment decision, potential investors should carefully consider the merits and risks of aninvestment in Notes issued under the Programme. In particular, investors should be aware of the following:

The Issuer believes that the following factors may affect its ability to fulfil its obligations under Notes issuedunder the Programme. All of these factors are contingencies that may or may not occur and the Issuer isnot in a position to express a view on the likelihood of any such contingency occurring.

Factors which the Issuer believes may be material for the purpose of assessing the market risks associatedwith Notes issued under the Programme are also described below.

The Issuer believes that the factors described below represent the principal risks inherent in investing inNotes issued under the Programme, but the Issuer may be unable to pay interest, principal or otheramounts on, or in connection with, any Notes for other reasons, which may not be considered significantrisks by the Issuer based on information currently available to it or which it may not be currently able toanticipate, and the Issuer does not represent that the statements below regarding the risks of holding anyNotes are exhaustive. Prospective investors should also read the detailed information set out elsewhere inthis Base Prospectus and reach their own views prior to making any investment decision.

Factors that may affect the Issuer’s ability to fulfil its obligations under the NotesEconomic, Political and Related ConsiderationsThe Issuer is a merchant bank, headquartered in Bahrain, which is primarily and increasingly focused onthe financial markets of the Gulf Cooperation Council (“GCC”) countries comprising Bahrain, Kuwait,Oman, Qatar, Saudi Arabia and the United Arab Emirates. A significant part of the Issuer’s assets arelocated within the GCC countries, including a majority of its loan assets (95 per cent. as at 30 June 2009),and the Issuer derives a majority of its deposits, 60.2 per cent., from those countries. Investors shouldnote that the Issuer’s business and financial performance could be adversely affected by political,economic and related developments both within and outside the GCC and Middle East region, because ofthe inter-dependence inherent in the global financial markets.

The financial services industry generally prospers in periods of economic growth and stable geopoliticalconditions and benefits from capital markets that are transparent, liquid and buoyant and experiencepositive investor sentiment. A severe financial crisis, such as that seen in 2007, 2008 and 2009 wherevarious sectors of the global credit markets have experienced very challenging conditions, typically hasan adverse effect on the financial services industry, including the Issuer.

Each of the Issuer’s businesses is affected by general economic and geopolitical conditions, which cancause the Issuer’s financial performance to fluctuate from year to year, as well as on a long-term basis.The second half of 2007 was dominated by heavy turbulence in the global credit and liquidity markets;this market turbulence has continued in 2008 and 2009 and may continue beyond 2009. The Issuer’sbusiness and financial performance could continue to be adversely affected by such turbulence.

During 2008 and the first half of 2009, the Issuer has noted a significant deterioration in the reportedfinancial condition of a number of GCC companies and this has, in the opinion of the Issuer, impactednegatively on the environment for wholesale commercial lending in the GCC.

Risks Related to the Issuer’s BusinessIn the course of its business activities, the Issuer is exposed to a variety of risks, the most significant ofwhich are credit risk, market risk, operational risk and liquidity risk. Whilst the Issuer believes it hasimplemented the appropriate policies, systems and processes to control and mitigate these risks,investors should note that any failure to adequately control these risks could be greater than anticipatedwhich could result in adverse effects on the Issuer’s financial condition and reputation. A detaileddescription of the Issuer’s risk management processes is included on page •.

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The profitability of the Issuer’s businesses could be adversely affected, as was the case in the first half of2009, by a worsening of general economic conditions in the GCC (macro economic conditions in the GCChave historically been heavily influenced by the price of oil, although recent adverse conditions forcorporate lending in the GCC have been influenced more by the continuing global credit crisis and itsnegative impact on, amongst other things, the ability of regional businesses to raise new finance or torefinance existing debt and asset prices), the wider Middle East, globally or in certain individual marketssuch as the United States or Saudi Arabia. Factors such as interest rates, inflation, investor sentiment, theavailability and cost of credit, the liquidity of the global financial markets and the level and volatility ofequity prices could significantly affect the activity level of customers. For example:

(i) a deepening or continuance of the current economic downturn or significantly higher interest ratescould adversely affect the credit quality of the Issuer’s on-balance sheet and off-balance sheet assetsby increasing the risk that a greater number of the Issuer’s customers would be unable to meet theirobligations;

(ii) a deepening or continuance of the current market downturn or worsening of the economy couldcause the Issuer to incur further mark to market losses in its trading portfolios;

(iii) a deepening or continuance of the current market downturn could reduce the fees the Issuer earnsfor managing assets. For example, a higher level of domestic or foreign interest rates or a downturnin trading markets could affect the flows of assets under management; and

(iv) a deepening or continuance of the current market downturn would be likely to lead to a decline inthe volume of transactions that the Issuer executes for its customers and, therefore, lead to a declinein the income it receives from fees and commissions and interest.

During 2008 and the first half of 2009, there has been increasing evidence that a number of companiesthat are located in the GCC and which have been active borrowers over recent years are facing financialdifficulties, especially those that are highly leveraged and those that rely to a significant extent onuncommitted and/or short term debt financing and those with exposure to certain industry sectors. Forexample, property developers in certain GCC countries, most notably in the United Arab Emirates, havebeen negatively impacted by falling property prices and a lack of market confidence in the real estatemarket. Declines in asset values in the GCC and globally have negatively impacted on the results of GCC– based investment companies. These difficulties are reflected in the increase in the level of provisions forloan impairment (both specific and non-specific) made by the Issuer with regard to its loan portfolioduring the first six months of 2009, as well as the increase in the level of its non-performing loans. In theevent that market conditions for corporate lending in the GCC were to deteriorate further, this couldresult in the level of the Issuer’s non-performing loans and provisioning for loan impairment increasingfurther, which would negatively impact on the Issuer’s future profitability.

The Issuer reviews its overall medium term business strategy on a regular basis; in the event that thebusiness strategy of the Issuer were to be changed as a result of any such review, there can be noassurance that such revised strategy would be successful.

Notwithstanding the increasing focus of the Issuer on the financial markets in the GCC, the Issuerundertakes some business in countries (including Iran, Syria and Sudan) and with entities which arecurrently subject to certain economic and political sanctions. The Issuer takes care to ensure that itcomplies with all such sanctions to the extent that they are applicable to it. Such sanctions may beexpanded in the future, which may cause certain business activities carried on by the Issuer in a particularcountry or with a particular entity to cease and may result in certain subsisting transactions being unableto be completed or performed, which, in either case, may negatively impact on the Issuer.

Credit RiskRisks arising from adverse changes in the credit quality and recoverability of loans, securities andamounts due from counterparties are inherent in a wide range of the Issuer’s businesses, principally in itslending and investment activities. Credit risks could arise from a deterioration in the credit quality ofspecific borrowers, issuers and counterparties of the Issuer, or from a general deterioration in local orglobal economic conditions, or from systemic risks within the financial system, which could affect the

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recoverability and value of the Issuer’s assets and require an increase in the Issuer’s provisions for theimpairment of loans, securities and other credit exposures.

The Issuer is exposed to many different industries and counterparties in the normal course of its business,but its exposure to counterparties in the financial services industry is particularly significant. Thisexposure can arise through trading, lending, deposit-taking, clearance and settlement and many otheractivities and relationships. These counterparties include brokers and dealers, commercial banks,investment banks, mutual and hedge funds, and other institutional clients. Many of these relationshipsexpose the Issuer to credit risk in the event of default of a counterparty or client. In addition, the Issuer’scredit risk may be exacerbated when the collateral it holds cannot be realised upon or is liquidated atprices not sufficient to recover the full amount of the loan or derivative exposure it is due. Many of thehedging and other risk management strategies utilised by the Issuer also involve transactions withfinancial services counterparties. The weakness of these counterparties may impair the effectiveness ofthe Issuer’s hedging and other risk management strategies. The Issuer has already witnessed increase inpayment delays, requests for restructuring and requests for waivers of covenants.

A deepening or continuance of the current economic downturn could adversely affect the credit qualityof the Issuer’s assets.

Liquidity RiskLiquidity risk could arise from the inability of the Issuer to anticipate and provide for unforeseendecreases or changes in funding sources which could have adverse consequences on the Issuer’s abilityto meet its obligations when they fall due. The Issuer obtains all of its funding from wholesale sources,chiefly from institutional depositors in the GCC (including governments and central banks (46.8 per cent.of total funding excluding equity as at 30 June 2009), the inter-bank market (31 per cent. of total fundingexcluding equity as at 30 June 2009, repos (3.2 per cent. of total funding excluding equity as at 30th June2009) and term financing facilities (19 per cent. of total funding excluding equity as at 30 June 2009)).

As has been well publicised recently, credit markets and residential mortgage markets have experiencedsevere dislocations and liquidity disruptions. As a result of current market conditions, financialinstitutions world-wide have been operating, and continue to operate, in a difficult environmentcharacterised by liquidity constraints, and such constraints may have an adverse impact on the financialposition or profitability of the Issuer or the Group.

Concentration RiskConsistent with other GCC banks, the Issuer has a high concentration of loans provided within the GCCregion (excluding Saudi Arabia) (56 per cent. as at 30 June 2009) and Saudi Arabia (39 per cent. as at 30June 2009) and has a large exposure to the (i) energy, oil and petrochemical industries and (ii) financialservices sector, which both collectively account for a large portion of total customer loans. If the GCC orSaudi Arabia experiences adverse economic or geopolitical conditions then this may affect the repaymentability of a large proportion of the Issuer’s loan customers.

Market RiskThe most significant market risks to which the Issuer is exposed are interest rate, credit spread, and bondand equity price risks associated with its trading, investment and asset and liability managementactivities. Changes in interest rate levels and spreads may affect the interest rate margin realised betweenthe Issuer’s lending and investment activities and its borrowing costs, and the values of assets that aresensitive to interest rate and spread changes. Changes in foreign exchange rates may affect the values ofassets and liabilities denominated in foreign currencies and the income from foreign exchange dealing.Changes in bond and equity prices may affect the values of the Issuer’s investment and trading portfolios.Such changes could negatively impact on the Issuer’s financial performance and business operations.

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Operational RiskOperational risk and losses can result from fraud, errors by employees, failure to document transactionsproperly or to obtain proper internal authorisation, failure to comply with regulatory requirements andconduct of business rules, systems and equipment failures, natural disasters or the failure of externalsystems (for example, those of the Issuer’s counterparties or vendors). Although the Issuer hasimplemented risk controls and loss mitigation strategies, and substantial resources are devoted todeveloping efficient procedures and to staff training, it is not possible to entirely eliminate each of theoperational risks. Notwithstanding anything in this risk factor, this risk factor should not be taken asimplying that either the Issuer or the Group will be unable to comply with its obligations as a companywith securities admitted to the Official List or as a supervised firm regulated by the FSA.

Other Factors Related to the IssuerImpact of Regulatory ChangesThe Issuer is subject to the laws, regulations, administrative actions and policies of Bahrain, the Kingdomof Saudi Arabia, the United Kingdom, the United States of America, and each other jurisdiction in whichit operates. These regulations may limit the Issuer’s activities and changes in supervision and regulation,in particular in Bahrain and the Kingdom of Saudi Arabia, could materially affect the Issuer’s business, theproducts or services offered, the value of its assets, and its financial condition. Although the Issuer worksclosely with its regulators and continually monitors the situation, future changes in regulation, fiscal orother policies cannot be predicted and are beyond the control of the Issuer.

UK Banking Act 2009Actions may be taken by the Treasury and the Bank of England under Part 1 of the Banking Act 2009 (the“Act”) pursuant to the special resolution regime instituted to address a situation where a UK bank (a UKinstitution with permission to accept deposits under the Financial Services and Markets Act 2000) (the“UK Bank”)) is likely to encounter financial difficulties. The Act gives the Treasury and the Bank ofEngland certain wide powers to support the implementation of the stabilisation measures contemplatedby the Act.

These powers, which apply regardless of any contractual restrictions, include (a) power to issue sharetransfer instruments and/or orders pursuant to which there may be transferred to a commercialpurchaser or a nominee of or a company wholly owned by the Treasury, all or some of the Securitiesissued by a UK Bank or its UK holding company. The share transfers can extend to a wide range of“Securities” including shares and bonds issued by the UK Bank or its UK holding company and warrantsfor such and also deferred shares or private membership rights in a building society and (b) the power totransfer all or some of the property, rights and liabilities of a UK Bank or a building society to acommercial purchaser or Bank of England entity. In certain circumstances encumbrances and trusts canbe over-reached or varied. Power also exists to override any default provisions in transactions otherwiseaffected by these powers. Compensation may be payable in the context of share transfer instrumentsand/or orders and property transfer instruments. In the case of share transfers any compensation will bepaid to the person who held the security immediately before the transfer, who may not be theencumbrancer. The Act also includes provisions relating to two new insolvency procedures which may becommenced by specified UK authorities (bank insolvency and bank administration).

The Act also vests power in the Bank of England (amongst other things) to override, vary or imposecontractual obligations between the UK Bank or its UK holding company and its former groupundertakings (as defined in the Act), for reasonable consideration, in order to enable any transferee orsuccessor bank of the UK Bank, or its UK holding company, to operate effectively. There is also power forthe Treasury to amend the law (save for a provision made by or under the Act) by order for the purposeof enabling it to use the special resolution regime powers effectively, potentially with retrospective effect.

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Ownership and Legal StatusThe Public Investment Fund of the Kingdom of Saudi Arabia (the “PIF”) currently owns 29.652 per cent.of GIB’s issued share capital and the Saudi Arabian Monetary Agency (“SAMA”) (the central bank of SaudiArabia) currently owns 67.574 per cent. of GIB’s issued share capital. Hence, Saudi Arabia, through the PIFand SAMA, owns 97.226 per cent. of the issued share capital of GIB. The Governments of Bahrain, Kuwait,Oman, Qatar and the United Arab Emirates, directly or indirectly, own the remaining shares in GIB inunequal percentages. When the Issuer faced significant losses in the past, its shareholders providedfurther capital and other support to the Issuer. There can be no assurance however that the Issuer’sshareholders will continue to maintain the existing levels of their stake in the Issuer or provide furthercapital to the Issuer, and if they do not, the Issuer’s business and/or financial condition may be adverselyaffected.

The Issuer is incorporated in Bahrain by an Amiri Decree and is registered as a conventional wholesalebank with the Central Bank of Bahrain (the “CBB”), which is the country’s central bank. Although the CBBregulates the Issuer as closely as it does locally incorporated banks, it does not act as lender of last resortto the Issuer and, consequently, the Issuer will be wholly reliant upon its shareholders for externalfinancial support in the event of need.

Enforcing foreign judgments in BahrainUnder the Conditions of the Notes, at the option of a Noteholder, the courts of England have exclusivejurisdiction to settle any dispute arising from the Notes. Enforcement of an English judgment in otherjurisdictions will be subject to the laws and procedures of those jurisdictions. There is currently noreciprocity in enforcement of judgments between England and Bahrain.

Factors that are considered material for the purpose of assessing the market risks associated with theNotesThe Notes may not be a suitable investment for all investorsEach potential investor in the Notes must determine the suitability of that investment in light of its owncircumstances. In particular, each potential investor should:

(i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the meritsand risks of investing in the Notes and the information contained or incorporated by reference inthis Prospectus or any applicable supplement;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the Notes and the impact the Notes will have on itsoverall investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes,including where the currency for principal or interest payments is different from the potentialinvestor’s currency;

(iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevantfinancial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bear theapplicable risks.

Some Notes are complex financial instruments. Sophisticated institutional investors generally do notpurchase complex financial instruments as stand-alone investments. They purchase complex financialinstruments as a way to reduce risk or enhance yield with an understood, measured, appropriate additionof risk to their overall portfolios. A potential investor should not invest in Notes which are complexfinancial instruments unless it has the expertise (either alone or with a financial adviser) to evaluate howthe Notes will perform under changing conditions, the resulting effects on the value of the Notes and theimpact this investment will have on the potential investor’s overall investment portfolio.

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Risks related to the structure of a particular issue of NotesA wide range of Notes may be issued under the Programme. A number of these Notes may have featureswhich contain particular risks for potential investors. Set out below is a description of the most commonsuch features:

Notes subject to optional redemption by the IssuerAn optional redemption feature of Notes is likely to limit their market value. During any period when theIssuer may elect to redeem Notes, the market value of those Notes generally will not rise substantiallyabove the price at which they can be redeemed. This also may be true prior to any redemption period.

The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rateon the Notes. At those times, an investor generally would not be able to reinvest the redemption proceedsat an effective interest rate as high as the interest rate on the Notes being redeemed and may only be ableto do so at a significantly lower rate. Potential investors should consider reinvestment risk in light of otherinvestments available at that time.

Index Linked Notes and Dual Currency NotesThe Issuer may issue Notes with principal or interest determined by reference to an index or formula, tochanges in the prices of securities or commodities, to movements in currency exchange rates or otherfactors (each, a “Relevant Factor”). In addition, the Issuer may issue Notes with principal or interestpayable in one or more currencies which may be different from the currency in which the Notes aredenominated. Potential investors should be aware that:

(i) the market price of such Notes may be volatile;

(ii) they may receive no interest;

(iii) payment of principal or interest may occur at a different time or in a different currency thanexpected;

(iv) they may lose all or a substantial portion of their principal;

(v) a Relevant Factor may be subject to significant fluctuations that may not correlate with changes ininterest rates, currencies or other indices;

(vi) if a Relevant Factor is applied to Notes in conjunction with a multiplier greater than one or containssome other leverage factor, the effect of changes in the Relevant Factor on principal or interestpayable likely will be magnified; and

(vii) the timing of changes in a Relevant Factor may affect the actual yield to investors, even if theaverage level is consistent with their expectations. In general, the earlier the change in the RelevantFactor, the greater the effect on yield.

The historical experience of an index should not be viewed as an indication of the future performance ofsuch index during the term of any Index Linked Notes. Accordingly, each potential investor should consultits own financial and legal advisers about the risk entailed in an investment in any Index Linked Notes andthe suitability of such Notes in light of its particular circumstances.

Partly-paid NotesThe Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to payany subsequent instalment could result in an investor losing all of his investment.

Variable rate Notes with a multiplier or other leverage factorNotes with variable interest rates can be volatile investments. If they are structured to include multipliersor other leverage factors, or caps or floors, or any combination of those features or other similar relatedfeatures, their market values may be even more volatile than those for securities that do not include thosefeatures.

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Inverse Floating Rate NotesInverse Floating Rate Notes have an interest rate equal to a fixed rate minus a rate based upon a referencerate such as LIBOR. The market values of those Notes typically are more volatile than market values ofother conventional floating rate debt securities based on the same reference rate (and with otherwisecomparable terms). Inverse Floating Rate Notes are more volatile because an increase in the referencerate not only decreases the interest rate of the Notes, but may also reflect an increase in prevailinginterest rates, which further adversely affects the market value of these Notes.

Fixed/Floating Rate NotesFixed/Floating Rate Notes may bear interest at a rate that converts from a fixed rate to a floating rate, orfrom a floating rate to a fixed rate. Where the Issuer has the right to effect such a conversion, this willaffect the secondary market and the market value of the Notes since the Issuer may be expected toconvert the rate when it is likely to produce a lower overall cost of borrowing. If the Issuer converts froma fixed rate to a floating rate in such circumstances, the spread on the Fixed/Floating Rate Notes may beless favourable than then prevailing spreads on comparable Floating Rate Notes tied to the samereference rate. In addition, the new floating rate at any time may be lower than the rates on other Notes.If the Issuer converts from a floating rate to a fixed rate in such circumstances, the fixed rate may be lowerthan the prevailing rates on its other Notes.

Notes issued at a substantial discount or premiumThe market values of securities issued at a substantial discount or premium from their principal amounttend to fluctuate more in relation to general changes in interest rates than do prices for conventionalinterest-bearing securities. Generally, the longer the remaining term of the securities, the greater theprice volatility as compared to conventional interest-bearing securities with comparable maturities.

The Issuer’s obligations under the Subordinated Notes are subordinatedThe Issuer’s obligations under Subordinated Notes will be unsecured and subordinated and will rankjunior in priority of payment to unsubordinated liabilities (including all deposits) and Senior Notes in theevent of the forced liquidation of the Issuer. Although the Subordinated Notes may pay a higher rate ofinterest than comparable notes which are not subordinated, there is a risk that an investor in theSubordinated Notes will lose all or some of his investment should the Issuer become insolvent.

See Condition 4 (Status of the Notes) of the Terms and Conditions of the Notes for a full description ofsubordination and payment obligations of the Issuer under Subordinated Notes.

Risks related to Notes generallySet out below is a brief description of certain risks relating to the Notes generally:

ModificationsThe conditions of the Notes contain provisions for calling meetings of Noteholders to consider mattersaffecting their interests generally. These provisions are governed by Bahraini law and permit definedmajorities to bind all Noteholders including Noteholders who did not attend and vote at the relevantmeeting and Noteholders who voted in a manner contrary to the majority.

Change of lawThe conditions of the Notes are (subject to limited exceptions) based on English law in effect as at thedate of this Base Prospectus. No assurance can be given as to the impact of any possible judicial decisionor change to English law or administrative practice after the date of this Base Prospectus.

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Notes where denominations involve integral multiples: definitive NotesIn relation to any issue of Notes which has denominations consisting of a minimum SpecifiedDenomination plus one or more higher integral multiples of another smaller amount, 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 amount whichis less than the minimum Specified Denomination in his account with the relevant clearing system at therelevant time may not receive a definitive Note in respect of such holding (should definitive Notes beprinted) and would need to purchase a principal amount of Notes such that its holding amounts to aSpecified Denomination.

If definitive Notes are issued, holders should be aware that definitive Notes which have a denominationthat is not an integral multiple of the minimum Specified Denomination may be illiquid and difficult totrade.

Risks related to the market generallySet out below is a brief description of the principal market risks, including liquidity risk and exchange raterisk:

The secondary market generallyNotes may have no established trading market when issued, and one may never develop. If a market doesdevelop, it may not be very liquid. Therefore, investors may not be able to sell their Notes easily or atprices that will provide them with a yield comparable to similar investments that have a developedsecondary market. This is particularly the case for Notes that are especially sensitive to interest rate,currency or market risks, are designed for specific investment objectives or strategies or have beenstructured to meet the investment requirements of limited categories of investors. These types of Notesgenerally would have a more limited secondary market and more price volatility than conventional debtsecurities. Illiquidity may have a severely adverse effect on the market value of the Notes.

In addition, Noteholders should be aware of the prevailing and widely reported global credit marketconditions (which continue at the date of this Base Prospectus), whereby there is a general lack ofliquidity in the secondary market for instruments similar to the Notes. Such lack of liquidity may result ininvestors suffering losses on the Notes in secondary resales even if there is no decline in the business orfinancial performance of the Issuer. The Issuer cannot predict which of these circumstances will changeand whether, if and when they do change, there will be a more liquid market for the Notes andinstruments similar to the Notes at that time.

Exchange rate risks and exchange controlsThe Issuer will pay principal and interest on the Notes in the Specified Currency. This presents certainrisks relating to currency conversions if an investor’s financial activities are denominated principally in acurrency or currency unit (the “Investor’s Currency”) other than the Specified Currency. These includethe risk that exchange rates may significantly change (including changes due to devaluation of theSpecified Currency or revaluation of the Investor’s Currency) and the risk that authorities with jurisdictionover the Investor’s Currency may impose or modify exchange controls. An appreciation in the value of theInvestor’s Currency relative to the Specified Currency would decrease (1) the Investor’s Currency-equivalent yield on the Notes, (2) the Investor’s Currency-equivalent value of the principal payable on theNotes and (3) the Investor’s Currency-equivalent market value of the Notes.

Government and monetary authorities may impose (as some have done in the past) exchange controlsthat could adversely affect an applicable exchange rate. As a result, investors may receive less interest orprincipal than expected, or no interest or principal.

Credit ratings may not reflect all risksOne or more independent credit rating agencies may assign credit ratings to the Notes. The ratings maynot reflect the potential impact of all risks related to subordination, structure, market, additional factors

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discussed above, and other factors that may affect the value of the Notes. A credit rating is not arecommendation to buy, sell or hold securities and may be revised or withdrawn by the assigning ratingagency at any time.

Legal investment considerations may restrict certain investmentsThe investment activities of certain investors are subject to legal investment laws and regulations, orreview or regulation by certain authorities. Each potential investor should consult its legal advisers todetermine whether and to what extent (1) the Notes are legal investments for it, (2) the Notes can beused as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledgeof Notes. Financial institutions should consult their legal advisers or the appropriate regulators todetermine the appropriate treatment of Notes under any applicable risk-based capital or similar rules.

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Information Incorporated by Reference

The following information shall be deemed to be incorporated in, and to form part of, this BaseProspectus:

(1) the audited consolidated financial statements (including the auditors’ report thereon and notesthereto) of the Issuer in respect of the year ended 31 December 2007;

(2) the audited consolidated financial statements (including the auditors’ report thereon and notesthereto) of the Issuer in respect of the year ended 31 December 2008; and

(3) the unaudited interim condensed consolidated financial statements of the Issuer for the six monthsperiod ended 30 June 2009.

Copies of the documents specified above as containing information incorporated by reference in this BaseProspectus may be inspected, free of charge, at the London branch of the Issuer situated at OneKnightsbridge, London SW1X 7XS, United Kingdom. Any information contained in any of the documentsspecified above which is not incorporated by reference in this Base Prospectus is either not relevant toinvestors or is covered elsewhere in this Base Prospectus.

Following the publication of this Base Prospectus a supplement may be prepared by the Issuer andapproved by the UK Listing Authority in accordance with Article 16 of the Prospectus Directive andrelevant implementing measures in the United Kingdom. Statements contained in any such supplement(or contained in any document incorporated by reference therein) shall, to the extent applicable (whetherexpressly, by implication or otherwise), be deemed to modify or supersede statements contained in thisBase Prospectus or in a document which is incorporated by reference in this Base Prospectus. Anystatement so modified or superseded shall not, except as so modified or superseded, constitute a part ofthis Base Prospectus.

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Forms of the Notes

Bearer NotesEach Tranche of Bearer Notes will initially be issued in the form of either a Temporary Global Note,without interest coupons, or a Permanent Global Note, without interest coupons, in each case as specifiedin the relevant Final Terms. Each Global Note will be deposited on or around the issue date of the relevantTranche of the Notes with a depositary or a common depositary for Euroclear and/or Clearstream,Luxembourg and/or any other relevant clearing system.

In the case of each Tranche of Bearer Notes, the relevant Final Terms will also specify whether UnitedStates Treasury Regulation §1.163-5(c)(2)(i)(C) (the “TEFRA C Rules”) or United States TreasuryRegulation §1.163-5(c)(2)(i)(D) (the “TEFRA D Rules”) is applicable in relation to the Notes or, if theNotes do not have a maturity of more than 365 days, that neither the TEFRA C Rules nor the TEFRA DRules are applicable.

Temporary Global Note exchangeable for Permanent Global NoteIf the relevant Final Terms specifies the form of Notes as being “Temporary Global Note exchangeable fora Permanent Global Note”, then the Notes will initially be in the form of a Temporary Global Note whichwill be exchangeable, in whole or in part, for interests in a Permanent Global Note, without interestcoupons, not earlier than 40 days after the issue date of the relevant Tranche of the Notes uponcertification as to non-U.S. beneficial ownership. No payments will be made under the Temporary GlobalNote unless exchange for interests in the Permanent Global Note is improperly withheld or refused. Inaddition, interest payments in respect of the Notes cannot be collected without such certification ofnon-U.S. beneficial ownership.

Whenever any interest in a Temporary Global Note is to be exchanged for an interest in a PermanentGlobal Note, the Issuer shall procure (in the case of first exchange) the prompt delivery (free of charge tothe bearer) of such Permanent Global Note to the bearer of the Temporary Global Note or (in the case ofany subsequent exchange) an increase in the principal amount of the Permanent Global Note inaccordance with its terms against:

(i) presentation and (in the case of final exchange) surrender of the Temporary Global Note to or to theorder of the Fiscal Agent; and

(ii) receipt by the Fiscal Agent of a certificate or certificates of non-U.S. beneficial ownership,

within seven days of the bearer requesting such exchange.

The principal amount of the Permanent Global Note shall be equal to the aggregate of the principalamounts specified in the certificates of non-U.S. beneficial ownership; provided, however, that in nocircumstances shall the principal amount of the Permanent Global Note exceed the initial principalamount of the Temporary Global Note.

The Permanent Global Note will be exchangeable in whole, but not in part, for Definitive Notes:

(i) on the expiry of such period of notice as may be specified in the relevant Final Terms; or

(ii) at any time, if so specified in the relevant Final Terms; or

(iii) if the relevant Final Terms specifies “in the limited circumstances described in the Permanent GlobalNote”, then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system isclosed for business for a continuous period of 14 days (other than by reason of legal holidays) orannounces an intention permanently to cease business or (b) any of the circumstances described inCondition 14 (Events of Default) occurs.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure theprompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and withCoupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principal

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amount equal to the principal amount of the Permanent Global Note to the bearer of the PermanentGlobal Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agentwithin 30 days of the bearer requesting such exchange.

Temporary Global Note exchangeable for Definitive NotesIf the relevant Final Terms specifies the form of Notes as being “Temporary Global Note exchangeablefor Definitive Notes” and also specifies that the TEFRA C Rules are applicable or that neither theTEFRA C Rules or the TEFRA D Rules are applicable, then the Notes will initially be issued in the form ofa Temporary Global Note which will be exchangeable, in whole but not in part, for Definitive Notes notearlier than 40 days after the issue date of the relevant Tranche of the Notes.

If the relevant Final Terms specifies the form of Notes as being “Temporary Global Note exchangeable forDefinitive Notes” and also specifies that the TEFRA D Rules are applicable, then the Notes will initially beissued in the form of a Temporary Global Note which will be exchangeable, in whole or in part, forDefinitive Notes not earlier than 40 days after the issue date of the relevant Tranche of the Notes uponcertification as to non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot becollected without such certification of non-U.S. beneficial ownership.

Whenever the Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure theprompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and withCoupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principalamount equal to the principal amount of the Temporary Global Note to the bearer of the TemporaryGlobal Note against the surrender of the Temporary Global Note to or to the order of the Fiscal Agentwithin 30 days of the bearer requesting such exchange.

Permanent Global Note exchangeable for Definitive NotesIf the relevant Final Terms specifies the form of Notes as being “Permanent Global Note exchangeable forDefinitive Notes”, then the Notes will initially be issued in the form of a Permanent Global Note which willbe exchangeable in whole, but not in part, for Definitive Notes:



(iii) if the relevant Final Terms specifies “in the limited circumstances described in the Permanent GlobalNote”, then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system isclosed for business for a continuous period of 14 days (other than by reason of legal holidays) orannounces an intention permanently to cease business or (b) any of the circumstances described inCondition 14 (Events of Default) occurs.

Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure theprompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and withCoupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principalamount equal to the principal amount of the Permanent Global Note to the bearer of the PermanentGlobal Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agentwithin 30 days of the bearer requesting such exchange.

Terms and Conditions applicable to the NotesThe terms and conditions applicable to any Definitive Note will be endorsed on that Note and will consistof the terms and conditions set out under “Terms and Conditions of the Notes” below and the provisionsof the relevant Final Terms which supplement, amend and/or replace those terms and conditions.

The terms and conditions applicable to any Note in global form will differ from those terms andconditions which would apply to the Note were it in definitive form to the extent described under“Summary of Provisions Relating to the Notes while in Global Form” below.

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Legend concerning United States personsIn the case of any Tranche of Bearer Notes having a maturity of more than 365 days, the Notes in globalform, the Notes in definitive form and any Coupons and Talons appertaining thereto will bear a legend tothe following effect:

“Any United States person who holds this obligation will be subject to limitations under the UnitedStates income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of theInternal Revenue Code.”

Registered NotesEach Tranche of Registered Notes will be in the form of either Individual Note Certificates or a GlobalRegistered Note, in each case as specified in the relevant Final Terms. Each Global Registered Note will bedeposited on or around the relevant issue date with a depositary or a common depositary for Euroclearand/or Clearstream, Luxembourg and/or any other relevant clearing system and registered in the nameof a nominee for such depositary and will be exchangeable for Individual Note Certificates in accordancewith its terms.

If the relevant Final Terms specifies the form of Notes as being “Individual Note Certificates”, then theNotes will at all times be in the form of Individual Note Certificates issued to each Noteholder in respectof its respective holdings.

If the relevant Final Terms specifies the form of Notes as being “Global Registered Note exchangeable forIndividual Note Certificates”, then the Notes will initially be in the form of a Global Registered Note whichwill be exchangeable in whole, but not in part, for Individual Note Certificates:



(iii) if the relevant Final Terms specifies “in the limited circumstances described in the Global RegisteredNote “, then if (a) Euroclear or Clearstream, Luxembourg or any other relevant clearing system isclosed for business for a continuous period of 14 days (other than by reason of legal holidays) orannounces an intention permanently to cease business or (b) any of the circumstances described inCondition 14 (Events of Default) occurs.

Whenever the Global Registered Note is to be exchanged for Individual Note Certificates, the Issuer shallprocure that Individual Note Certificates will be issued in an aggregate principal amount equal to theprincipal amount of the Global Registered Note within five business days of the delivery, by or on behalfof the registered holder of the Global Registered Note to the Registrar of such information as is requiredto complete and deliver such Individual Note Certificates (including, without limitation, the names andaddresses of the persons in whose names the Individual Note Certificates are to be registered and theprincipal amount of each such person’s holding) against the surrender of the Global Registered Note atthe specified office of the Registrar.

Such exchange will be effected in accordance with the provisions of the Agency Agreement and theregulations concerning the transfer and registration of Notes scheduled thereto and, in particular, shallbe effected without charge to any holder, but against such indemnity as the Registrar may require inrespect of any tax or other duty of whatsoever nature which may be levied or imposed in connection withsuch exchange.

Terms and Conditions applicable to the NotesThe terms and conditions applicable to any Individual Note Certificate will be endorsed on that IndividualNote Certificate and will consist of the terms and conditions set out under “Terms and Conditions of theNotes” below and the provisions of the relevant Final Terms which supplement, amend and/or replacethose terms and conditions.

The terms and conditions applicable to any Global Registered Note will differ from those terms andconditions which would apply to the Note were it in definitive form to the extent described under“Summary of Provisions Relating to the Notes while in Global Form” below.

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Terms and Conditions of the Notes

The following is the text of the terms and conditions which, as supplemented, amended and/or replaced bythe relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. Theterms and conditions applicable to any Note in global form will differ from those terms and conditionswhich would apply to the Note were it in definitive form to the extent described under “Summary ofProvisions Relating to the Notes while in Global Form” below.

1. Introduction(a) Programme

Gulf International Bank B.S.C. (the “Issuer”) has established a Euro Medium Term Note Programme(the “Programme”) for the issuance of up to U.S.$4,000,000,000 in aggregate principal amount ofnotes (the “Notes”).

(b) Final TermsNotes issued under the Programme are issued in series (each a “Series”) and each Series maycomprise one or more tranches (each a “Tranche”) of Notes. Each Tranche is the subject of a finalterms (the “Final Terms”) which supplements these terms and conditions (the “Conditions”). Theterms and conditions applicable to any particular Tranche of Notes are these Conditions assupplemented, amended and/or replaced by the relevant Final Terms. In the event of anyinconsistency between these Conditions and the relevant Final Terms, the relevant Final Terms shallprevail.

(c) Agency AgreementThe Notes are the subject of a fiscal and paying agency agreement dated 18 November 2009 (the“Agency Agreement”) between the Issuer, Deutsche Bank AG, London Branch as fiscal agent (the“Fiscal Agent”, which expression includes any successor fiscal agent appointed from time to time inconnection with the Notes), Deutsche Bank Luxembourg S.A. as registrar (the “Registrar”, whichexpression includes any successor registrar appointed from time to time in connection with theNotes), the paying agents named therein (together with the Fiscal Agent, the “Paying Agents”,which expression includes any successor or additional paying agents appointed from time to timein connection with the Notes) and the transfer agents named therein (together with the Registrar,the “Transfer Agents”, which expression includes any successor or additional transfer agentsappointed from time to time in connection with the Notes). In these Conditions references to the“Agents” are to the Paying Agents and the Transfer Agents and any reference to an “Agent” is toany one of them.

(d) Deed of CovenantThe Notes may be issued in bearer form (“Bearer Notes”), or in registered form (“RegisteredNotes”). Registered Notes are constituted by a deed of covenant dated 18 November 2009 (the“Deed of Covenant”) entered into by the Issuer.

(e) The NotesAll subsequent references in these Conditions to “Notes” are to the Notes which are the subject ofthe relevant Final Terms. Copies of the relevant Final Terms are available for viewing athttp://www.londonstockexchange.com/en-gb/pricenews/marketnews/and the London branch ofthe Issuer situated at One Knightsbridge, London SW1X 7XS, United Kingdom.

(f ) SummariesCertain provisions of these Conditions are summaries of the Agency Agreement and the Deed ofCovenant and are subject to their detailed provisions. Noteholders and the holders of the related

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interest coupons, if any, (the “Couponholders” and the “Coupons”, respectively) are bound by, andare deemed to have notice of, all the provisions of the Agency Agreement and the Deed of Covenantapplicable to them. Copies of the Agency Agreement and the Deed of Covenant are available forinspection by Noteholders during normal business hours at the Specified Offices of each of theAgents, the initial Specified Offices of which are set out below.

2. Interpretation(a) Definitions

In these Conditions the following expressions have the following meanings:

“Accrual Yield” has the meaning given in the relevant Final Terms;

“Additional Business Centre(s)” means the city or cities specified as such in the relevant FinalTerms;

“Additional Financial Centre(s)” means the city or cities specified as such in the relevant FinalTerms;

“Assets” means in relation to any Person, all or any part of its business, undertaking, property,assets, revenues (including any right to receive revenues) and uncalled capital, wherever situated;

“Business Day” means:

(i) in relation to any sum payable in euro, a TARGET Settlement Day and a day on whichcommercial banks and foreign exchange markets settle payments generally in each (if any)Additional Business Centre; and

(ii) in relation to any sum payable in a currency other than euro, a day on which commercial banksand foreign exchange markets settle payments in the Principal Financial Centre of the relevantcurrency and in each (if any) Additional Business Centre;

“Business Day Convention”, in relation to any particular date, has the meaning given in the relevantFinal Terms and, if so specified in the relevant Final Terms, may have different meanings in relationto different dates and, in this context, the following expressions shall have the following meanings:

(i) “Following Business Day Convention” means that the relevant date shall be postponed to thefirst following day that is a Business Day;

(ii) “Modified Following Business Day Convention” or “Modified Business Day Convention”means that the relevant date shall be postponed to the first following day that is a Business Dayunless that day falls in the next calendar month in which case that date will be the firstpreceding day that is a Business Day;

(iii) “Preceding Business Day Convention” means that the relevant date shall be brought forwardto the first preceding day that is a Business Day;

(iv) “FRN Convention”, “Floating Rate Convention” or “Eurodollar Convention” means that eachrelevant date shall be the date which numerically corresponds to the preceding such date inthe calendar month which is the number of months specified in the relevant Final Terms as theSpecified Period after the calendar month in which the preceding such date occurred provided,however, that:

(A) if there is no such numerically corresponding day in the calendar month in which anysuch date should occur, then such date will be the last day which is a Business Day in thatcalendar month;

(B) if any such date would otherwise fall on a day which is not a Business Day, then such datewill be the first following day which is a Business Day unless that day falls in the nextcalendar month, in which case it will be the first preceding day which is a Business Day;and

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(C) if the preceding such date occurred on the last day in a calendar month which was aBusiness Day, then all subsequent such dates will be the last day which is a Business Dayin the calendar month which is the specified number of months after the calendar monthin which the preceding such date occurred; and

(v) “No Adjustment” means that the relevant date shall not be adjusted in accordance with anyBusiness Day Convention;

“Calculation Agent” means the Fiscal Agent or such other Person specified in the relevant FinalTerms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/orsuch other amount(s) as may be specified in the relevant Final Terms;

“Calculation Amount” has the meaning given in the relevant Final Terms;

“Controlled” means where that one Person is controlled by another that that other (whether by theownership of share capital, the possession of voting power, contract or otherwise) has the power toappoint and/or remove all or the majority of the members of the Board of Directors or othergoverning body of that Person or otherwise controls or has the power to control the affairs andpolicies of that Person;

“Coupon Sheet” means, in respect of a Note, a coupon sheet relating to the Note;

“Day Count Fraction” means, in respect of the calculation of an amount for any period of time (the“Calculation Period”), such day count fraction as may be specified in these Conditions or therelevant Final Terms and:

(i) if “Actual/Actual (ICMA)” is so specified, means:

(a) where the Calculation Period is equal to or shorter than the Regular Period during whichit falls, the actual number of days in the Calculation Period divided by the product of(1) the actual number of days in such Regular Period and (2) the number of RegularPeriods in any year; and

(b) where the Calculation Period is longer than one Regular Period, the sum of:

(A) the actual number of days in such Calculation Period falling in the Regular Period inwhich it begins divided by the product of (1) the actual number of days in suchRegular Period and (2) the number of Regular Periods in any year; and

(B) the actual number of days in such Calculation Period falling in the next RegularPeriod divided by the product of (a) the actual number of days in such RegularPeriod and (2) the number of Regular Periods in any year;

(ii) if “Actual/Actual (ISDA)” or “Actual/Actual” is so specified, means the actual number of daysin the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in aleap year, the sum of (A) the actual number of days in that portion of the Calculation Periodfalling in a leap year divided by 366 and (B) the actual number of days in that portion of theCalculation Period falling in a non-leap year divided by 365);

(iii) if “Actual/365 (Fixed)” is so specified, means the actual number of days in the CalculationPeriod divided by 365;

(iv) if “Actual/365 (Sterling)” is so specified, the actual number of days in the Calculation Perioddivided by 365 or, in the case of an Interest Payment Date falling in a leap year, 366;

(v) if “Actual/360” is so specified, means the actual number of days in the Calculation Perioddivided by 360;

(vi) if “30/360”, “360/360” or “Bond Basis” is so specified, the number of days in the CalculationPeriod divided by 360, calculated on a formula basis as follows

Day Count Fraction = [360 ⎤ (Y2–Y1)] + [30 x (M2–M1)] + (D2–D1)

360

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where:

“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y2” is the year, expressed as a number, in which the day immediately following the last dayincluded in the Calculation Period falls;

“M1” is the calendar month, expressed as a number, in which the first day of the CalculationPeriod falls;

“M2” is the calendar month, expressed as number, in which the day immediately following thelast day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless suchnumber would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day included inthe Calculation Period, unless such number would be 31 and D1 is greater than 29, in whichcase D2 will be 30”;

(vii) if “30E/360” or “Eurobond Basis” is so specified, the number of days in the Calculation Perioddivided by 360, calculated on a formula basis as follows:


360where:




“M2” is the calendar month, expressed as a number, in which the day immediately followingthe last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless suchnumber would be 31, in which case D1 will be 30; and

“D2” is the calendar day, expressed as a number, immediately following the last day included inthe Calculation Period, unless such number would be 31, in which case D2 will be 30; and

(viii) if “30E/360 (ISDA)” is so specified, the number of days in the Calculation Period divided by360, calculated on a formula basis as follows:


360where:




“M2” is the calendar month, expressed as a number, in which the day immediately followingthe last day included in the Calculation Period falls;

“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) thatday is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and

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“D2” is the calendar day, expressed as a number, immediately following the last day included inthe Calculation Period, unless (i) that day is the last day of February but not the Maturity Dateor (ii) such number would be 31, in which case D2 will be 30,

provided, however, that in each such case the number of days in the Calculation Period is calculatedfrom and including the first day of the Calculation Period to but excluding the last day of theCalculation Period;

“Early Redemption Amount (Tax)” means, in respect of any Note, its principal amount or suchother amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Early Termination Amount” means, in respect of any Note, its principal amount or such otheramount as may be specified in, or determined in accordance with, these Conditions or the relevantFinal Terms;

“Extraordinary Resolution” has the meaning given in the Agency Agreement;

“Final Redemption Amount” means, in respect of any Note, its principal amount or such otheramount as may be specified in, or determined in accordance with, the relevant Final Terms;

“First Interest Payment Date” means the date specified in the relevant Final Terms;

“Fixed Coupon Amount” has the meaning given in the relevant Final Terms;

“Group” means the Issuer and its Subsidiaries taken as a whole at any given time;

“Guarantee” means, in relation to any Indebtedness of any Person, any obligation of another Personto pay such Indebtedness including (without limitation):

(i) any obligation to purchase such Indebtedness;

(ii) any obligation to lend money, to purchase or subscribe shares or other securities or topurchase assets or services in order to provide funds for the payment of such Indebtedness;

(iii) any indemnity against the consequences of a default in the payment of such Indebtedness; and

(iv) any other agreement to be responsible for such Indebtedness;

“Holder”, in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form, Denomination,Title and Transfer – Title to Bearer Notes) and, in the case of Registered Notes, has the meaning givenin Condition 3(d) (Form, Denomination, Title and Transfer – Title to Registered Notes);

“IFRS” means International Financial Reporting Standards as published by the InternationalAccounting Standards Board (as amended, supplemented or re-issued from time to time);

“Indebtedness” means any indebtedness of any Person for money borrowed or raised including(without limitation) any indebtedness for or in respect of:

(i) amounts raised by acceptance under any acceptance credit facility;

(ii) amounts raised under any note purchase facility;

(iii) the amount of any liability in respect of leases or hire purchase contracts which would, inaccordance with applicable law and generally accepted accounting principles, be treated asfinance or capital leases;

(iv) the amount of any liability in respect of any purchase price for assets or services the paymentof which is deferred for a period in excess of 60 days; and

(v) amounts raised under any other transaction (including, without limitation, any forward sale orpurchase agreement) having the commercial effect of a borrowing;

“Interest Amount” means, in relation to a Note and an Interest Period, the amount of interestpayable in respect of that Note for that Interest Period;

“Interest Commencement Date” means the Issue Date of the Notes or such other date as may bespecified as the Interest Commencement Date in the relevant Final Terms;

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“Interest Determination Date” has the meaning given in the relevant Final Terms;

“Interest Payment Date” means the First Interest Payment Date and any date or dates specified assuch in, or determined in accordance with the provisions of, the relevant Final Terms and, if aBusiness Day Convention is specified in the relevant Final Terms:

(i) as the same may be adjusted in accordance with the relevant Business Day Convention; or

(ii) if the Business Day Convention is the FRN Convention, Floating Rate Convention or EurodollarConvention and an interval of a number of calendar months is specified in the relevant FinalTerms as being the Specified Period, each of such dates as may occur in accordance with theFRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Periodof calendar months following the Interest Commencement Date (in the case of the first InterestPayment Date) or the previous Interest Payment Date (in any other case);

“Interest Period” means each period beginning on (and including) the Interest CommencementDate or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;

“ISDA Definitions” means the 2006 ISDA Definitions (as amended and updated as at the date ofissue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms)as published by the International Swaps and Derivatives Association, Inc.);

“Issue Date” has the meaning given in the relevant Final Terms;

“Margin” has the meaning given in the relevant Final Terms;

“Material Subsidiary” means, at any given time, a Subsidiary of the Issuer, which:

(a) has total income representing 15 per cent. or more of the consolidated gross income of theGroup (excluding intra-Group income); or

(b) has total assets representing 15 per cent. or more of the consolidated total assets of the Group,

in each case calculated on a consolidated basis in accordance with IFRS, as consistently applied;

Compliance with the conditions set out in paragraphs (a) and (b) above shall be determined byreference to the latest audited or unaudited consolidated annual or, as the case may be, audited orunaudited consolidated interim financial statements of that Subsidiary and the latest auditedconsolidated annual or, as the case may be, audited or unaudited consolidated interim financialstatements of the Group. A report by two Directors of the Issuer that in their opinion a Subsidiaryof the Issuer is or is not or was or was not at any particular time or through any particular period aSubsidiary shall (in the absence of manifest or proven error) be conclusive and binding on theparties;

“Maturity Date” has the meaning given in the relevant Final Terms;

“Maximum Redemption Amount” has the meaning given in the relevant Final Terms;

“Minimum Redemption Amount” has the meaning given in the relevant Final Terms;

“Noteholder”, in the case of Bearer Notes, has the meaning given in Condition 3(b) (Form,Denomination, Title and Transfer – Title to Bearer Notes) and, in the case of Registered Notes, hasthe meaning given in Condition 3(d) (Form, Denomination, Title and Transfer – Title to RegisteredNotes);

“Optional Redemption Amount (Call)” means, in respect of any Note, its principal amount or suchother amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Optional Redemption Amount (Put)” means, in respect of any Note, its principal amount or suchother amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Optional Redemption Date (Call)” has the meaning given in the relevant Final Terms;

“Optional Redemption Date (Put)” has the meaning given in the relevant Final Terms;

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Participating Member State” means a Member State of the European Communities which adoptsthe euro as its lawful currency in accordance with the Treaty;

“Payment Business Day” means:

(i) if the currency of payment is euro, any day which is:

(A) a day on which banks in the relevant place of presentation are open for presentation andpayment of bearer debt securities and for dealings in foreign currencies; and

(B) in the case of payment by transfer to an account, a TARGET Settlement Day and a day onwhich dealings in foreign currencies may be carried on in each (if any) AdditionalFinancial Centre; or

(ii) if the currency of payment is not euro, any day which is:

(A) a day on which banks in the relevant place of presentation are open for presentation andpayment of bearer debt securities and for dealings in foreign currencies; and

(B) in the case of payment by transfer to an account, a day on which dealings in foreigncurrencies may be carried on in the Principal Financial Centre of the currency of paymentand in each (if any) Additional Financial Centre;

“Permitted Security Interest” means, any Security Interest created by the Issuer or any Subsidiaryover the whole or any part of its present or future assets or revenues where such assets or revenuesare comprised of the following (or are otherwise qualifying collateral for issues of covered bondspursuant to any relevant contractual arrangements and/or specific provisions of the laws of theKingdom of Bahrain relating to covered bonds): (i) mortgage receivables; or (ii) asset-backedsecurities backed by any of the assets under paragraph (i); or (iii) any other assets permitted byBahraini law to collateralise the covered bonds, in each case provided that the creation of suchsecurity interest is solely pursuant to the relevant contractual arrangements effecting an issue ofcovered bonds or, as the case may be, specific provisions of the laws of the Kingdom of Bahrainrelating to covered bonds applicable at the time of creation of such Security Interest, and providedthat the aggregate outstanding principal, capital or nominal amount secured by any such SecurityInterest shall not at any time exceed an amount equal to twenty per cent. of the share capital andreserves of the Issuer as provided in the most recent published audited, consolidated annualaccounts of the Group;

“Person” means any individual, company, corporation, firm, partnership, joint venture, undertaking,association, organisation, trust, state or agency of a state or other entity, whether or not havingseparate legal personality;

“Principal Financial Centre” means, in relation to any currency, the principal financial centre for thatcurrency provided, however, that:

(i) in relation to euro, it means the principal financial centre of such Member State of theEuropean Communities as is selected (in the case of a payment) by the payee or (in the case ofa calculation) by the Calculation Agent; and

(ii) in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to NewZealand dollars, it means either Wellington or Auckland; in each case as is selected (in the caseof a payment) by the payee or (in the case of a calculation) by the Calculation Agent;

“Put Option Notice” means a notice which must be delivered to a Paying Agent by any Noteholderwanting to exercise a right to redeem a Note at the option of the Noteholder;

“Put Option Receipt” means a receipt issued by a Paying Agent to a depositing Noteholder upondeposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeema Note at the option of the Noteholder;

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“Rate of Interest” means the rate or rates (expressed as a percentage per annum) of interest payablein respect of the Notes specified in the relevant Final Terms or calculated or determined inaccordance with the provisions of these Conditions and/or the relevant Final Terms;

“Redemption Amount” means, as appropriate, the Final Redemption Amount, the EarlyRedemption Amount (Tax), the Optional Redemption Amount (Call), the Optional RedemptionAmount (Put), the Early Termination Amount or such other amount in the nature of a redemptionamount as may be specified in, or determined in accordance with the provisions of, the relevant FinalTerms;

“Reference Banks” has the meaning given in the relevant Final Terms or, if none, four major banksselected by the Calculation Agent in the market that is most closely connected with the ReferenceRate;

“Reference Price” has the meaning given in the relevant Final Terms;

“Reference Rate” has the meaning given in the relevant Final Terms;

“Regular Period” means:

(i) in the case of Notes where interest is scheduled to be paid only by means of regular payments,each period from and including the Interest Commencement Date to but excluding the firstInterest Payment Date and each successive period from and including one Interest PaymentDate to but excluding the next Interest Payment Date;

(ii) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paidonly by means of regular payments, each period from and including a Regular Date falling inany year to but excluding the next Regular Date, where “Regular Date” means the day andmonth (but not the year) on which any Interest Payment Date falls; and

(iii) in the case of Notes where, apart from one Interest Period other than the first Interest Period,interest is scheduled to be paid only by means of regular payments, each period from andincluding a Regular Date falling in any year to but excluding the next Regular Date, where“Regular Date” means the day and month (but not the year) on which any Interest PaymentDate falls other than the Interest Payment Date falling at the end of the irregular InterestPeriod.

“Relevant Date” means, in relation to any payment, whichever is the later of (a) the date on whichthe payment in question first becomes due and (b) if the full amount payable has not been receivedin the Principal Financial Centre of the currency of payment by the Fiscal Agent on or prior to suchdue date, the date on which (the full amount having been so received) notice to that effect has beengiven to the Noteholders;

“Relevant Financial Centre” has the meaning given in the relevant Final Terms;

“Relevant Indebtedness” means any Indebtedness which is in the form of or represented by anybond, note, debenture, debenture stock, loan stock, certificate or other instrument which is, or iscapable of being, listed, quoted or traded on any stock exchange or in any securities market(including, without limitation, any over-the-counter market);

“Relevant Screen Page” means the page, section or other part of a particular information service(including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant FinalTerms, or such other page, section or other part as may replace it on that information service orsuch other information service, in each case, as may be nominated by the Person providing orsponsoring the information appearing there for the purpose of displaying rates or prices comparableto the Reference Rate;

“Relevant Time” has the meaning given in the relevant Final Terms;

“Reserved Matter” means any proposal to change any date fixed for payment of principal or interestin respect of the Notes, to reduce the amount of principal or interest payable on any date in respectof the Notes, to alter the method of calculating the amount of any payment in respect of the Notes

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or the date for any such payment, to change the currency of any payment under the Notes or tochange the quorum requirements relating to meetings or the majority required to pass anExtraordinary Resolution;

“Security Interest” means any mortgage, charge, pledge, lien or other security interest including,without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;

“Specified Currency” has the meaning given in the relevant Final Terms;

“Specified Denomination(s)” has the meaning given in the relevant Final Terms;

“Specified Office” has the meaning given in the Agency Agreement;

“Specified Period” has the meaning given in the relevant Final Terms;

“Subsidiary” means, in relation to any Person (its “holding company”) at any particular time, anyother Person which is then Controlled, or more than 50 per cent. of whose issued equity sharecapital (or the like) is then beneficially owned, directly or indirectly, by that Person;

“Talon” means a talon for further Coupons;

“TARGET2” means the Trans-European Automated Real-time Gross Settlement Express Transferpayment system which utilises a single shared platform and which was launched on 19 November2007;

“TARGET Settlement Day” means any day on which TARGET2 is open for the settlement ofpayments in euro;

“Treaty” means the Treaty establishing the European Communities, as amended; and

“Zero Coupon Note” means a Note specified as such in the relevant Final Terms.

(b) InterpretationIn these Conditions:

(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are notapplicable;

(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the time ofissue, references to Coupons shall be deemed to include references to Talons;

(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at the timeof issue, references to Talons are not applicable;

(iv) any reference to principal shall be deemed to include the Redemption Amount, any additionalamounts in respect of principal which may be payable under Condition 13 (Taxation), anypremium payable in respect of a Note and any other amount in the nature of principal payablepursuant to these Conditions;

(v) any reference to interest shall be deemed to include any additional amounts in respect ofinterest which may be payable under Condition 13 (Taxation) and any other amount in thenature of interest payable pursuant to these Conditions;

(vi) references to Notes being “outstanding” shall be construed in accordance with the AgencyAgreement;

(vii) if an expression is stated in Condition 2(a) to have the meaning given in the relevant FinalTerms, but the relevant Final Terms gives no such meaning or specifies that such expression is“not applicable” then such expression is not applicable to the Notes; and

(viii) any reference to the Agency Agreement shall be construed as a reference to the AgencyAgreement as amended and/or supplemented up to and including the Issue Date of the Notes.

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3. Form, Denomination, Title and Transfer(a) Bearer Notes

Bearer Notes are in the Specified Denomination(s) with Coupons and, if specified in the relevantFinal Terms, Talons attached at the time of issue. The Specified Denomination(s) may include aminimum denomination specified in the relevant Final Terms and higher integral multiples of asmaller amount specified in the relevant Final Terms. In the case of a Series of Bearer Notes withmore than one Specified Denomination, Bearer Notes of one Specified Denomination will not beexchangeable for Bearer Notes of another Specified Denomination.

(b) Title to Bearer NotesTitle to Bearer Notes and the Coupons will pass by delivery. In the case of Bearer Notes, “Holder”means the holder of such Bearer Note and “Noteholder” and “Couponholder” shall be construedaccordingly.

(c) Registered NotesRegistered Notes are in the Specified Denomination(s), which may include a minimumdenomination specified in the relevant Final Terms and higher integral multiples of a smalleramount specified in the relevant Final Terms.

(d) Title to Registered NotesThe Registrar will maintain the register in accordance with the provisions of the Agency Agreement.A certificate (each, a “Note Certificate”) will be issued to each Holder of Registered Notes in respectof its registered holding. Each Note Certificate will be numbered serially with an identifying numberwhich will be recorded in the Register. In the case of Registered Notes, “Holder” means the personin whose name such Registered Note is for the time being registered in the Register (or, in the caseof a joint holding, the first named thereof ) and “Noteholder” shall be construed accordingly.

(e) OwnershipThe Holder of any Note or Coupon shall (except as otherwise required by law) be treated as itsabsolute owner for all purposes (whether or not it is overdue and regardless of any notice ofownership, trust or any other interest therein, any writing thereon or, in the case of RegisteredNotes, on the Note Certificate relating thereto (other than the endorsed form of transfer) or anynotice of any previous loss or theft thereof ) and no Person shall be liable for so treating such Holder.No Person shall have any right to enforce any term or condition of any Note under the Contracts(Rights of Third Parties) Act 1999.

(f ) Transfers of Registered NotesSubject to paragraphs (i) (Closed periods) and (j) (Regulations concerning transfers and registration)below, a Registered Note may be transferred upon surrender of the relevant Note Certificate, withthe endorsed form of transfer duly completed, at the Specified Office of the Registrar or any TransferAgent, together with such evidence as the Registrar or (as the case may be) such Transfer Agent mayreasonably require to prove the title of the transferor and the authority of the individuals whohave executed the form of transfer; provided, however, that a Registered Note may not betransferred unless the principal amount of Registered Notes transferred and (where not all of theRegistered Notes held by a Holder are being transferred) the principal amount of the balance ofRegistered Notes not transferred are Specified Denominations. Where not all the Registered Notesrepresented by the surrendered Note Certificate are the subject of the transfer, a new NoteCertificate in respect of the balance of the Registered Notes will be issued to the transferor.

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(g) Registration and delivery of Note CertificatesWithin five business days of the surrender of a Note Certificate in accordance with paragraph (f )(Transfers of Registered Notes) above, the Registrar will register the transfer in question and delivera new Note Certificate of a like principal amount to the Registered Notes transferred to each relevantHolder at its Specified Office or (as the case may be) the Specified Office of any Transfer Agent or(at the request and risk of any such relevant Holder) by uninsured first class mail (airmail if overseas)to the address specified for the purpose by such relevant Holder. In this paragraph, “business day”means a day on which commercial banks are open for general business (including dealings in foreigncurrencies) in the city where the Registrar or (as the case may be) the relevant Transfer Agent hasits Specified Office.

(h) No chargeThe transfer of a Registered Note will be effected without charge by or on behalf of the Issuer or theRegistrar or any Transfer Agent but against such indemnity as the Registrar or (as the case may be)such Transfer Agent may require in respect of any tax or other duty of whatsoever nature which maybe levied or imposed in connection with such transfer.

(i) Closed periodsNoteholders may not require transfers to be registered during the period of 15 days ending on thedue date for any payment of principal or interest in respect of the Registered Notes.

( j) Regulations concerning transfers and registrationAll transfers of Registered Notes and entries on the Register are subject to the detailed regulationsconcerning the transfer of Registered Notes scheduled to the Agency Agreement. The regulationsmay be changed by the Issuer with the prior written approval of the Registrar. A copy of the currentregulations will be mailed (free of charge) by the Registrar to any Noteholder who requests inwriting a copy of such regulations.

4. Status of the Notes(a) Status of the Senior Notes

This Condition 4(a) is applicable to the Notes only if the Notes are specified in the relevant FinalTerms as being Senior Notes.

The Notes constitute direct, unconditional, unsubordinated and (subject to the provisions ofCondition 5 (Negative Pledge) unsecured obligations of the Issuer and rank pari passu amongthemselves and (save for certain obligations required to be preferred by law) equally with all otherunsecured obligations (other than subordinated obligations, if any) of the Issuer from time to timeoutstanding. The Issuer shall execute such instruments and do such acts as may be required underthe laws of the Kingdom of Bahrain to ensure the effectiveness of such ranking following any changein any law or regulation relating thereto which becomes effective on or after the date on whichagreement is reached to issue the first Tranche of the Senior Notes and which requires the Issuer totake such action.

(b) Status of the Subordinated NotesThis Condition 4(b) is applicable to the Notes only if the Notes are specified in the relevant FinalTerms as being Subordinated Notes.

The Notes constitute subordinated obligations of the Issuer and rank pari passu and without anypreference between themselves. In the event of the forced liquidation of the Issuer for the purposesof Article 156 of The Central Bank of Bahrain and Financial Institutions Law, Decree Law No.64/2006 (“forced liquidation”), the payment obligations of the Issuer under the Notes shall rankafter unsubordinated and unsecured creditors of the Issuer but pari passu with all other

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subordinated obligations of the Issuer that are not expressed to rank junior or senior to theSubordinated Notes and in priority to the claims of all shareholders of the Issuer (including theholders of all preference shares of the Issuer). The Issuer shall execute such instruments and do suchacts as may be required by the laws of the Kingdom of Bahrain to ensure the effectiveness of suchranking.

5. Negative Pledge(a) Application

This Condition 5 (Negative Pledge) is applicable to the Notes only if the Notes are specified in therelevant Final Terms as being Senior Notes.

(b) CovenantSo long as any Note remains outstanding, the Issuer shall not, and the Issuer shall procure that noneof its Subsidiaries will, create or permit to subsist any Security Interest upon the whole or any partof its present or future undertaking, assets or revenues (including uncalled capital) to secureany Relevant Indebtedness or Guarantee of Relevant Indebtedness other than a PermittedSecurity Interest without (a) at the same time or prior thereto securing the Notes equally andrateably therewith or (b) providing such other security for the Notes as may be approved by anExtraordinary Resolution of the Noteholders.

6. Fixed Rate Note Provisions(a) Application

This Condition 6 (Fixed Rate Note Provisions) is applicable to the Notes only if the Fixed Rate NoteProvisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interestThe Notes bear interest from the Interest Commencement Date at the Rate of Interest payable inarrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note willcease to bear interest from the due date for final redemption unless, upon due presentation,payment of the Redemption Amount is improperly withheld or refused, in which case it willcontinue to bear interest in accordance with this Condition 6 (as well after as before judgment) untilwhichever is the earlier of (i) the day on which all sums due in respect of such Note up to that dayare received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after theFiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notesup to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Fixed Coupon AmountThe amount of interest payable in respect of each Note for any Interest Period shall be the relevantFixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be therelevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d) Calculation of interest amountThe amount of interest payable in respect of each Note for any period for which a Fixed CouponAmount is not specified shall be calculated by applying the Rate of Interest to the CalculationAmount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figureto the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) andmultiplying such rounded figure by a fraction equal to the Specified Denomination of such Notedivided by the Calculation Amount. For this purpose a “sub-unit” means, in the case of any currencyother than euro, the lowest amount of such currency that is available as legal tender in the countryof such currency and, in the case of euro, means one cent.

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7. Floating Rate Note and Index-Linked Interest Note Provisions(a) Application

This Condition 7 (Floating Rate Note and Index-Linked Interest Note Provisions) is applicable to theNotes only if the Floating Rate Note Provisions or the Index-Linked Interest Note Provisions arespecified in the relevant Final Terms as being applicable.

(b) Accrual of interestThe Notes bear interest from the Interest Commencement Date at the Rate of Interest payable inarrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note willcease to bear interest from the due date for final redemption unless, upon due presentation,payment of the Redemption Amount is improperly withheld or refused, in which case it willcontinue to bear interest in accordance with this Condition (as well after as before judgment) untilwhichever is the earlier of (i) the day on which all sums due in respect of such Note up to that dayare received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after theFiscal Agent has notified the Noteholders that it has received all sums due in respect of the Notesup to such seventh day (except to the extent that there is any subsequent default in payment).

(c) Screen Rate DeterminationIf Screen Rate Determination is specified in the relevant Final Terms as the manner in which theRate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for eachInterest Period will be determined by the Calculation Agent on the following basis:

(i) if the Reference Rate is a composite quotation or customarily supplied by one entity, theCalculation Agent will determine the Reference Rate which appears on the Relevant ScreenPage as of the Relevant Time on the relevant Interest Determination Date;

(ii) in any other case, the Calculation Agent will determine the arithmetic mean of the ReferenceRates which appear on the Relevant Screen Page as of the Relevant Time on the relevantInterest Determination Date;

(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above,fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page isunavailable, the Calculation Agent will:

(A) request the principal Relevant Financial Centre office of each of the Reference Banks toprovide a quotation of the Reference Rate at approximately the Relevant Time on theInterest Determination Date to prime banks in the Relevant Financial Centre interbankmarket in an amount that is representative for a single transaction in that market at thattime; and

(B) determine the arithmetic mean of such quotations; and

(iv) if fewer than two such quotations are provided as requested, the Calculation Agent willdetermine the arithmetic mean of the rates (being the nearest to the Reference Rate, asdetermined by the Calculation Agent) quoted by major banks in the Principal Financial Centreof the Specified Currency, selected by the Calculation Agent, at approximately 11.00 a.m. (localtime in the Principal Financial Centre of the Specified Currency) on the first day of the relevantInterest Period for loans in the Specified Currency to leading European banks for a period equalto the relevant Interest Period and in an amount that is representative for a single transactionin that market at that time,

and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (asthe case may be) the arithmetic mean so determined; provided, however, that if the CalculationAgent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance withthe above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notesduring such Interest Period will be the sum of the Margin and the rate or (as the case may be) thearithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period.

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(d) ISDA DeterminationIf ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) ofInterest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Periodwill be the sum of the Margin and the relevant ISDA Rate where “ISDA Rate” in relation to anyInterest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) thatwould be determined by the Calculation Agent under an interest rate swap transaction ifthe Calculation Agent were acting as Calculation Agent for that interest rate swap transaction underthe terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant FinalTerms;

(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in therelevant Final Terms; and

(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant FloatingRate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first dayof that Interest Period or (B) in any other case, as specified in the relevant Final Terms.

(e) Index-Linked InterestIf the Index-Linked Interest Note Provisions are specified in the relevant Final Terms as beingapplicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determinedin the manner specified in the relevant Final Terms.

(f ) Maximum or Minimum Rate of InterestIf any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Final Terms,then the Rate of Interest shall in no event be greater than the maximum or be less than theminimum so specified.

(g) Calculation of Interest AmountThe Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is tobe determined in relation to each Interest Period, calculate the Interest Amount payable in respectof each Note for such Interest Period. The Interest Amount will be calculated by applying the Rateof Interest for such Interest Period to the Calculation Amount, multiplying the product by therelevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the SpecifiedCurrency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fractionequal to the Specified Denomination of the relevant Note divided by the Calculation Amount. Forthis purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount ofsuch currency that is available as legal tender in the country of such currency and, in the case ofeuro, means one cent.

(h) Calculation of other amountsIf the relevant Final Terms specifies that any other amount is to be calculated by the CalculationAgent, the Calculation Agent will, as soon as practicable after the time or times at which any suchamount is to be determined, calculate the relevant amount. The relevant amount will be calculatedby the Calculation Agent in the manner specified in the relevant Final Terms.

(i) PublicationThe Calculation Agent will cause each Rate of Interest and Interest Amount determined by it,together with the relevant Interest Payment Date, and any other amount(s) required to bedetermined by it together with any relevant payment date(s) to be notified to the Issuer, the PayingAgents and each competent authority, stock exchange and/or quotation system (if any) by whichthe Notes have then been admitted to listing, trading and/or quotation as soon as practicable after

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such determination but (in the case of each Rate of Interest, Interest Amount and Interest PaymentDate) in any event not later than the first day of the relevant Interest Period. Notice thereof shall alsopromptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate anyInterest Amount (on the basis of the foregoing provisions) without notice in the event of anextension or shortening of the relevant Interest Period. If the Calculation Amount is less than theminimum Specified Denomination the Calculation Agent shall not be obliged to publish eachInterest Amount but instead may publish only the Calculation Amount and the Interest Amount inrespect of a Note having the minimum Specified Denomination.

( j) Notifications etcAll notifications, opinions, determinations, certificates, calculations, quotations and decisions given,expressed, made or obtained for the purposes of this Condition by the Calculation Agent will (inthe absence of manifest error) be binding on the Issuer, the Paying Agents, the Noteholders and theCouponholders and (subject as aforesaid) no liability to any such Person will attach to theCalculation Agent in connection with the exercise or non-exercise by it of its powers, duties anddiscretions for such purposes.

8. Zero Coupon Note Provisions(a) Application

This Condition 8 (Zero Coupon Note Provisions) is applicable to the Notes only if the Zero CouponNote Provisions are specified in the relevant Final Terms as being applicable.

(b) Late payment on Zero Coupon NotesIf the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld orrefused, the Redemption Amount shall thereafter be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Priceon the basis of the relevant Day Count Fraction from (and including) the Issue Date to (butexcluding) whichever is the earlier of (i) the day on which all sums due in respect of such Noteup to that day are received by or on behalf of the relevant Noteholder and (ii) the day which isseven days after the Fiscal Agent has notified the Noteholders that it has received all sums duein respect of the Notes up to such seventh day (except to the extent that there is anysubsequent default in payment).

9. Dual Currency Note Provisions(a) Application

This Condition 9 (Dual Currency Note Provisions) is applicable to the Notes only if the Dual CurrencyNote Provisions are specified in the relevant Final Terms as being applicable.

(b) Rate of InterestIf the rate or amount of interest falls to be determined by reference to an exchange rate, the rate oramount of interest payable shall be determined in the manner specified in the relevant Final Terms.

10. Redemption and Purchase(a) Scheduled redemption

Unless previously redeemed, or purchased and cancelled, the Notes will be redeemed at their FinalRedemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments).

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(b) Redemption for tax reasonsThe Notes may be redeemed at the option of the Issuer in whole, but not in part:

(i) at any time (if neither the Floating Rate Note Provisions or the Index-Linked Interest NoteProvisions are specified in the relevant Final Terms as being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate Note Provisions or the Index-Linked InterestNote Provisions are specified in the relevant Final Terms as being applicable),

on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall beirrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to thedate fixed for redemption, if:

(A) the Issuer has or will become obliged to pay additional amounts as provided or referred to inCondition 13 (Taxation) as a result of any change in, or amendment to, the laws or regulationsof the Kingdom of Bahrain or any political subdivision or any authority thereof or thereinhaving power to tax, or any change in the application or official interpretation of such laws orregulations (including a holding by a court of competent jurisdiction), which change oramendment becomes effective on or after the date of issue of the first Tranche of the Notes;and

(B) such obligation cannot be avoided by the Issuer taking reasonable measures available to it,

provided, however, that no such notice of redemption shall be given earlier than:

(1) where the Notes may be redeemed at any time, 90 days prior to the earliest date on which theIssuer would be obliged to pay such additional amounts if a payment in respect of the Noteswere then due; or

(2) where the Notes may be redeemed only on an Interest Payment Date, 60 days prior to theInterest Payment Date occurring immediately before the earliest date on which the Issuerwould be obliged to pay such additional amounts if a payment in respect of the Notes werethen due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shalldeliver to the Fiscal Agent (A) a certificate signed by two directors of the Issuer stating that theIssuer is entitled to effect such redemption and setting forth a statement of facts showing that theconditions precedent to the right of the Issuer so to redeem have occurred of and (B) an opinion ofindependent legal advisers of recognised standing to the effect that the Issuer has or will becomeobliged to pay such additional amounts as a result of such change or amendment. Upon the expiryof any such notice as is referred to in this Condition 10(b), the Issuer shall be bound to redeem theNotes in accordance with this Condition 10(b).

(c) Redemption at the option of the IssuerIf the Call Option is specified in the relevant Final Terms as being applicable, the Notes may beredeemed at the option of the Issuer in whole or, if so specified in the relevant Final Terms, in parton any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on theIssuer’s giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shallbe irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notesspecified in such notice on the relevant Optional Redemption Date (Call) at the OptionalRedemption Amount (Call) plus accrued interest (if any) to such date).

(d) Partial redemptionIf the Notes are to be redeemed in part only on any date in accordance with Condition 10(c)(Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawingof lots in such place as the Fiscal Agent approves and in such manner as the Fiscal Agent considersappropriate, subject to compliance with applicable law, the rules of each competent authority, stockexchange and/or quotation system (if any) by which the Notes have then been admitted to listing,

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trading and/or quotation and the notice to Noteholders referred to in Condition 10(c) (Redemptionat the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If anyMaximum Redemption Amount or Minimum Redemption Amount is specified in the relevant FinalTerms, then the Optional Redemption Amount (Call) shall in no event be greater than the maximumor be less than the minimum so specified.

(e) Redemption at the option of NoteholdersIf the Put Option is specified in the relevant Final Terms as being applicable, the Issuer shall, at theoption of the Holder of any Note redeem such Note on the Optional Redemption Date (Put)specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put)together with interest (if any) accrued to such date. In order to exercise the option contained in thisCondition 10(e), the Holder of a Note must, not less than 30 nor more than 60 days before therelevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together withall unmatured Coupons relating thereto and a duly completed Put Option Notice in the formobtainable from any Paying Agent. The Paying Agent with which a Note is so deposited shall delivera duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with aduly completed Put Option Notice in accordance with this Condition 10(e), may be withdrawn;provided, however, that if, prior to the relevant Optional Redemption Date (Put), any such Notebecomes immediately due and payable or, upon due presentation of any such Note on the relevantOptional Redemption Date (Put), payment of the redemption moneys is improperly withheld orrefused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder atsuch address as may have been given by such Noteholder in the relevant Put Option Notice and shallhold such Note at its Specified Office for collection by the depositing Noteholder against surrenderof the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent inaccordance with this Condition 10(e), the depositor of such Note and not such Paying Agent shallbe deemed to be the Holder of such Note for all purposes. It may be that before a Put Option can beexercised, certain conditions and/or circumstances will need to be satisfied. Where relevant, theprovisions will be set out in the applicable Final Terms.

(f ) No other redemptionThe Issuer shall not be entitled to redeem the Notes otherwise than as provided in paragraphs (a) to(e) above.

(g) Early redemption of Zero Coupon NotesUnless otherwise specified in the relevant Final Terms, the Redemption Amount payable onredemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equalto the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Pricefrom (and including) the Issue Date to (but excluding) the date fixed for redemption or (as thecase may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, thecalculation in respect of the period of less than a full year shall be made on the basis of such DayCount Fraction as may be specified in the Final Terms for the purposes of this Condition 10(g) or, ifnone is so specified, a Day Count Fraction of 30E/360.

(h) PurchaseThe Issuer or any of their its Subsidiaries may at any time purchase Notes in the open market orotherwise and at any price, provided that all unmatured Coupons are purchased therewith.

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(i) CancellationAll Notes so redeemed or purchased by the Issuer or any of its respective Subsidiaries and anyunmatured Coupons attached to or surrendered with them shall be cancelled and may not bereissued or resold.

11. Payments – Bearer NotesThis Condition 11 is only applicable to Bearer Notes.

(a) PrincipalPayments of principal shall be made only against presentation and (provided that payment is madein full) surrender of Bearer Notes at the Specified Office of any Paying Agent outside the UnitedStates by cheque drawn in the currency in which the payment is due on, or by transfer to an accountdenominated in that currency (or, if that currency is euro, any other account to which euro may becredited or transferred) and maintained by the payee with, a bank in the Principal Financial Centreof that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City ofLondon).

(b) InterestPayments of interest shall, subject to paragraph (h) below, be made only against presentation and(provided that payment is made in full) surrender of the appropriate Coupons at the Specified Officeof any Paying Agent outside the United States in the manner described in paragraph (a) above.

(c) Payments in New York CityPayments of principal or interest may be made at the Specified Office of a Paying Agent in New YorkCity if (i) the Issuer has appointed Paying Agents outside the United States with the reasonableexpectation that such Paying Agents will be able to make payment of the full amount of the intereston the Notes in the currency in which the payment is due when due, (ii) payment of the full amountof such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchangecontrols or other similar restrictions and (iii) payment is permitted by applicable United States law.

(d) Payments subject to fiscal lawsAll payments in respect of the Bearer Notes are subject in all cases to any applicable fiscal or otherlaws and regulations in the place of payment, but without prejudice to the provisions of Condition 13(Taxation). No commissions or expenses shall be charged to the Noteholders or Couponholders inrespect of such payments.

(e) Deductions for unmatured CouponsIf the relevant Final Terms specifies that the Fixed Rate Note Provisions are applicable and a BearerNote is presented without all unmatured Coupons relating thereto:

(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of principaldue for payment, a sum equal to the aggregate amount of the missing Coupons will bededucted from the amount of principal due for payment; provided, however, that if the grossamount available for payment is less than the amount of principal due for payment, the sumdeducted will be that proportion of the aggregate amount of such missing Coupons which thegross amount actually available for payment bears to the amount of principal due for payment;

(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal duefor payment:

(A) so many of such missing Coupons shall become void (in inverse order of maturity) as willresult in the aggregate amount of the remainder of such missing Coupons (the “RelevantCoupons”) being equal to the amount of principal due for payment; provided, however,

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that where this sub-paragraph would otherwise require a fraction of a missing Coupon tobecome void, such missing Coupon shall become void in its entirety; and

(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount ofprincipal due for payment) will be deducted from the amount of principal due forpayment; provided, however, that, if the gross amount available for payment is less thanthe amount of principal due for payment, the sum deducted will be that proportion of theaggregate amount of the Relevant Coupons (or, as the case may be, the amount ofprincipal due for payment) which the gross amount actually available for payment bearsto the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) aboveagainst presentation and (provided that payment is made in full) surrender of the relevant missingCoupons.

(f ) Unmatured Coupons voidIf the relevant Final Terms specifies that this Condition 11(f ) is applicable or that the Floating RateNote Provisions or the Index-Linked Interest Note Provisions are applicable, on the due date for finalredemption of any Note or early redemption in whole of such Note pursuant to Condition 10(b)(Redemption for tax reasons), Condition 10(e) (Redemption at the option of Noteholders), Condition10(c) (Redemption at the option of the Issuer) or Condition 14 (Events of Default), all unmaturedCoupons relating thereto (whether or not still attached) shall become void and no payment will bemade in respect thereof.

(g) Payments on business daysIf the due date for payment of any amount in respect of any Bearer Note or Coupon is not a PaymentBusiness Day in the place of presentation, the Holder shall not be entitled to payment in such placeof the amount due until the next succeeding Payment Business Day in such place and shall not beentitled to any further interest or other payment in respect of any such delay.

(h) Payments other than in respect of matured CouponsPayments of interest other than in respect of matured Coupons shall be made only againstpresentation of the relevant Bearer Notes at the Specified Office of any Paying Agent outside theUnited States (or in New York City if permitted by paragraph (c) above).

(i) Partial paymentsIf a Paying Agent makes a partial payment in respect of any Bearer Note or Coupon presented to itfor payment, such Paying Agent will endorse thereon a statement indicating the amount and dateof such payment.

( j) Exchange of TalonsOn or after the maturity date of the final Coupon which is (or was at the time of issue) part of aCoupon Sheet relating to the Bearer Notes, the Talon forming part of such Coupon Sheet may beexchanged at the Specified Office of the Fiscal Agent for a further Coupon Sheet (including, ifappropriate, a further Talon but excluding any Coupons in respect of which claims have alreadybecome void pursuant to Condition 15 (Prescription). Upon the due date for redemption of anyBearer Note, any unexchanged Talon relating to such Note shall become void and no Coupon will bedelivered in respect of such Talon.

12. Payments – Registered NotesThis Condition 12 is only applicable to Registered Notes.

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(a) PrincipalPayments of principal shall be made by cheque drawn in the currency in which the payment is duedrawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the FiscalAgent not later than the fifteenth day before the due date for any such payment, by transfer to anaccount denominated in that currency (or, if that currency is euro, any other account to which euromay be credited or transferred) and maintained by the payee with, a bank in the Principal FinancialCentre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the Cityof London) and (in the case of redemption) upon surrender (or, in the case of part payment only,endorsement) of the relevant Note Certificates at the Specified Office of any Paying Agent.

(b) InterestPayments of interest shall be made by cheque drawn in the currency in which the payment is duedrawn on, or, upon application by a Holder of a Registered Note to the Specified Office of the FiscalAgent not later than the fifteenth day before the due date for any such payment, by transfer to anaccount denominated in that currency (or, if that currency is euro, any other account to which euromay be credited or transferred) and maintained by the payee with, a bank in the Principal FinancialCentre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the Cityof London) and (in the case of interest payable on redemption) upon surrender (or, in the case ofpart payment only, endorsement) of the relevant Note Certificates at the Specified Office of anyPaying Agent.

(c) Payments subject to fiscal lawsAll payments in respect of the Registered Notes are subject in all cases to any applicable fiscal orother laws and regulations in the place of payment, but without prejudice to the provisions ofCondition 13 (Taxation). No commissions or expenses shall be charged to the Noteholders in respectof such payments.

(d) Payments on business daysWhere payment is to be made by transfer to an account, payment instructions (for value the duedate, or, if the due date is not Payment Business Day, for value the next succeeding Payment BusinessDay) will be initiated and, where payment is to be made by cheque, the cheque will be mailed (i) (inthe case of payments of principal and interest payable on redemption) on the later of the due datefor payment and the day on which the relevant Note Certificate is surrendered (or, in the case of partpayment only, endorsed) at the Specified Office of a Paying Agent and (ii) (in the case of paymentsof interest payable other than on redemption) on the due date for payment. A Holder of a RegisteredNote shall not be entitled to any interest or other payment in respect of any delay in paymentresulting from (A) the due date for a payment not being a Payment Business Day or (B) a chequemailed in accordance with this Condition 12 arriving after the due date for payment or being lost inthe mail.

(e) Partial paymentsIf a Paying Agent makes a partial payment in respect of any Registered Note, the Issuer shall procurethat the amount and date of such payment are noted on the Register and, in the case of partialpayment upon presentation of a Note Certificate, that a statement indicating the amount and thedate of such payment is endorsed on the relevant Note Certificate.

(f ) Record dateEach payment in respect of a Registered Note will be made to the person shown as the Holder in theRegister at the opening of business in the place of the Registrar’s Specified Office on the fifteenthday before the due date for such payment (the “Record Date”). Where payment in respect of a

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Registered Note is to be made by cheque, the cheque will be mailed to the address shown as theaddress of the Holder in the Register at the opening of business on the relevant Record Date.

13. Taxation(a) Gross up

All payments of principal and interest in respect of the Notes and the Coupons by or on behalf ofthe Issuer shall be made free and clear of, and without withholding or deduction for or on accountof, any present or future taxes, duties, assessments or governmental charges of whatever natureimposed, levied, collected, withheld or assessed by or on behalf of the Kingdom of Bahrain or anypolitical subdivision therein or any authority therein or thereof having power to tax, unless thewithholding or deduction of such taxes, duties, assessments, or governmental charges is required bylaw. In that event, the Issuer shall pay such additional amounts as will result in receipt by theNoteholders and the Couponholders after such withholding or deduction of such amounts as wouldhave been received by them had no such withholding or deduction been required, except that nosuch additional amounts shall be payable in respect of any Note or Coupon:

(i) held by or on behalf of a Holder which is liable to such taxes, duties, assessments orgovernmental charges in respect of such Note or Coupon by reason of its having someconnection with the jurisdiction by which such taxes, duties, assessments or charges have beenimposed, levied, collected, withheld or assessed other than the mere holding of the Note orCoupon; or

(ii) where such withholding or deduction is imposed on a payment to an individual and is requiredto be made pursuant to European Council Directive 2003/48/EC on the taxation of savingsincome or any law implementing or complying with, or introduced in order to conform to, suchDirective; or

(iii) held by or on behalf of a Holder who would have been able to avoid such withholding ordeduction by presenting the relevant Note or Coupon to another Paying Agent in a MemberState of the EU; or

(iv) where the relevant Note or Coupon or Note Certificate is presented or surrendered for paymentmore than 30 days after the Relevant Date except to the extent that the Holder of such Noteor Coupon would have been entitled to such additional amounts on presenting or surrenderingsuch Note or Coupon or Note Certificate for payment on the last day of such period of 30 days.

(b) Taxing jurisdictionIf the Issuer becomes subject at any time to any taxing jurisdiction other than the Kingdom ofBahrain, references in these Conditions to the Kingdom of Bahrain shall be construed as referencesto the Kingdom of Bahrain and/or such other jurisdiction.

14. Events of Default14.1 Events of Default for Senior Notes

This Condition 14.1 is applicable to the Notes only if the Notes are specified in the relevant FinalTerms as being Senior Notes.

If any of the following events occurs:

(a) Non-payment: default is made in the payment of any principal in respect of any Note for aperiod of seven days or more or any interest in respect of any Note for a period of 14 days ormore, in each case after the due date for the same; or

(b) Breach of other obligations: the Issuer defaults in the performance or observance of any of itsother obligations under or in respect of the Notes and such default remains unremedied for30 days after written notice thereof, addressed to the Issuer by any Noteholder, has beendelivered to the Issuer or to the Specified Office of the Fiscal Agent; or

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(c) Cross-default of Issuer or Subsidiary(i) any Indebtedness of the Issuer or any of its Subsidiaries is not paid when due or (as the

case may be) within any originally applicable grace period; or

(ii) any such Indebtedness becomes (or becomes capable of being declared following adefault of a payment obligation in respect of such Indebtedness) due and payable prior toits stated maturity otherwise than at the option of the Issuer or (as the case may be) therelevant Subsidiary or (provided that no event of default, howsoever described, hasoccurred) any Person entitled to such Indebtedness; or

(iii) the Issuer or any of its Subsidiaries fails to pay when due any amount payable by it underany Guarantee of any Indebtedness.

provided that the amount of Indebtedness referred to in sub-paragraph (i) and/orsub-paragraph (ii) above and/or the amount payable under any Guarantee referred to insub-paragraph (iii) above, individually or in the aggregate, exceeds U.S.$20,000,000 (or itsequivalent in any other currency or currencies); or

(d) Unsatisfied judgment: one or more judgment(s) or order(s) for the payment an aggregateamount in excess of U.S.$10,000,000 (or its equivalent in any other currency or currencies) isrendered against the Issuer or any of its Material Subsidiaries and continue(s) unsatisfied andunstayed for a period of 30 days after the date(s) thereof or, if later, the date therein specifiedfor payment; or

(e) Security enforced: a secured party takes possession, or a receiver, manager or other similarofficer is appointed, of the whole or any material part of the undertaking, assets and revenuesof the Issuer or its Material Subsidiaries; or

(f ) Insolvency etc: (i) the Issuer or any of its Material Subsidiaries becomes insolvent or is unableor admits its inability to pay its debts as they fall due or stops, suspends or threatens to stop orsuspend payment of all or any material part of its debts, (ii) an administrator or liquidator (orother similar official) of the Issuer or any of its Material Subsidiaries or the whole or anymaterial part of the undertaking, assets and revenues of the Issuer or any of its MaterialSubsidiaries is appointed (or application for any such appointment is made) or (iii) amoratorium is declared in respect of any Indebtedness of any of the Issuer or its MaterialSubsidiaries; or

(g) Winding up etc: (i) an order is made or an effective resolution is passed for the winding up,liquidation or dissolution of the Issuer or any of its Material Subsidiaries (otherwise than, in thecase of a Material Subsidiary of the Issuer, for the purposes of or pursuant to an amalgamation,reorganisation or restructuring whilst solvent), (ii) the Issuer or any of its Material Subsidiariesor any creditor of the Issuer or any of its Material Subsidiaries shall apply or petition for awinding-up or administration order in respect of the Issuer or any of its Material Subsidiaries(otherwise than, in the case of a Material Subsidiary of the Issuer, for the purposes of orpursuant to an amalgamation, reorganisation or restructuring whilst solvent) (a) on the termsapproved by an Extraordinary Resolution of the Noteholders or (b) in the case of a MaterialSubsidiary, whereby the undertakings and assets of the Material Subsidiary are transferred toor otherwise vested in one or more entities within the Group, (iii) the Issuer or any of itsMaterial Subsidiaries ceases or threatens to cease to carry on all or any material part of itsbusiness (otherwise than, in the case of a Material Subsidiary of the Issuer, for the purposes ofor pursuant to an amalgamation, reorganisation or restructuring whilst solvent) (a) on theterms approved by an Extraordinary Resolution of the Noteholders or (b) in the case of aMaterial Subsidiary, whereby the undertakings and assets of the Material Subsidiary aretransferred to or otherwise vested in one or more entities within the Group, or(iv) administration of the Issuer is assumed by the Central Bank of Bahrain under its statutorypowers; or

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(h) Analogous event: any event occurs which under the laws of the Kingdom of Bahrain has ananalogous effect to any of the events referred to in paragraphs (d) to (g) above; or

(i) Failure to take action etc: any action, condition or thing at any time required to be taken,fulfilled or done in order (i) to enable the Issuer lawfully to enter into, exercise its rights andperform and comply with its obligations under and in respect of the Notes, (ii) to ensure thatthose obligations are legal, valid, binding and enforceable and (iii) to make the Notes and theCoupons admissible in evidence in the courts of the Kingdom of Bahrain is not taken, fulfilledor done; or

(j) Government Intervention etc.: by or under the authority of any government, (i) themanagement of the Issuer or any of its Material Subsidiaries is wholly or substantially displacedor the authority of the Issuer or any Material Subsidiary in the conduct of its business is whollyor substantially curtailed (in any such case, otherwise than in accordance with its Agreementof Establishment, Articles of Association or other constitutional documents) or (ii) all or amajority of the issued share capital of the Issuer or any of its Material Subsidiaries or the wholeor any part (the book value of which is 20 per cent. or more of the book value of the whole) ofits revenues or assets is seized, nationalised, expropriated or compulsorily acquired,

then the holder of such Note may, by written notice addressed to the Issuer and delivered to theIssuer or to the Specified Office of the Fiscal Agent, declare any Note held by it to be immediatelydue and payable, whereupon the same shall become immediately due and payable at their EarlyTermination Amount together with accrued interest (if any) without further action or formality.

14.2 Events of Default for Subordinated NotesThis Condition 14.2 is applicable to the Notes only if the Notes are specified in the relevant FinalTerms as being Subordinated Notes.

If any of the following events occurs:

(a) Non-Payment: default is made in the payment of any principal in respect of any Note for aperiod of seven days or more or any interest in respect of any Note for a period of 14 days ormore, in each case after the due date for the same; or

(b) Winding up etc: the Issuer becomes insolvent, a petition is made by a creditor of the Issuer fora declaration of bankruptcy in respect of the Issuer or the dissolution of the Issuer is agreed byits shareholders or ordered by an order of the competent court, or administration of the Issueris assumed by the Central Bank of Bahrain under its statutory powers,

then, in the case of Condition 14.2(a), the holder of such Note may, at its discretion, and subject toany applicable laws, without further notice, institute proceedings for the forced liquidation of theIssuer and/or prove in any forced liquidation of the Issuer but may take no other action in respectof such default, and, in the case of Condition 14.2(b), the holder of such Note may, by written noticeaddressed to the Issuer and delivered to the Issuer or to the Specified Office of the Fiscal Agent orthe Registrar, as applicable, declare any Note held by it to be immediately due and payable,whereupon the same shall become immediately due and payable at its Early Termination Amounttogether with accrued interest (if any) and/or prove in the forced liquidation of the Issuer.

15. PrescriptionClaims for principal in respect of Bearer Notes shall become void unless the relevant Bearer Notes arepresented for payment within ten years of the appropriate Relevant Date. Claims for interest in respect ofBearer Notes shall become void unless the relevant Coupons are presented for payment within five yearsof the appropriate Relevant Date. Claims for principal and interest on redemption in respect of RegisteredNotes shall become void unless the relevant Note Certificates are surrendered for payment within tenyears of the appropriate Relevant Date.

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16. Replacement of Notes and CouponsIf any Note, Note Certificate or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replacedat the Specified Office of the Fiscal Agent, in the case of Bearer Notes, or the Registrar, in the case ofRegistered Notes (and, if the Notes are then admitted to listing, trading and/or quotation by anycompetent authority, stock exchange and/or quotation system which requires the appointment of aPaying Agent or Transfer Agent in any particular place, the Paying Agent or Transfer Agent having itsSpecified Office in the place required by such competent authority, stock exchange and/or quotationsystem), subject to all applicable laws and competent authority, stock exchange and/or quotation systemrequirements, upon payment by the claimant of the expenses incurred in connection with suchreplacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer mayreasonably require. Mutilated or defaced Notes, Note Certificates or Coupons must be surrendered beforereplacements will be issued.

17. AgentsIn acting under the Agency Agreement and in connection with the Notes and the Coupons, the Agentsact solely as agents of the Issuer and do not assume any obligations towards or relationship of agency ortrust for or with any of the Noteholders or Couponholders.

The initial Agents and their initial Specified Offices are listed below. The initial Calculation Agent (if any)is specified in the relevant Final Terms. The Issuer reserves the right at any time to vary or terminate theappointment of any Agent and to appoint a successor fiscal agent or registrar or Calculation Agent andadditional or successor paying agents; provided, however, that:

(a) the Issuer shall at all times maintain a fiscal agent and a registrar; and

(b) the Issuer shall at all times maintain a paying agent in an EU member state that will not be obligedto withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any lawimplementing or complying with or introduced in order to conform to, such Directive; and

(c) if a Calculation Agent is specified in the relevant Final Terms, the Issuer shall at all times maintain aCalculation Agent; and

(d) if and for so long as the Notes are admitted to listing, trading and/or quotation by any competentauthority, stock exchange and/or quotation system which requires the appointment of a PayingAgent and/or a Transfer Agent in any particular place, the Issuer shall maintain a Paying Agentand/or a Transfer Agent having its Specified Office in the place required by such competentauthority, stock exchange and/or quotation system.

Notice of any change in any of the Agents or in their Specified Offices shall promptly be given to theNoteholders.

18. Meetings of Noteholders; Modification and Waiver(a) Meetings of Noteholders

The Agency Agreement contains provisions for convening meetings of Noteholders to considermatters relating to the Notes, including the modification of any provision of these Conditions. Anysuch modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting maybe convened by the Issuer and shall be convened by it upon the request in writing of Noteholdersholding not less than five per cent. of the aggregate principal amount of the outstanding Notes. Thequorum at any meeting convened to vote on an Extraordinary Resolution will be one or morePersons holding or representing not less than 50 per cent. of the aggregate principal amount of theoutstanding Notes or, at any adjourned meeting, one or more Persons being or representingNoteholders whatever the principal amount of the Notes held or represented; provided, however,that Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meetingof Noteholders at which one or more Persons holding or representing not less than two-thirds or, atany adjourned meeting, one-third of the aggregate principal amount of the outstanding Notes forma quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all theNoteholders and Couponholders, whether present or not.

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In addition, a resolution in writing signed by or on behalf of all Noteholders who for the time beingare entitled to receive notice of a meeting of Noteholders will take effect as if it were anExtraordinary Resolution. Such a resolution in writing may be contained in one document or severaldocuments in the same form, each signed by or on behalf of one or more Noteholders.

(b) ModificationThe Notes, these Conditions, and the Deed of Covenant may be amended without the consent of theNoteholders or the Couponholders to correct a manifest error. In addition, the parties to the AgencyAgreement may agree to modify any provision thereof, but the Issuer shall not agree, without theconsent of the Noteholders, to any such modification unless it is of a formal, minor or technicalnature, it is made to correct a manifest or proven error, to comply with mandatory provisions of thelaw or it is, in the opinion of such parties, not materially prejudicial to the interests of theNoteholders.

19. Further IssuesThe Issuer may from time to time, without the consent of the Noteholders or the Couponholders, createand issue further notes having the same terms and conditions as the Notes in all respects (or in allrespects except for the first payment of interest) so as to form a single series with the Notes.

20. Notices(a) Bearer Notes

Notices to the Holders of Bearer Notes shall be valid if published in a leading English language dailynewspaper published in London (which is expected to be the Financial Times) or, if such publicationis not practicable, in a leading English language daily newspaper having general circulation inEurope. Any such notice shall be deemed to have been given on the date of first publication (or ifrequired to be published in more than one newspaper, on the first date on which publication shallhave been made in all the required newspapers). Couponholders shall be deemed for all purposes tohave notice of the contents of any notice given to the Holders of Bearer Notes.

(b) Registered NotesNotices to the Holders of Registered Notes shall be sent to them by first class mail (or its equivalent)or (if posted to an overseas address) by airmail at their respective addresses on the Register or, ifsuch publication is not practicable, in a leading English language daily newspaper having generalcirculation in Europe. Any such notice shall be deemed to have been given on the fourth day afterthe date of mailing or for a newspaper on the date of publication.

21. Currency IndemnityIf any sum due from the Issuer in respect of the Notes or the Coupons or any order or judgment given ormade in relation thereto has to be converted from the currency (the “first currency”) in which the sameis payable under these Conditions or such order or judgment into another currency (the “secondcurrency”) for the purpose of (a) making or filing a claim or proof against the Issuer, (b) obtaining anorder or judgment in any court or other tribunal or (c) enforcing any order or judgment given or madein relation to the Notes, the Issuer shall indemnify each Noteholder, on the written demand of suchNoteholder addressed to the Issuer and delivered to the Issuer or to the Specified Office of the FiscalAgent, against any loss suffered as a result of any discrepancy between (i) the rate of exchange used forsuch purpose to convert the sum in question from the first currency into the second currency and (ii) therate or rates of exchange at which such Noteholder may in the ordinary course of business purchase thefirst currency with the second currency upon receipt of a sum paid to it in satisfaction, in whole or in part,of any such order, judgment, claim or proof.

This indemnity constitutes a separate and independent obligation of the Issuer and shall give rise to aseparate and independent cause of action.

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22. RoundingFor the purposes of any calculations referred to in these Conditions (unless otherwise specified in theseConditions or the relevant Final Terms), (a) all percentages resulting from such calculations will berounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 percent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resultingfrom such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) allJapanese Yen amounts used in or resulting from such calculations will be rounded downwards to the nextlower whole Japanese Yen amount, and (d) all amounts denominated in any other currency used in orresulting from such calculations will be rounded to the nearest two decimal places in such currency, with0.005 being rounded upwards.

23. Governing Law and Jurisdiction(a) Governing law

The Notes and any non-contractual obligations arising out of or in connection with the Notes aregoverned by English law, save that Condition 4(b) is governed by the laws of the Kingdom of Bahrain.

(b) ArbitrationSubject to Condition 23(c) (Noteholders’ option), any dispute arising out of or connected with theNotes, the Dealer Agreement, any Relevant Agreement as defined in the Dealer Agreement, theDeed of Covenant or the Agency Agreement (including a dispute regarding their existence, validityor termination or the consequences of their nullity or regarding any non-contractual obligationsarising out of or in connection with them) (a “Dispute”) shall be referred to and finally resolved byarbitration under the Arbitration Rules of the London Court of International Arbitration (“LCIA”)(the “Rules”), as amended from time to time and by the rest of this Condition:

(i) The arbitral tribunal shall consist of three arbitrators.

(ii) The claimant and the respondent shall each nominate one arbitrator within 15 days fromreceipt by the Registrar of the LCIA of the Response to the Request for arbitration as definedin the Rules, and the chairman of the arbitral tribunal shall be nominated by the two party-nominated arbitrators within 15 days of the last of their appointments.

(iii) The seat of the arbitration shall be London, England and all hearings shall take place in London,England.

(iv) The language of the arbitration shall be English.

(v) The parties waive any right of application to determine a preliminary point of law undersection 45 and to appeal on a question of law under section 69 of the Arbitration Act 1996.

(vi) If any Dispute raises issues which are substantially the same as or connected with issues raisedin a Dispute which has already been referred to arbitration under either the Notes, the DealerAgreement, any Relevant Agreement as defined in the Dealer Agreement, the Deed ofCovenant or the Agency Agreement (an “Existing Dispute”) or arises out of substantially thesame facts as are the subject of an Existing Dispute (a “Related Dispute”), then the arbitraltribunal nominated or appointed in respect of any such Existing Dispute shall also benominated as the arbitral tribunal in respect of any Related Dispute, save where the arbitraltribunal considers such appointment would be inappropriate.

(vii) Where the same arbitral tribunal has been appointed in relation to two or more Existing and/orRelated Disputes, the arbitral tribunal may, with the agreement of all of the parties concernedor upon the application of one of the parties, being a party to each of the Disputes, order thatthe whole or part of the matters at issue shall be heard together upon such terms or conditionsas the arbitral tribunal thinks fit.

(viii) Upon request of a party to a Dispute or any party to the Notes, the Dealer Agreement, anyRelevant Agreement as defined in the Dealer Agreement, the Deed of Covenant or the Agency

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Agreement which itself wishes to be joined to any reference to arbitration proceedings inrelation to a Dispute, the arbitral tribunal may join any party to the Notes, the DealerAgreement, any Relevant Agreement as defined in the Dealer Agreement, the Deed ofCovenant or the Agency Agreement to any reference to arbitration proceedings in relation tothat Dispute between them. Each of the parties to the Notes hereby consents to be joinedto any reference to arbitration proceedings in relation to any Dispute at the request of a partyto that Dispute, and to accept the joinder of a party requesting to be joined pursuant to thissub-paragraph (viii).

(c) Noteholders’ optionBefore any Noteholder has filed a Request for arbitration or Response as defined in the Rules (as thecase may be), such Noteholder may by notice in writing to the Issuer require that a Dispute be heardby a court of law. If the Noteholder gives such notice, the Dispute to which such notice refers shallbe determined in accordance with Condition 23(d) (Jurisdiction of English courts).

(d) Jurisdiction of the English courtsIn the event that a Noteholder issues a notice pursuant to Condition 23(c) (Noteholders’ option), thefollowing provisions shall apply:

(i) Subject to Condition 23(b) (Arbitration), the courts of England shall have exclusive jurisdictionto settle any Dispute.

(ii) The Issuer agrees that the courts of England are the most appropriate and convenient courtsto settle any Dispute and, accordingly, that it will not argue to the contrary.

(iii) Condition 23(d) (Jurisdiction of the English courts) is for the benefit of the Noteholders only. Asa result, and notwithstanding paragraph (i) above, any Noteholder may take proceedingsrelating to a Dispute (“Proceedings”) in any other courts with jurisdiction. To the extentallowed by law, Noteholders may take concurrent Proceedings in any number of jurisdictions.

(e) Service of processThe Issuer agrees that the documents which start any Proceedings and any other documentsrequired to be served in relation to those Proceedings may be served on it by being delivered toregistered office of the Issuer situated at One Knightsbridge, London SW1X 7XS, United Kingdom orsuch other address as the Issuer may notify pursuant to Condition 20 (Notices) or at any address forthe time being at which service of process may be served on it in accordance with Part XXIII of theCompanies Act 1985 or equivalent provisions from time to time in force. Nothing in this Condition23(e) shall affect the right of any Noteholder to serve process in any other manner permitted by law.This Condition applies to Proceedings in England and to Proceedings elsewhere.

(f ) Waiver of immunityTo the extent that the Issuer may in any jurisdiction claim for itself or its assets or revenues(presently owned or subsequently acquired or generated, and whether related to the Notes or not)immunity from suit, execution, attachment (whether in aid of execution, before judgment or awardor otherwise) or other legal process and to the extent that such immunity (whether or not claimed)may be attributed in any such jurisdiction to the Issuer or its assets or revenues (presently owned orsubsequently acquired or generated, and whether related to the Notes or not), the Issuer agrees notto claim and irrevocably waives such immunity to the full extent permitted by the laws of suchjurisdiction and, in particular, to the intent that in any Proceedings, including Proceedings in supportof arbitration and Proceedings to enforce an award, taken in the County of New York the foregoingwaiver of immunity shall have the fullest scope permitted under the United States Foreign SovereignImmunities Act of 1976 and is intended to be irrevocable for the purposes of such Act.

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Form of Final Terms

The Final Terms in respect of each Tranche of Notes will be substantially in the following form, dulysupplemented (if necessary), amended (if necessary) and completed to reflect the particular terms of therelevant Notes and their issue. Text in this section appearing in italics does not form part of the form of theFinal Terms but denotes directions for completing the Final Terms.

Final Terms dated [•]Gulf International Bank B.S.C.

Issue of [Aggregate Nominal Amount of Tranche] [Title of Notes]

under the

U.S.$4,000,000,000

Euro Medium Term Note Programme

PART A – CONTRACTUAL TERMS

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the“Conditions”) set forth in the Base Prospectus dated 18 November 2009 [and the supplemental BaseProspectus dated [•]] which [together] constitute[s] a base prospectus (the “Base Prospectus”) for thepurposes of the Prospectus Directive (Directive 2003/71/EC) (the “Prospectus Directive”). Thisdocument constitutes the Final Terms of the Notes described herein for the purposes of Article 5.4 of theProspectus Directive. These Final Terms contain the final terms of the Notes and must be read inconjunction with such Base Prospectus [as so supplemented].

Full information on the Issuer and the offer of the Notes described herein is only available on the basis ofthe combination of these Final Terms and the Base Prospectus [as so supplemented]. The BaseProspectus [and the supplemental Base Prospectus] [is] [are] available for viewing [at [website]] [and]during normal business hours at [address] [and copies may be obtained from [address]].

The following alternative language applies if the first tranche of an issue which is being increased wasissued under a base prospectus with an earlier date and either (1) the Notes which are the subject of theFinal Terms are not being (a) offered to the public in a member state (other than pursuant to one or moreof the exemptions set out in Article 3.2 of the Prospectus Directive) or (b) admitted to trading on aregulated market in a member state or (2) the Conditions (as defined in the next paragraph) do notcontain, by comparison with the Base Prospectus, any “significant new factor” within the meaning of Article16.1 of the Prospectus Directive. If neither (1) nor (2) applies the Issuer will need to consider effecting theissue by means of a supplement to the Base Prospectus or a stand alone prospectus rather than by FinalTerms.

Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the“Conditions”) set forth in the base prospectus dated [•]. These Final Terms contain the final terms of theNotes and must be read in conjunction with the Base Prospectus dated [current date] [and thesupplemental Base Prospectus dated [date]] which [together] constitute[s] a base prospectus (the “BaseProspectus”) for the purposes of the Prospectus Directive (Directive 2003/71/EC) (the “ProspectusDirective”), save in respect of the Conditions which are extracted from the base prospectus dated [•] [andthe supplemental prospectus dated [•] and are attached hereto. This document constitutes the FinalTerms relating to the issue of Notes described herein for the purposes of Article 5.4 of the ProspectusDirective.

Full information on the Issuer and the offer of the Notes is only available on the basis of the combinationof these Final Terms and the base prospectuses dated [•] 2008 and [current date] [and the supplementalbase prospectuses dated [•] and [•]. The base prospectuses [and the supplemental base prospectuses] areavailable for viewing [at [website]] [and] during normal business hours at [address] [and copies may beobtained from [address]].

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[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numberingshould remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs. Italics denote guidance for completing the Final Terms.]

[When completing any Final Terms, or adding any other final terms or information, consideration should begiven as to whether such terms or information constitute “significant new factors” and consequently triggerthe need for a supplement to the Prospectus under Article 16 of the Prospectus Directive].

1. Issuer: Gulf International Bank B.S.C.

2. [(i) Series Number:] [ ]

[(ii) Tranche Number: [ ]

(If fungible with an existing Series, details of that Series,including the date on which the Notes become fungible).]

3. Specified Currency or Currencies: [ ]

4. Aggregate Nominal Amount: [ ]

[(i)] [Series]: [ ]

[(ii) Tranche: [ ]]

5. Issue Price: [ ] per cent. of the Aggregate Nominal Amount [plusaccrued interest from [insert date] (in the case of fungibleissues only, if applicable)]

6. (i) Specified Denominations: [In the case of any Notes which are to be (1) offered to thepublic in a Member State of the European Economic Area incircumstances which would otherwise require thepublication of a prospectus under the Prospectus Directiveor (2) admitted to trading on a regulated market within theEuropean Economic Area, the minimum specifieddenomination shall be EUR 50,000 (or, if the Notes aredenominated in a currency other than euro, the equivalentamount in such currency).]

[Where multiple denominations above EUR 50,000 orequivalent are being used insert the following wording

“[EUR 50,000] and integral multiples of [EUR 1,000] inexcess thereof up to an including [EUR 99,000]. No Notesin definitive form will be issued with a denomination above[EUR 99,000].”]

(ii) Calculation Amount: [(If only one Specified Denomination, insert the SpecifiedDenomination.

If more than one Specified Denomination, insert the highestcommon factor. Note: There must be a common factor inthe case of two or more Specified Denominations)]

7. (i) Issue Date: [ ]

(ii) Interest Commencement Date: [Specify/Issue Date/Not Applicable]

8. Maturity Date: [Specify date or (for Floating Rate Notes) Interest PaymentDate falling in or nearest to the relevant month and year]

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9. Interest Basis: [• per cent. Fixed Rate]

[[Specify reference rate] +/- • per cent. Floating Rate][Zero Coupon][Index Linked Interest][Other (Specify)](further particulars specified below)

10. Redemption/Payment Basis: [Redemption at par][Index Linked Redemption][Dual Currency][Partly Paid][Instalment][Other (Specify)]

(N.B. If the Final Redemption Amount is other than 100 percent. of the nominal value the Notes will be derivativesecurities for the purposes of the Prospectus Directive andthe requirements of Annex XII in the Prospectus DirectiveRegulation will apply)

11. [Specify details of any provision for convertibility of Notesinto another interest or redemption/payment basis]

12. Put/Call Options: [Investor Put][Issuer Call][(further particulars specified below)]

13. [(i)] Status of the Notes: [Senior Notes/Subordinated Notes]

[(ii)] [ ] [and [ ], respectively(N.B. Only relevant where Board (or similar) authorisation isrequired for the particular tranche of Notes)]

14. Method of distribution: [Syndicated/Non-syndicated]

15. Fixed Rate Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Rate[(s)] of Interest: [ ] per cent. per annum [payable [annually/semi-annually/quarterly/monthly/other (specify)] in arrear]

(ii) Interest Payment Date(s): [ ] in each year [adjusted in accordance with [specifyBusiness Day Convention and any applicable BusinessCentre(s) for the definition of “Business Day”]/notadjusted]

(iii) Fixed Coupon Amount[(s)]: [ ] per Calculation Amount

(iv) Broken Amount(s): [ ] per Calculation Amount, payable on the InterestPayment Date falling [in/on] [ ]

(v) Day Count Fraction: [30/360/Actual/Actual (ICMA)/other]

(vi) [Determination Dates: [ ] in each year (insert regular interest payment dates,ignoring issue date or maturity date in the case of a long orshort first or last coupon. N.B. only relevant where DayCount Fraction is Actual/Actual (ICMA))]

(vii) [Not Applicable/give details]Other terms relating to themethod of calculatinginterest for Fixed Rate Notes:

[Date [Board] approval forissuance of Notes] obtained:

Change of Interest orRedemption/Payment Basis:

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16. Floating Rate Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Interest Period(s): [ ]

(ii) Specified Period: [ ](Specified Period and Specified Interest Payment Dates arealternatives. A Specified Period, rather than SpecifiedInterest Payment Dates, will only be relevant if the BusinessDay Convention is the FRN Convention, Floating RateConvention or Eurodollar Convention. Otherwise, insert “NotApplicable”)

(iii) [ ](Specified Period and Specified Interest Payment Dates arealternatives. If the Business Day Convention is the FRNConvention, Floating Rate Convention or EurodollarConvention, insert “Not Applicable”)

(iv) [First Interest Payment Date]: [ ]

(v) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/other(give details)]

(vi) Additional Business Centre(s): [Not Applicable/give details]

(vii) [Screen Rate Determination/ISDA Determination/other(give details)]

(viii) [[Name] shall be the Calculation Agent (no need to specifyif the Fiscal Agent is to perform this function)]

(ix) Screen Rate Determination:

• Reference Rate: [For example, LIBOR or EURIBOR]

• [ ] (Second London business day prior to the start ofeach Interest Period if LIBOR (other than sterling or euroLIBOR), first day of each Interest Period if sterling LIBORand the second day on which the TARGET2 system is openprior to the start of each Interest Period if EURIBOR or euroLIBOR)

• Relevant Screen Page: [For example, Reuters LIBOR 01/EURIBOR 01]

• Relevant Time: [For example, 11.00 a.m. London time/Brussels time]

• Relevant Financial Centre: [For example, London/Euro-zone (where Euro-zone meansthe region comprised of the countries whose lawful currencyis the euro]

(x) ISDA Determination:

• Floating Rate Option: [ ]

• Designated Maturity: [ ]

• Reset Date: [ ]

Interest DeterminationDate(s):

Party responsible for calculatingthe Rate(s) of Interest and/orInterest Amount(s) (if not the[Fiscal Agent]):

Manner in which theRate(s) of Interestis/are to be determined:

Specified InterestPayment Dates:

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(xi) Margin(s): [+/-][ ] per cent. per annum

(xii) Minimum Rate of Interest: [ ] per cent. per annum

(xiii) Maximum Rate of Interest: [ ] per cent. per annum

(xiv) Day Count Fraction: [Actual/Actual (ISDA)][Actual/365(Fixed)Actual/365 (Sterling)Actual/36030/36030E/36030E/360(ISDA)Other (Specify)]

(xv) [ ]

17. Zero Coupon Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Accrual Yield: [ ] per cent. per annum

(ii) Reference Price: [ ]

(iii) [Consider whether it is necessary to specify a Day CountFraction for the purposes of Condition [10(g)]]

18. [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Index/Formula/other variable: [give or annex details]

(ii) [give name (and, if the Notes are derivative securities towhich Annex XII of the Prospectus Directive applies,address)]

(iii) [ ]

(iv) [ ]

(v) Interest Determination Date(s): [ ]

Provisions for determiningCoupon where calculated byreference to Index and/orFormula and/or othervariable:

Party responsible forcalculating the Rate ofInterest (if not the CalculationAgent) and Interest Amount(if not the Agent):

Calculation Agent responsiblefor calculating the interestdue:

Index-Linked Interest Note/othervariable-linked interest NoteProvisions

Any other formula/basisof determining amountpayable:

Fall back provisions, roundingprovisions, denominator and anyother terms relating to themethod of calculating interest onFloating Rate Notes, if differentfrom those set out in theConditions:

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(vi) [Need to include a description of the market disruption orsettlement disruption events and adjustment provisions]

(vii) Interest or calculation period(s): [ ]

(viii) Specified Period: [ ](Specified Period and Specified Interest Payment Dates arealternatives. A Specified Period, rather than SpecifiedInterest Payment Dates, will only be relevant if the BusinessDay Convention is the FRN Convention, Floating RateConvention or Eurodollar Convention. Otherwise, insert “NotApplicable”)

(ix) Specified Interest Payment Dates: [ ](Specified Period and Specified Interest Payment Dates arealternatives. If the Business Day Convention is the FRNConvention, Floating Rate Convention or EurodollarConvention, insert “Not Applicable”)

(x) Business Day Convention: [Floating Rate Convention/Following Business DayConvention/Modified Following Business DayConvention/Preceding Business Day Convention/other(give details)]

(xi) Additional Business Centre(s) : [ ]

(xii) [ ] per cent. per annum

(xiii) [ ] per cent. per annum

(xiv) Day Count Fraction: [ ]

19. Dual Currency Note Provisions [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) [give details]

(ii) [ ]

(iii) [Need to include a description of the market disruption orsettlement disruption events and adjustment provisions]

(iv) [ ]Person at whose optionSpecified Currency(ies)is/are payable:

Provisions applicablewhere calculation byreference to Rate ofExchange impossible orimpracticable:

Calculation Agent, if any,responsible for calculatingthe principal and/orinterest due:

Rate of Exchange/methodof calculating Rate ofExchange:

Maximum Rate/Amountof Interest:

Minimum Rate/Amountof Interest:

Provisions for determiningCoupon where calculation byreference to Index and/orFormula and/or other variableis impossible or impracticableor otherwise disrupted:

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20. Call Option [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) [ ] per Calculation Amount

(iii) If redeemable in part:

(a) [ ] per Calculation Amount

(b) [ ] per Calculation Amount

(iv) Notice period: [ ]

21. Put Option [Applicable/Not Applicable](If not applicable, delete the remaining sub-paragraphs ofthis paragraph)

(i) Optional Redemption Date(s): [ ]

(ii) [ ] per Calculation Amount

(iii) Notice period: [ ]

22. [ ] per Calculation Amount

(N.B. If the Final Redemption Amount us not 100 per cent. ofthe nominal value the Notes may be derivative securities forthe purposes of the Prospectus Directive and therequirements of Annex XII to the Prospectus DirectiveRegulations will apply. Where the Final Redemption Amountis linked to the exercise price or the final reference price ofan underlying, give details of the exercise price or finalreference price.)

23. Early Redemption Amount [Not Applicable(If both the Early Redemption Amount (Tax) and the EarlyTermination Amount are the principal amount of theNotes/specify the Early Redemption Amount (Tax) and/orthe Early Termination Amount if different from the principalamount of the Notes)]

Early Redemption Amount(s) perCalculation Amount payable onredemption for taxation reasons oron event of default or other earlyredemption and/or the method ofcalculating the same (if required orif different from that set out in theConditions):

Final Redemption Amountof each Note

Optional RedemptionAmount(s) of each Noteand method, if any, ofcalculation of suchamount(s):

Maximum RedemptionAmount

Minimum RedemptionAmount:

Optional RedemptionAmount(s) of each Noteand method, if any, ofcalculation of suchamount(s):

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24. Form of Notes1: Bearer Notes:

[Temporary Global Note exchangeable for a PermanentGlobal Note which is exchangeable for Definitive Notes on[ ] days’ notice/at any time/in the limitedcircumstances specified in the Permanent Global Note]

[Temporary Global Note exchangeable for Definitive Noteson [ ] days’ notice]

[Permanent Global Note exchangeable for Definitive Noteson [ ] days’ notice/at any time/in the limitedcircumstances specified in the Permanent Global Note]

[Registered Notes:]

[Individual Note Certificates]

[Global Registered Note exchangeable for Individual NoteCertificates]

25. [Not Applicable/give details.Note that this paragraph relates to the date and place ofpayment, and not interest period end dates, to which subparagraphs 15(ii), 16(vi) and 18(x) relate]

26. [Yes/No. If yes, give details]

27. [Not Applicable/give details]

28. [Not Applicable/give details]

29. [Not Applicable/The provisions [in Condition [ ]apply]

30. Consolidation provisions: Not Applicable/The provisions [in Condition 19 (FurtherIssues)] [annexed to this Final Terms] apply

31. Other final terms: [Not Applicable/give details]

[(When adding any other final terms consideration shouldbe given as to whether such terms constitute “significant

Redenomination, renominalisationand reconventioning provisions:

Details relating to Instalment Notes:amount of each instalment, date onwhich each payment is to be made:

Details relating to Partly Paid Notes:amount of each paymentcomprising the Issue Price and dateon which each payment is to bemade [and consequences (if any) offailure to pay, including any right ofthe Issuer to forfeit the Notes andinterest due on late payment]:

Talons for future Coupons orReceipts to be attached to DefinitiveNotes (and dates on which suchTalons mature):

Additional Financial Centre(s) orother special provisions relating topayment dates:

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1 Ensure that this is consistent with the "Form of the Notes" section in the Base Prospectus and the Notes themselves. N.B. Theexchange upon notice/at any time option should not be expressed to be applicable if the Specified Denomination of theNotes in paragraph 6 includes language substantially to the following effect: "[EUR 50,000] and integral multiples of [EUR1,000] in excess thereof up to and including [EUR 99,000]." Furthermore, such Specified Denomination construction is notpermitted in relation to any issue of Notes which is to be represented by a Temporary Global Note exchangeable for DefinitiveNotes.

new factors” and consequently trigger the need for asupplement to the Base Prospectus under Article 16 of theProspectus Directive.)]

32. (i) [Not Applicable/give names, addresses and underwritingcommitments]

(ii) [ ]

[Date of Subscription Agreement need only be specified ifthe Notes are derivative securities for the purposes of theProspectus Directive and the requirements of Annex XII ofthe Prospectus Directive Regulation apply]

(iii) Stabilising Manager(s) (if any): [Not Applicable/give name]

33. [Not Applicable/give name and address]

[Addresses need only be specified if the Notes are derivativesecurities for the purposes of the Prospectus Directive andthe reSquirements of Annex XII of the Prospectus DirectiveRegulation apply]

34. U.S. Selling Restrictions: [Reg. S Compliance Category];(In the case of Bearer Notes) – [TEFRA C/TEFRA D/TEFRAnot applicable]

(In the case of Registered Notes) – Not Applicable

35. Additional selling restrictions: [Not Applicable/give details]

PURPOSE OF FINAL TERMSThese Final Terms comprise the final terms required for issue and admission to trading on the LondonStock Exchange’s regulated market and listing on the Official List of the UK Listing Authority of the Notesdescribed herein pursuant to the U.S.$4,000,000,000 Euro Medium Term Note Programme of GulfInternational Bank B.S.C.

RESPONSIBILITYThe Issuer accepts responsibility for the information contained in these Final Terms. [(Relevant third partyinformation) has been extracted from (specify source). The Issuer confirms that such information hasbeen accurately reproduced and that, so far as it is aware, and is able to ascertain from informationpublished by (specify source), no facts have been omitted which would render the reproduced informationinaccurate or misleading.]

Signed on behalf of Gulf International Bank B.S.C.:

By: ..................................................................Duly authorised

If non-syndicated, name [andaddress] of Dealer:

[Date of [Subscription]Agreement]:

If syndicated, names [andaddresses] of Managers:

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PART B – OTHER INFORMATION

1. LISTING(i) Admission to trading [Application has been made by the Issuer (or on its behalf )

for the Notes to be admitted to trading on [theLondon Stock’s Exchange’s regulated market and listing onthe Official List of the UK Listing Authority] with effectfrom [ ].]

[Application is expected to be made by the Issuer (or on itsbehalf ) for the Notes to be admitted to trading on [theLondon Stock’s Exchange’s regulated market and listing onthe Official List of the UK Listing Authority] with effectfrom [ ].] [Not Applicable.]

(Where documenting a fungible issue need to indicate thatoriginal Notes are already admitted to trading.)

(ii) [ ]

2. RATINGSRatings: The Notes to be issued have been rated:

[S & P: [ ]][Moody’s: [ ]][Fitch: [ ]][[Other]: [ ]]

(The above disclosure should reflect the rating allocated toNotes of the type being issued under the Programmegenerally or, where the issue has been specifically rated, thatrating.)

3. [INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE ISSUE/OFFER]Need to include a description of any interest, including conflicting ones, that is material to theissue/offer, detailing the persons involved and the nature of the interest. May be satisfied by theinclusion of the following statement:

“Save as discussed in [“Subscription and Sale”] and save for any fees payable to the[Managers/Dealers], so far as the Issuer is aware, no person involved in the offer of the Notes hasan interest material to the offer.” (Amend as appropriate if there are other interests)]

[(When adding any other description, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the Prospectus Directive.)]

4. REASONS FOR THE OFFER, ESTIMATED NET PROCEEDS AND TOTAL EXPENSES[(i) Reasons for the offer [ ]

(See [“Use of Proceeds”] wording in Base Prospectus – ifreasons for offer different from making profit and/orhedging certain risks will need to include those reasonshere.)]

Estimate of total expenses related toadmission to trading:

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[(ii)] Estimated net proceeds: [ ]

(If proceeds are intended for more than one use will need tosplit out and present in order of priority. If proceedsinsufficient to fund all proposed uses state amount andsources of other funding.)

[(iii)]Estimated total expenses: [ ]

(If the Notes are derivative securities to which Annex XII ofthe Prospectus Directive Regulation applies it is onlynecessary to include disclosure of net proceeds and totalexpenses at (ii) and (iii) above where disclosure is includedat (i) above.)

5. [Fixed Rate Notes only – YIELDIndication of yield: [ ]

The yield is calculated at the Issue Date on the basis of theIssue Price. It is not an indication of future yield.]

6. [Index-linked or other variable-linked notes only - PERFORMANCE OF INDEX/FORMULA/OTHERVARIABLE, EXPLANATION OF EFFECT ON VALUE OF INVESTMENT AND ASSOCIATED RISKSAND OTHER INFORMATION CONCERNING THE UNDERLYINGNeed to include details of where past and future performance and volatility of theindex/formula/other variable can be obtained and a clear and comprehensive explanation of how thevalue of the investment is affected by the underlying and the circumstances when the risks are mostevident. [Where the underlying is an index need to include the name of the index and a description ifcomposed by the Issuer and if the index is not composed by the Issuer need to include details of wherethe information about the index can be obtained. Where the underlying is not an index need to includeequivalent information. Include other information concerning the underlying required by Paragraph4.2 of Annex XII of the Prospectus Directive Regulation.]]

[(When completing this paragraph, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the Prospectus Directive.)]

The Issuer intends to provide post-issuance information [specify what information will be reportedand where it can be obtained]] [does not intend to provide post-issuance information].

7. [Dual Currency Notes only – PERFORMANCE OF RATE[S] OF EXCHANGE AND EXPLANATION OFEFFECT ON VALUE OF INVESTMENTNeed to include details of where past and future performance and volatility of the relevant rate[s] canbe obtained]

[(When completing this paragraph, consideration should be given as to whether such mattersdescribed constitute “significant new factors” and consequently trigger the need for a supplement tothe Base Prospectus under Article 16 of the Prospectus Directive.)]

8. OPERATIONAL INFORMATIONISIN Code: [ ]

Common Code: [ ]

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[Not Applicable/give name(s) and number(s)]

Delivery: Delivery [against/free of ] payment

[ ]

[ ]Names and addresses of additionalPaying Agent(s) (if any):

Names and addresses of initial PayingAgent(s):

Any clearing system(s) other thanEuroclear Bank S.A./N.V. andClearstream Banking, sociétéanonyme and the relevantidentification number(s):

60

Summary of Provisions Relating to the Notes while in Global Form

Clearing System AccountholdersIn relation to any Tranche of Notes represented by a Global Note in bearer form, references in the Termsand Conditions of the Notes to “Noteholder” are references to the bearer of the relevant Global Notewhich, for so long as the Global Note is held by a depositary or a common depositary for Euroclear and/orClearstream, Luxembourg and/or any other relevant clearing system, will be that depositary or commondepositary.

In relation to any Tranche of Notes represented by a Global Registered Note, references in the Terms andConditions of the Notes to “Noteholder” are references to the person in whose name such GlobalRegistered Note is for the time being registered in the Register which, for so long as the Global RegisteredNote is held by or on behalf of a depositary or a common depositary for Euroclear and/or Clearstream,Luxembourg and/or any other relevant clearing system, will be that depositary or common depositary ora nominee for that depositary or common depositary.

Each of the persons shown in the records of Euroclear and/or Clearstream, Luxembourg and/or any otherrelevant clearing system as being entitled to an interest in a Global Note or a Global Registered Note (eachan “Accountholder”) must look solely to Euroclear and/or Clearstream, Luxembourg and/or such otherrelevant clearing system (as the case may be) for such Accountholder’s share of each payment made bythe Issuer to the holder of such Global Note or Global Registered Note and in relation to all other rightsarising under such Global Note or Global Registered Note. The extent to which, and the manner in which,Accountholders may exercise any rights arising under the Global Note or Global Registered Note will bedetermined by the respective rules and procedures of Euroclear and Clearstream, Luxembourg and anyother relevant clearing system from time to time. For so long as the relevant Notes are represented by aGlobal Note or Global Registered Note, Accountholders shall have no claim directly against the Issuer inrespect of payments due under the Notes and such obligations of the Issuer will be discharged bypayment to the holder of such Global Note or Global Registered Note.

Exchange of Temporary Global NotesWhenever any interest in a Temporary Global Note is to be exchanged for an interest in a PermanentGlobal Note, the Issuer shall procure:

(a) in the case of first exchange, the prompt delivery (free of charge to the bearer) of such PermanentGlobal Note, duly authenticated, to the bearer of the Temporary Global Note; or

(b) in the case of any subsequent exchange, an increase in the principal amount of such PermanentGlobal Note in accordance with its terms,

in each case in an aggregate principal amount equal to the aggregate of the principal amounts specifiedin the certificates issued by Euroclear and/or Clearstream, Luxembourg and/or any other relevantclearing system and received by the Fiscal Agent against presentation and (in the case of final exchange)surrender of the Temporary Global Note to or to the order of the Fiscal Agent within seven days of thebearer requesting such exchange.

Whenever a Temporary Global Note is to be exchanged for Definitive Notes, the Issuer shall procure theprompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and withCoupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principalamount equal to the principal amount of the Temporary Global Note to the bearer of the TemporaryGlobal Note against the surrender of the Temporary Global Note to or to the order of the Fiscal Agentwithin 30 days of the bearer requesting such exchange.

If:

(a) a Permanent Global Note has not been delivered or the principal amount thereof increased by5.00 p.m. (London time) on the seventh day after the bearer of a Temporary Global Note has

61

requested exchange of an interest in the Temporary Global Note for an interest in a PermanentGlobal Note; or

(b) Definitive Notes have not been delivered by 5.00 p.m. (London time) on the thirtieth day after thebearer of a Temporary Global Note has requested exchange of the Temporary Global Note forDefinitive Notes; or

(c) a Temporary Global Note (or any part thereof ) has become due and payable in accordance with theTerms and Conditions of the Notes or the date for final redemption of a Temporary Global Note hasoccurred and, in either case, payment in full of the amount of principal falling due with all accruedinterest thereon has not been made to the bearer of the Temporary Global Note in accordance withthe terms of the Temporary Global Note on the due date for payment,

then the Temporary Global Note (including the obligation to deliver a Permanent Global Note or increasethe principal amount thereof or deliver Definitive Notes, as the case may be) will become void at 5.00 p.m.(London time) on such seventh day (in the case of (a) above) or at 5.00 p.m. (London time) on suchthirtieth day (in the case of (b) above) or at 5.00 p.m. (London time) on such due date (in the case of (c)above) and the bearer of the Temporary Global Note will have no further rights thereunder (but withoutprejudice to the rights which the bearer of the Temporary Global Note or others may have under the Deedof Covenant. Under the Deed of Covenant, persons shown in the records of Euroclear and/or Clearstream,Luxembourg and/or any other relevant clearing system as being entitled to an interest in a TemporaryGlobal Note will acquire directly against the Issuer all those rights to which they would have been entitledif, immediately before the Temporary Global Note became void, they had been the holders of DefinitiveNotes in an aggregate principal amount equal to the principal amount of Notes they were shown asholding in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearingsystem.

Exchange of Permanent Global NotesWhenever a Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure theprompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and withCoupons and Talons attached (if so specified in the relevant Final Terms), in an aggregate principalamount equal to the principal amount of the Permanent Global Note to the bearer of the PermanentGlobal Note against the surrender of the Permanent Global Note to or to the order of the Fiscal Agentwithin 30 days of the bearer requesting such exchange.

If:

(a) Definitive Notes have not been delivered by 5.00 p.m. (London time) on the thirtieth day after thebearer of a Permanent Global Note has duly requested exchange of the Permanent Global Note forDefinitive Notes; or

(b) a Permanent Global Note (or any part of it) has become due and payable in accordance with theTerms and Conditions of the Notes or the date for final redemption of the Notes has occurred and,in either case, payment in full of the amount of principal falling due with all accrued interest thereonhas not been made to the bearer of the Permanent Global Note in accordance with the terms of thePermanent Global Note on the due date for payment,

then the Permanent Global Note (including the obligation to deliver Definitive Notes) will become void at5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m. (London time) onsuch due date (in the case of (b) above) and the bearer of the Permanent Global Note will have no furtherrights thereunder (but without prejudice to the rights which the bearer of the Permanent Global Note orothers may have under the Deed of Covenant. Under the Deed of Covenant, persons shown in the recordsof Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearing system as beingentitled to an interest in a Permanent Global Note will acquire directly against the Issuer all those rightsto which they would have been entitled if, immediately before the Permanent Global Note became void,they had been the holders of Definitive Notes in an aggregate principal amount equal to the principalamount of Notes they were shown as holding in the records of Euroclear and/or Clearstream,Luxembourg and/or any other relevant clearing system.

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Exchange of Global Registered NotesWhenever a Global Registered Note is to be exchanged for Individual Note Certificates, the Issuer shallprocure that Individual Note Certificates will be issued in an aggregate principal amount equal to theprincipal amount of the Global Registered Note within five business days of the delivery, by or on behalfof the holder of the Global Registered Note to the Registrar of such information as is required to completeand deliver such Individual Note Certificates (including, without limitation, the names and addresses ofthe persons in whose names the Individual Note Certificates are to be registered and the principal amountof each such person’s holding) against the surrender of the Global Registered Note at the specified officeof the Registrar. Such exchange will be effected in accordance with the provisions of the AgencyAgreement and the regulations concerning the transfer and registration of Notes scheduled thereto and,in particular, shall be effected without charge to any holder, but against such indemnity as the Registrarmay require in respect of any tax or other duty of whatsoever nature which may be levied or imposed inconnection with such exchange.

If:

(a) Individual Note Certificates have not been delivered by 5.00 p.m. (London time) on the thirtieth dayafter they are due to be issued and delivered in accordance with the terms of the Global RegisteredNote; or

(b) any of the Notes represented by a Global Registered Note (or any part of it) has become due andpayable in accordance with the Terms and Conditions of the Notes or the date for final redemptionof the Notes has occurred and, in either case, payment in full of the amount of principal falling duewith all accrued interest thereon has not been made to the holder of the Global Registered Note inaccordance with the terms of the Global Registered Note on the due date for payment,

then the Global Registered Note (including the obligation to deliver Individual Note Certificates) willbecome void at 5.00 p.m. (London time) on such thirtieth day (in the case of (a) above) or at 5.00 p.m.(London time) on such due date (in the case of (b) above) and the holder of the Global Registered Notewill have no further rights thereunder (but without prejudice to the rights which the holder of the GlobalRegistered Note or others may have under the Deed of Covenant. Under the Deed of Covenant, personsshown in the records of Euroclear and/or Clearstream, Luxembourg and/or any other relevant clearingsystem as being entitled to an interest in a Global Registered Note will acquire directly against the Issuerall those rights to which they would have been entitled if, immediately before the Global Registered Notebecame void, they had been the holders of Individual Note Certificates in an aggregate principal amountequal to the principal amount of Notes they were shown as holding in the records of Euroclear and/orClearstream, Luxembourg and/or any other relevant clearing system.

Conditions applicable to Global Notes and Global Registered NotesEach Global Note and Global Registered Note will contain provisions which modify the Terms andConditions of the Notes as they apply to the Global Note or Global Registered Note. The following is asummary of certain of those provisions:

Payments: All payments in respect of the Global Note or Global Registered Note which, according to theTerms and Conditions of the Notes, require presentation and/or surrender of a Note, Note Certificate orCoupon will be made against presentation and (in the case of payment of principal in full with all interestaccrued thereon) surrender of the Global Note or Global Registered Note to or to the order of any PayingAgent and will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect ofthe Notes. On each occasion on which a payment of principal or interest is made in respect of the GlobalNote, the Issuer shall procure that the payment is noted in a schedule thereto.

Exercise of put option: In order to exercise the option contained in Condition 10(e) (Redemption at theoption of Noteholders) the bearer of the Permanent Global Note or the holder of a Global Registered Notemust, within the period specified in the Conditions for the deposit of the relevant Note and put notice,give written notice of such exercise to the Fiscal Agent specifying the principal amount of Notes inrespect of which such option is being exercised. Any such notice will be irrevocable and may not bewithdrawn.

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Partial exercise of call option: In connection with an exercise of the option contained in Condition 10(c)(Redemption at the option of the Issuer) in relation to some only of the Notes, the Permanent Global Noteor Global Registered Note may be redeemed in part in the principal amount specified by the Issuer inaccordance with the Conditions and the Notes to be redeemed will not be selected as provided in theConditions but in accordance with the rules and procedures of Euroclear and Clearstream, Luxembourg(to be reflected in the records of Euroclear and Clearstream, Luxembourg as either a pool factor or areduction in principal amount, at their discretion).

Notices: Notwithstanding Condition 20 (Notices), while all the Notes are represented by a PermanentGlobal Note (or by a Permanent Global Note and/or a Temporary Global Note) or a Global Registered Noteand the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are),or the Global Registered Note is, deposited with a depositary or a common depositary for Euroclearand/or Clearstream, Luxembourg and/or any other relevant clearing system, notices to Noteholders maybe given by delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg and/or anyother relevant clearing system and, in any case, such notices shall be deemed to have been given to theNoteholders in accordance with Condition 20 (Notices) on the date of delivery to Euroclear and/orClearstream, Luxembourg and/or any other relevant clearing system.

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Description of the Issuer

HistoryGIB was established in the Kingdom of Bahrain in November 1975 pursuant to an agreement to which theGovernments of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates and Iraq weresignatories. The Public Investment Fund of the Kingdom of Saudi Arabia (the “PIF”) currently owns29.652 per cent. of GIB’s issued share capital and the Saudi Arabian Monetary Agency (“SAMA”) (thecentral bank of Saudi Arabia) currently owns 67.574 per cent. of GIB’s issued share capital; hence, SaudiArabia, through the PIF and SAMA, owns 97.226 per cent. of the issued share capital of GIB. TheGovernments of Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, directly or indirectly, ownthe remaining shares in GIB in unequal percentages. As at the date of this Base Prospectus, GIB’s issuedshare capital is U.S.$2.5 billion comprising two and a half billion fully-paid shares with a par value ofU.S.$1 each.

GIB is incorporated in Bahrain as a Bahraini shareholding company by Amiri Decree Law No. 30 dated24 November 1975 and is registered as a conventional wholesale bank with the Central Bank of Bahrain(the “CBB”). The Bank’s commercial registration number is 4660 and its registered office is Al-DowaliBuilding, 3 Palace Avenue, Manama, Kingdom of Bahrain, telephone: (+973) 17 534 000.

Following its establishment, GIB concentrated on the syndicated loan market for sovereign borrowersuntil 1980, when it turned its attention to the corporate sector and began to develop close relationshipswith major international corporations. In April 1999 GIB acquired all of the issued share capital of SaudiInternational Bank (“SIB”), a London-based investment bank which has since been renamed GulfInternational Bank (UK) Limited (“GIBUK”), in order to expand its product range and diversify its sourcesof revenue away from its prior focus on wholesale commercial banking in the GCC region. SIB wasidentified as having established capabilities in corporate finance, asset management and capital markets.

In order to address the revaluation losses and provisions in relation to exposures to assets impacted bythe continuing global credit crisis that first occurred during the second half of 2007, GIB’s share capitalwas increased on 31 December 2007 from U.S.$1.5 billion to U.S.$2.5 billion. This capital increase causedthe PIF’s percentage shareholding in GIB to increase to 16.503 per cent., as the PIF subscribed for theshares which had not been taken up by the Governments of Bahrain, Oman and the United Arab Emirates(through their respective shareholding entities), which did not participate in the capital increase.

In 2000, GIB was the first non-Saudi bank to establish a branch in Saudi Arabia, opening a branch inRiyadh, followed in 2004 by a second branch located in Jeddah.

In 2009, GIB received permission from SAMA to open a branch in the strategically important EasternProvince of Saudi Arabia and it is expected that this branch will become operational in 2010. The EasternProvince of Saudi Arabia is the centre of Saudi Arabia’s oil and petrochemicals industries and many ofSaudi Arabia’s leading industrial companies are based, or have significant operations, there. GIB believesthat the new branch in the Eastern Province will enable GIB to strengthen its existing relationships in theEastern Province and to develop new relationships, particularly in the oil and petrochemical businesssegments, with companies that have previously used mainly locally incorporated Saudi banks to meettheir banking requirements.

GIB also operates through branches located in London and New York and representative offices in AbuDhabi and Beirut. In addition, GIBUK has a branch in New York as well as its head office in London.

At the beginning of 2008, in order to comply with specific regulatory changes in Saudi Arabia, GIBestablished GIB Financial Services L.L.C. (“GIBFS”). GIBFS offers various investment banking services inSaudi Arabia. GIBFS is incorporated in Saudi Arabia and has a paid up share capital of SAR 60 million. GIBowns (directly or indirectly) the whole of the issued share capital of GIBFS. GIBFS is regulated by theCapital Markets Authority of Saudi Arabia.

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OwnershipThe current shareholding structure of GIB is as follows:

PercentageShareholder ShareholdingSaudi Arabian Monetary Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67.574%The Public Investment Fund of the Kingdom of Saudi Arabia . . . . . . . . . . . . . . . . . . . . . . 29.652%Kuwait Investment Authority, Kuwait . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.730%Qatar Investment Authority, Qatar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.730%Bahrain Mumtalakat Holding Company, B.S.C. (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.438%Ministry of Finance of the Sultanate of Oman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.438%Ministry of Finance & Industry of the United Arab Emirates . . . . . . . . . . . . . . . . . . . . . . . 0.438%

–––––––––––Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%

––––––––––––––––––––––

SAMA has indicated that it intends to transfer all of its shares in GIB to the PIF. Such a transfer is subjectto certain regulatory approvals, as well as to the approval of GIB’s board of directors. GIB is not aware asto whether all requisite approvals relating to the transfer will be obtained and, if so, when the transfer willbe effected. If such a transfer is effected, the PIF will become the largest shareholder in GIB, owning97.226 per cent. of GIB’s issued share capital. The PIF board is chaired by the Minister of Finance of SaudiArabia and includes the Minister of Economy and Planning of Saudi Arabia, the Minister of Trade andIndustry of Saudi Arabia and the Governor of SAMA.

The PIF has two main business roles: equity investing and lending. The PIF’s activities are mainlyconducted in Saudi Arabia.

According to information published by SAMA, the total amount of outstanding loans by the PIF up to theend of fiscal year 2008 was SAR 28,716 million.

The Qatar Investment Authority has indicated its wish to transfer its shares in GIB to Qatar Holding L.L.C.(a company wholly-owned by The Qatar Investment Authority). It is expected that such transfer will beeffected before the end of 2009, subject to all requisite approvals being obtained.

Recent DevelopmentsAs part of GIB’s strategic initiative to reduce the level of risk on its balance sheet and to refocus on its corebusiness activities, a significant portion of the non-core investment securities portfolio was disposed ofvia a sale to the PIF and SAMA effective at the end of 2008. The assets sold included GIB’s entire exposureto collateralised debt obligations, asset backed securities, equities and equity funds and subordinatedbank debt, on which GIB had taken substantial provisions for impairment. The assets were sold at theiramortised cost less specific provisions for impairment as at the effective date of sale. Accordingly, noprofit or loss was recorded on the transaction. The total amortised cost less specific provisions forimpairment of the sold assets at the effective date of sale on 31 December 2008, based on exchange ratesprevailing on that date, was U.S.$4,832 million. This was net of specific provisions for impairment ofU.S.$544.7 million. The specific provisions relating to the sold assets were written off. In order tocompensate the PIF and SAMA for the difference between the total consideration paid for such assets andthe fair value of such assets as at an agreed date (the consideration being higher than the applicable fairvalue), GIB’s shareholders re-allocated the ownership of GIB’s issued share capital as between themselvesin accordance with a pre-determined formula, thereby increasing the percentage ownership of the PIFand SAMA in GIB to the levels shown in the table above.

In August 2009, the general assembly of the shareholders of GIB unanimously elected a new board ofdirectors. Previously, members of the board of directors had been nominated by the respectiveshareholders. This election resulted in a reduced board of seven directors. GIB considers all but one of thedirectors to be independent, in accordance with criteria established by the CBB for the purpose ofdetermining whether directors should be classified as being “independent”.

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GIB is in the process of winding down its exposure to hedge funds, which exposure has reducedsignificantly during 2008 and 2009.

GIB recently introduced new reduced credits. The credit limit structure remains ratings based, but creditlimits for each rating level have been reduced, reflecting GIB’s reduced risk appetite in the current adversebusiness enviroment.

Accounting PoliciesThe interim consolidated financial statements have been prepared in accordance with InternationalFinancial Reporting Standards (IFRS). The interim consolidated financial statements for the six monthsended 30 June 2009 have been prepared in compliance with International Accounting Standard (IAS) 34:Interim Financial Reporting. The accounting policies have been consistently applied by GIB and itssubsidiaries and are consistent with those of the previous year, as set out in the consolidated financialstatement for the year ended 31 December 2008.

Overview and StrategyAs a conventional wholesale bank, GIB has no lender of last resort and, consequently, GIB will be whollyreliant upon its shareholders for external financial support in the event of need. The basic restrictionplaced on conventional wholesale banks by the CBB is that, with some limited exceptions, they are notpermitted to deal with either companies or individuals resident in Bahrain with regard to transactionshaving values falling below various threshold amounts specified by the CBB. However, transactions of alltypes with other fully licensed banks in Bahrain are permitted, as well as dealings with the Governmentof Bahrain and various public sector entities.GIB’s strategy is to focus its business on the markets of theGCC member states and the associated trade and financial flows between this area and the rest of theworld. GIB believes that it is in a position to capitalise on strong core business activities in the GCC region,including commercial banking, project and structured finance, investment banking, Islamic banking andasset management. In recent years, GIB has arranged financing for several GCC-based banks and has aleading role in a number of transactions for major GCC infrastructure projects. As the GCC states continueto pursue economic reforms and expansion of their private sectors, GIB’s strategic goal is to position itselfso as to be able to profitably exploit the substantial business opportunities that these conditions createand to become the GCC merchant bank of choice, as a result of GIB’s ability to provide sophisticated,customer-tailored products and services that provide innovative solutions to increasingly complexfinancial requirements in GIB’s core market. The key elements of GIB’s strategy to achieve this goal are asfollows:

• strengthen and broaden its customer franchise and thereby derive an increased portion of its revenuefrom customer relationships through a dedicated customer relationship management function;

• enhance its competitive position in the GCC markets to enable it to compete effectively againstdomestic and international banks across a wider product range. GIB has developed professional in-house capabilities in project and structured finance, investment banking, Islamic banking and assetmanagement; and

• to increase risk adjusted returns from its core lending activity through the cross selling of fee-basedproducts and services. In order to improve risk adjusted returns, GIB has implemented new measures,including the adoption of a risk adjusted return on capital (RAROC) methodology.

It is anticipated that opportunities of earning fee-based income from corporate finance, debt advisorymandates, debt capital markets activities and private equity and asset management and other sourcesfrom commercial banking clients will increasingly be a significant factor in GIB’s decision as to whetherloans should be made to those clients and, if so, to what extent.

As a U.S. dollar-based conventional wholesale bank, GIB has minimal Bahrain Dinar-denominated assetsand liabilities. GIB’s assets and liabilities are almost entirely denominated in U.S. dollars and other majorinternational currencies. Currency risk is largely hedged primarily against movement of the U.S. dollaragainst the euro and Sterling.

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The following table contains certain financial highlights of GIB as at and for the years ended 31 December2006, 2007 and 2008 and the six months ended 30 June 2009.

As at and forsix months

As at and for the year ended 31 December ended 30 June––––––––––––––––––––––––––––––––––––––2006 2007 2008 2009––––––––– ––––––––– –––––––––

(U.S.$ MM)Net Income before Provisions and Tax . . . . 261.4 201.2 179.8 89.7Net Income/(Loss) after Tax . . . . . . . . . . . . . 255.5 (757.3) (396.2) (22.5)Net Interest Income . . . . . . . . . . . . . . . . . . . . 257.7 305.6 288.3 112.9Operating Expenses . . . . . . . . . . . . . . . . . . . . 144.0 141.2 142.9 60.3Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,787.2 29,954.0 25,033.5 17,116.7Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,145.0 12,601.8 12,972.1 11,088.6Investment Securities . . . . . . . . . . . . . . . . . . . 8,422.9 8,070.7 2,220.5 2,045.6Senior Term Financing . . . . . . . . . . . . . . . . . . 1,867.1 2,657.8 2,431.5 2,302.6Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . 1,856.6 2,215.3 1,925.5 1,846.2Total Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 16,867.7 19,644.7 18,395.0 11,610.1

As at 31 December As at 30 June2006 2007 2008 2009––––– ––––– –––––

%Capital Asset Ratio (Basel II for 2008and 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 12.0 17.3 20.0Tier 1 Radio . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 9.6 12.5 14.6

BusinessAs a merchant bank, GIB serves GCC-based customers in a range of specialised areas including projectand structured finance, Islamic banking, investment banking and asset management. This reinforces GIB’scompetitive position by building on its market presence and understanding of the region’s economicenvironment and potential business opportunities.

GIB’s customers are comprised primarily of government agencies of the GCC states, major top tierregional corporations, financial institutions and multinational companies active in the GCC region.

GIB’s business activities fall into four broad categories: Commercial Banking (which accounted for 56 percent. of gross revenue for the first half of 2009 (“1H2009”)), Investment Banking (which accounted for0.3 per cent. of gross revenue in 1H2009), Asset Management (which accounted for 7.6 per cent. of grossrevenue in 1H2009) and Treasury Services and Investment Management (which accounted for 36.1 percent. of gross revenue in 1H2009).

Commercial BankingCommercial Banking had, over recent years, been implementing an expansionary strategy within the GCCmarket, with the underwriting and arranging of corporate and project finance loans and supporting thefinancing needs of regional banks and government entities being core activities for Commercial Banking.However, in view of the recent turmoil in the global credit markets and the significant losses suffered byGIB during 2007, 2008 and the first six months of 2009, it is expected that, in the short to medium term,the total value of GIB’s loans and advances will decline, although the extent of the decline will be largelydependent on market conditions. GIB is expecting the aggregate value of its loans and advances to havedeclined to between U.S.$10 billion and U.S.$11 billion by the end of 2009. GIB also expects that, whilstGIB continues to position itself to exploit attractive opportunities in project finance and contract finance,until conditions improve in the global credit markets, greater emphasis will be placed on bilateralrelationships, loans with shorter maturities, unfunded business and uncommitted credit lines.

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Business development and customer servicing responsibilities are vested with dedicated teams coveringthe different GCC markets. In addition, Commercial Banking includes the International Banking Areawhich manages GIB’s branches in New York and London and its representative office in Beirut, with itsfocus on the Near East and Arab World markets. Based on significant trade flows and long term historicrelationships with the GCC, GIB’s international trade finance and institutional lending business is mainlyconducted in North Africa, Turkey, Iran and some other Near East countries.

GIB, through its carefully formulated business strategy, is focused on increasing product and revenuestream diversification. Among others, GIB has recognised the increasing appeal of Islamic bankingstructures and products as a means of diversifying available funding sources for its customers and as ameans for satisfying customer demand within the GCC for Shari’a compliant products and considerableefforts have been made to increase GIB’s profile in the Islamic banking market.

Investment BankingGIB’s principal focus is on the GCC states, providing customer-led and innovative financial products andservices. Its target market for Investment Banking includes major private-sector corporations, familyowned establishments, Gulf-based financial institutions and multinational companies active in the region.

Investment Banking includes corporate finance advisory services in connection with mergers, disposalsand acquisitions, privatisations, strategic advice and equity placements (IPOs and private placements).

Comprising a team of professionals located in Riyadh, Bahrain and Abu Dhabi, GIB’s corporate financeteam provides financial advisory services to a wide range of public and private sector customers in theGCC. Corporate finance advisory services include due diligence, valuation and structuring, as well asplacement advice and implementation. Working with other business units of GIB, Investment Banking isable to offer comprehensive solutions to its customers through its advisory capability. Product offeringsinclude equity advisory services for IPOs and private equity placements, underwriting of IPOs andsubscriptions for IPOs.

A private equity capability within Investment Banking has been developed over recent years. In 2004, GIBestablished The GCC Energy Fund LP (the “Energy Fund”), an integrated private equity energy fundfocused on the GCC, in collaboration with an international bank. In addition to equity investments madethrough the Energy Fund, GIB has also acquired a number of minority stakes in GCC companies by way ofsubscription to offerings made by way of private placement. It is expected by GIB that GCC family-ownedcompanies will continue to seek outside capital and that GIB is well positioned to be able to exploit theinvestment opportunities that this creates, by virtue of the referral of equity investment opportunitiesfrom GIB’s Investment Banking business and by virtue of GIB’s increasing profile in the GCC equityinvestment arena. On the back of this expertise, Private Equity will be expanding its business model todevelop private equity funds, so as to enhance the fee based income for GIB and introduce a new productoffering to its client base.

GIB’s Debt Capital Markets desk was established in 2006 with a vision to capitalise on the increasingvolume of debt capital market issues in the GCC. Its initial role was to garner roles along with other leadmanagers and subscribe for regional conventional bond and sukuk issues. Obtaining mandates for similarlead management roles, either conventional or Islamic, is the primary focus of Debt Capital Markets, asGIB seeks to capitalise on its franchise network relationships.

GIB’s investment banking activities are conducted in Saudi Arabia through GIBFS, a wholly ownedsubsidiary of GIB.

Asset Management:GIB’s Asset Management business operates through GIB’s UK subsidiary, GIBUK, which is regulated by theFSA. GIBUK has recently restructured its business so as to concentrate on its core strength in assetmanagement, discontinuing its proprietary trading and other non-core business activities.

Assets under management stood at U.S.$15,256 million as at 30 June 2009. Assets under managementemanate from GIB’s target institutional markets in the GCC and Europe. The business includes London-

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based investment professionals, managing through three product lines: equity portfolios, fixed incomeportfolios and structured products and funds. The managed portfolios include both enhanced index andactively managed accounts.

Mandates cover global and regional international equity markets, global fixed income and credit markets.Structured products include a series of managed Collateral Debt Obligations (CDOs). Fund productsinclude bond and hedge funds.

GIB’s Asset Management business is one of the largest commercial asset managers in the Middle East (interms of assets under management) and has a well established franchise in the GCC.

Treasury Services and Investment Management:GIB offers a wide range of treasury and capital market products and services to a broad customer baseconsisting of regional corporates, financial institutions and government entities, and implementscustomised hedging and investment strategies on behalf of its customers. GIB funds itself though itsoffices in Bahrain, Riyadh, London and New York, mainly through long standing depositor relationships.

In addition to providing treasury and capital markets products and services to its customers, historicallyGIB also maintained a significant proprietary investment securities portfolio; however, as part of GIB’sstrategic initiatives to reduce the level of risk on its balance sheet and to refocus on its core businessactivities, a significant portion of the non-core investment securities portfolio was disposed of in a saleeffective at the end of 2008. The assets sold included GIB’s entire exposure to collateralised debtobligations, asset backed securities equities, equity funds and subordinated bank debt, on which GIB hastaken substantial provisions for impairment. The assets were sold at their amortised cost less specificprovisions for impairment as at the effective date of sale. Accordingly, no profit or loss was recorded onthe transaction. The total amortised cost less specific provisions for impairment of the sold assets at theeffective date of sale on 31 December 2008, based on exchange rate prevailing on that date, wasU.S.$4,832 million. This was net of specific provisions for impairment of U.S.$544.7 million. The specificprovisions relating to the sold assets were written off. Following such disposal, GIB’s strategy will beincreasingly focused on well-diversified investment management, as well as client-oriented businessactivities.

GIB is in the process of winding down its exposure to hedge funds. This exposure has reduced significantlyduring 2008 and 2009.

No new proprietary investment securities were acquired by GIB during 2008 or the first half of 2009 andit is expected that proprietary trading activities will only be conducted henceforth on a limited basis (see“Business Activities – Investment Securities” below).

Business ActivitiesLoans and AdvancesLoans and advances amounted to U.S.$11,088.6 million as at 30 June 2009, representing a U.S.$1.9 billionor 14.5 per cent. decrease compared to 31 December 2008. As at 30 June 2009, 95.0 per cent. of the loanportfolio represented lending within GIB’s core market in the GCC states (December 2008: 94 per cent.).

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The following table provides a breakdown of GIB’s total loans and advances portfolio by sector as at31 December 2007 and 2008 and 30 June 2009:

As at 31 December As at 30 June––––––––––––––––––––––––––––––––––––––––––

2007 2008 2009–––––––––––––––––––– ––––––––––––––––––– ––––––––––––––––––% of Total % of Total % of Total

Loan Loan LoanAmount Portfolio Amount Portfolio Amount Portfolio

(U.S.$ MM) (U.S.$ MM) (U.S.$ MM)Energy, Oil andPetrochemical . . . . . . . . . . . 3,418.4 27% 3,352.2 26% 3,400.2 30%Financial Services . . . . . . . . 2,149.5 17% 2,260.7 17% 2,116.3 19%Trading and Services . . . . . . 1,956.3 15% 2,231.6 17% 1,532.5 13%Construction . . . . . . . . . . . . . 1,106.9 9% 1,093.9 8% 1,055.1 9%Real Estate . . . . . . . . . . . . . . 614.2 5% 845.1 6% 835.4 7%Transportation . . . . . . . . . . . 780.0 6% 936.0 7% 770.3 7%Manufacturing . . . . . . . . . . . 1,012.7 8% 1,154.4 9% 713.2 6%Communication . . . . . . . . . . 616.5 5% 616.8 5% 616.1 5%Government . . . . . . . . . . . . . 686.1 5% 450.8 3% 280.3 2%Others . . . . . . . . . . . . . . . . . . 336.6 3% 304.8 2% 194.1 2%

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Sub Total . . . . . . . . . . . . . . . . 12,677.2 100% 13,246.3 100% 11,513.5 100%

–––––––– –––––––– –––––––––––––––– –––––––– ––––––––Provisions forimpairment . . . . . . . . . . . . . . (75.4) (274.2) (424.9)

–––––––– –––––––– ––––––––Total . . . . . . . . . . . . . . . . . . . . 12,601.8 12,972.1 11,088.6

–––––––– –––––––– –––––––––––––––– –––––––– ––––––––

The following table provides a geographic breakdown of GIB’s total loans and advances portfolio as at31 December 2007 and 2008 and 30 June 2009:




(U.S.$ MM) (U.S.$ MM) (U.S.$ MM)GCC . . . . . . . . . . . . . . . . . . . . 11,779.6 94% 12,215.3 94% 10,538.5 95Europe . . . . . . . . . . . . . . . . . . 413.1 3% 383.8 3% 314.8 3Other Middle East andNorth Africa . . . . . . . . . . . . . 381.2 3% 332.1 3% 219.0 2Asia . . . . . . . . . . . . . . . . . . . . 24.9 0% 38.7 0% 16.1 0North America . . . . . . . . . . . 3.0 0% 2.2 0% 0.2 0

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total . . . . . . . . . . . . . . . . . . . . 12,601.8 100% 12,972.1 100% 11,088.6 100%

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

Approximately 39 per cent. of GIB’s total loans and advances portfolio is attributable to Saudi Arabia (asat 30 June 2009).

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The following table provides a breakdown of GIB’s lending by maturity as at 31 December 2007 and 2008and 30 June 2009:




(U.S.$ MM) (U.S.$ MM) (U.S.$ MM)Within 3 months . . . . . . . . . 3,624.6 29% 3,272.4 25% 2,883.6 26%4 months to 1 year . . . . . . . 2,265.7 18% 2,755.3 21% 1,808.4 16%Years 2 and 3 . . . . . . . . . . . . 2,671.8 21% 2,712.5 21% 2,421.3 22%Years 4 and 5 . . . . . . . . . . . . 1,619.3 13% 1,539.1 12% 1,229.7 11%Over 5 years . . . . . . . . . . . . . 2,420.4 19% 2,692.8 21% 2,745.6 25%

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total . . . . . . . . . . . . . . . . . . . . 12,601.8 100% 12,972.1 100% 11,088.6 100%

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––At 30 June 2009, 69 per cent. of the total loan portfolio comprised loans denominated in United Statesdollars with the balance being denominated principally in Saudi Riyals (December 2008: 66.4 per cent.,December 2007: 68.4 per cent.).

Credit Approval ProcessAll credit approval decisions are taken centrally at head office. No authority in respect of credit approvaldecisions is delegated to GIB’s branches. Credit approval authority is vested with the Board of Directors,who have delegated to the Chief Executive Officer (“CEO”) certain authorities to approve credit exposure,based on the credit rating/market segment/ownership of the obligor. In turn, delegated credit authoritiesare in place for senior credit officers in Risk Management, including the Chief Credit Officer (“CCO”).

Credit Risk RatingGIB monitors, manages and controls credit risk exposures based on an internal credit rating system thatrates individual obligors based on a rating scale from 1 to 10, subject to positive (+) and negative (-)modifiers for rating grades 2 to 6. The internal credit rating is a measure of the credit-worthiness of asingle obligor, based on an assessment of the credit risk relating to senior unsecured, medium term,foreign currency credit exposure. The primary objectives of the internal credit rating system are themaintenance of a single uniform standard for credit quality measurement, and to serve as the primarybasis for Board-approved risk parameters and delegated credit authority limit. The internal credit ratingsystem also serves as a key input into the GIB’s risk-adjusted return on capital (RAROC) performancemeasurement system. Ratings are assigned to obligors, rather than facilities, and reflect a medium termtime horizon, thereby rating through an economic cycle. The internal ratings map directly to the ratinggrades used by the international credit rating agencies.

GIB’s on-risk assets are reviewed at least on an annual basis, at which time the relevant relationshipmanager prepares a report for submission to, and consideration by, the Credit Committee comprising ata minimum, a Credit Officer (“CO”), a Senior Credit Officer (“SCO”) and a Risk Management SCO. A creditrisk rating is assigned to each obligor. If there is any change in the prospects of the obligor at any timeprior to the annual review, it is the responsibility of the relevant relationship manager to makeappropriate recommendations to the Credit Committee.

A significant majority of GIB’s loan portfolio is performing (95 per cent.) as at 30 June 2009.

As at 30 June 2009, a total of 13 per cent. of the loan portfolio was classified and performing, whilst 5 percent. of the loan portfolio was classified and non-performing.

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An analysis of the performing classified exposure by rating as at 30 June 2009 is as follows:

GIB Rating(Equivalent S&P/ Gross Exposure % of Total LoanMoody’s) Classification (U.S.$MM) Portfolio5 (BB/Ba) Special Mention 549.2 4.77%5- (BB-/Ba3) Special Mention 44.3 0.38%6+ (B+/B1) Special Mention 54.6 0.47%6 (B/B) Special Mention 246.8 2.14%6- (B-/B3) Special Mention 12.8 0.11%7 (CCC/Caa) Special Mention 211.2 1.83%

7 (CCC/Caa) Substandard 160.7 1.40%8 (CC/Ca) Substandard 61.1 0.53%9 (C/C) Doubtful 161.0 1.4%

–––––––– ––––––––Total 1,501.7 13.04%

–––––––– –––––––––––––––– ––––––––

Classification is a remedial management tool used aggressively by GIB to manage individual exposureswhich show the slightest signs of weakness (see below).

Classification PolicyIf a credit shows signs of deterioration, even if it is performing, it is placed on a “Classified” status,comprising four separate categories: Special Mention, Substandard, Doubtful and Loss.

The definitions of the classification categories used by GIB are as follows:

– Special Mention/(Evidence of Weakness)Applicable to a loan that is being repaid as structured, but where analysis indicates a deteriorationin the financial position, collateral, or management, which the reviewer feels could lead to GIB beingexposed to an interruption of regular payments, or interest servicing, on due dates. Slowness in therepayment of loans should be classified in this category.

It indicates the need for early attention by the GIB Account Officer, including discussions with theobligor with the aim of correcting deficiencies.

– Substandard/(Timely Payment or Settlement at Risk)Orderly payment has been, or may be, jeopardised or interrupted because of severely adverse trends,or detrimental developments, of a financial, managerial, economic or political nature.

Even if GIB is confident that a loan can ultimately be repaid, if there is an element of doubt as towhether some form of restructuring may be required, the loan should be classified as ‘substandard’.Although ultimate repayment in full is expected, there is a need for GIB to strengthen its position asa lender and to ensure that adequate remedial measures are taken by the obligor.

– Doubtful/(Full Payment and Settlement Improbable)Outstandings on which full repayment appears questionable. Interest and/or principal is usually inarrears and some degree of eventual loss is anticipated, although the timing or amount have yet tobe determined. Non-accrual of interest is required and a provision may be necessary.

Positive and vigorous action should be taken by GIB officers to avert or minimise loss.

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– Loss/(Uncollectible)Outstandings on which even interest is not paid and on which no repayment is expected during theforeseeable future are classified as “Loss”. Full provision is normally required and the loan should beremoved from GIB’s assets when non-recoverability is determined.

A “Loss” classification does not imply recognition that principal will never be recovered andresponsible units are expected to continue vigorous collection efforts until it is established that nofurther repayment or recovery is possible.

Classification of an exposure makes it subject to the additional requirements of the remedial creditrisk management process, including (but not limited to):

• intensive monitoring by relationship management, including the development of an action plan;

• the exposure becomes a candidate for non-accrual status (usually after 90 days) andprovisioning;

• legal action, if necessary; and

• write off, if recovery is considered to be remote.

All classified exposures are subject to monthly updates prepared by relationship management, whichare provided to the management and the credit committee.

The following table shows GIB’s loan portfolio, with associated loan loss provisions, by classificationcategories as at 30 June 2009:

% of GrossLoan Specific

Gross Loan Portfolio Provision Net Loans(U.S.$ MM) (U.S.$ MM) (U.S.$ MM)

Standard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,922.1 94.9 0.0 10,922.1Sub-standard . . . . . . . . . . . . . . . . . . . . . . . . . . 424.5 3.7 109.5 315.0Doubtful . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162.9 1.4 81.4 81.5Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 0.0 4.0 0.0

–––––––––– –––––––––– –––––––––– ––––––––––Loans (Gross) . . . . . . . . . . . . . . . . . . . . . . . . . . 11,513.5 100.0% 194.9 11,318.6

–––––––––– –––––––––– –––––––––– –––––––––––––––––––– –––––––––– –––––––––– ––––––––––Non-Specific Provisions . . . . . . . . . . . . . . . . . 230.0

––––––––––Loans (Net) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,088.6

––––––––––––––––––––

Specific provisions in respect of loans are made to the full extent of the estimated potential loss, whilenon-specific provisions are based on an incurred loss model. The incurred loss model estimates theprobable losses inherent within the portfolio at the balance sheet date but that have not been specificallyidentified. The estimates are based on internal risk ratings, historical default rates, loss severity and ratingmigrations, and reflect the macroeconomic, political and business environment and other pertinentfactors.

It is GIB’s policy to write off credit risk assets only after all reasonable restructuring and collection effortshave taken place and the possibility of further recovery is considered to be remote.

The following table illustrates the total loan loss provisions, gross past due loans, net past due loans andother data in respect of non-performing and past due loans as at 31 December 2007 and 2008 and 30June 2009:

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As at 31 December As at 30 June–––––––––––––––––––––

2007 2008 2009––––––– ––––––– –––––––

(U.S.$ MM except for percentages)Total loan loss provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75.4 274.2 424.9Specific provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 94.2 194.9Non-specific provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65.0 180.0 230.0Gross past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.0 6.0 478.0As percentage of gross loans . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1% 0.1 4.2Net past due loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 1.0 391.4As percentage of net loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0% 0.0 3.5Provisioning coverage for past due loans . . . . . . . . . . . . . . . . 85.0% 83.3 18.1Ratio of non-performing loans (net of provisions)to Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.1% 0.1 21.2

As at 30 June 2009, loan provisions were 1.4 times the level of unsecured past due loans and past due netloans were 2 per cent. of all net loans.

Investment SecuritiesThe following table illustrates the fair values for the Investment Securities portfolio as at 31 December2007 and 2008 and 30 June 2009:

As at 31 December As at 30 June–––––––––––––––––––––––––––––––––––––––––––

2007 2008 2009–––––––––––––––––––– –––––––––––––––––––– –––––––––––––––––––––

Fair Value––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––

Percentage (U.S.$ Percentage (U.S.$ Percentage(U.S.$ MM) of total MM) of total MM) of total

AAA/Aaa . . . . . . . . . . . . . . 1,996.9 25% 27.1 1% – 0%AA- to AA+/Aa3to Aa1 . . . . . . . . . . . . . . . . 1,589.3 20% 1,361.0 61% 143.9 7%A- to A+/A3 to A1 . . . . . 3,243.1 40% 511.9 23% 1,384.9 68%BBB- to BBB+/Baa3to Baa1 . . . . . . . . . . . . . . . . 766.4 9% 46.8 2% 271.5 13%Other debt securities171.7 2% 64.4 3% 60.8 3%

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Total debt securities . . . . 7,767.7 96% 2,011.2 90% 1,861.1 91%Structured financeinvestments . . . . . . . . . . . . . 81.8 1% – 0% – 0%Equities and equityfunds . . . . . . . . . . . . . . . . . 221.2 3% 209.3 10% 184.5 9%

––––––– ––––––– ––––––– ––––––– ––––––– –––––––Total . . . . . . . . . . . . . . . . . . 8,070.7 100% 2,220.5 100% 2,045.6 100%

––––––– ––––––– ––––––– ––––––– ––––––– –––––––––––––– ––––––– ––––––– ––––––– ––––––– –––––––

Investment securities totalled U.S.$2,045.6 million as at 30 June 2009. The investment securities portfoliorepresents not only a liquidity reserve but also an international geographical diversification of the Group’srisk assets with 31 per cent. of the portfolio comprising securities of North American and Europeanissuers. The remaining balance comprises mainly securities issued by governments of GCC states and GCCbanks.

Investment securities principally comprise two types of debt security portfolios and a more limitedinvestment in private equity and hedge funds. The total debt security portfolio amounted to U.S.$1,861.1million as at 30 June 2009, representing 91 per cent. of total investment securities. The larger debtsecurity portfolio comprises floating rate securities or fixed rate securities that have been swapped toyield constant spreads over LIBOR. These accounted for U.S.$1,714.8 million, representing 92 per cent. ofthe total debt securities portfolios as at 30 June 2009. The smaller debt security portfolio comprises fixed

75

income securities. This portfolio amounted to U.S.$146.3 million as at 30 June 2009 representing 8 percent. of the total debt securities portfolio. This largely comprised bonds issued by the governments ofGCC states.

The following table shows a breakdown of the securities portfolio by geographic location as at 30 June2009:

U.S.$Securities millionsGCC 1,324.4Other MENA region 41.7Europe 96.7North America 672.7Asia 40.4

–––––––Total exposure 2,175.9

––––––––––––––97.0 per cent. of the total debt securities comprised investment grade-rated securities. Other debtsecurities are those the issuers of which are rated below BBB-/Baa3 or are unrated. The credit riskassociated with these securities is rigorously monitored within the overall credit risk managementprocess. The securities are therefore subject to the same stringent credit requirements as standardlending and credit-related contingent transactions.

As part of GIB’s strategic initiative to reduce the level of risk on its balance sheet and to refocus on its corebusiness activities, a significant portion of the non-core investment securities portfolio was disposed ofvia a sale to the PIF and SAMA effective at the end of 2008. The assets sold included GIB’s entire exposureto collateralised debt obligations, asset backed securities, equities and equity funds and subordinatedbank debt, on which GIB had taken substantial provisions for impairment. The assets were sold at theiramortised cost less specific provisions for impairment as at the effective date of sale. Accordingly, noprofit or loss was recorded on the transaction. The total amortised cost less specific provisions forimpairment of the sold assets at the effective date of sale on 31 December 2008, based on exchange ratesprevailing on that date, was U.S.$4,832 million. This was net of specific provisions for impairment ofU.S.$544.7 million. The specific provisions relating to the sold assets were written off. For furtherinformation, see “Business – Treasury and Investment Services” above.

Other Asset CategoriesGIB also has various other assets. The following table sets out the book values of selected asset categoriesas at 31 December 2007 and 2008 and 30 June 2009:

As at 31 December As at 30 June2007 2008 2009

–––––––– ––––––––(U.S.$ MM) (U.S.$ MM)

Accrued interest, fees and commissions . . . . . . . . . . . . . . . . 345.0 235.4 89.4Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . 46.3 113.5 76.0Premises and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44.9 44.2 43.6Other, including accounts receivable . . . . . . . . . . . . . . . . . . . 66.9 37.2 118.6Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.6 16.2 14.6Deferred items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 6.2 3.6Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 8.7 17.1Amounts receivable in respect of increasein share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000.0 – –

–––––––– –––––––– ––––––––1,533.8 461.4 362.9

–––––––– –––––––– –––––––––––––––– –––––––– ––––––––

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FundingBanks, government and customer deposits as at 30 June 2009 totalled U.S.$11,610.1 million (2008: U.S.$18,395.0 million). Government and customer deposits amounted to U.S.$8,946.4 million as at 30 June2009, being U.S.$6,062.7 million lower than as at 31 December 2008. Customer deposits as at 30th June2009 represented 77 per cent. of total deposits compared to 82 per cent. as at 31 December 2008. Bankdeposits amounted to U.S.$2,663.7 million as at 30 June 2009 being U.S.$722.2 million lower than as at31 December 2008. The decreases in deposits since the end of 2008 were due to a lower fundingrequirement following the sale of investment securities to shareholders and a reduction in the loanvolume.

GIB’s remaining funding needs are met by equity, term financing, subordinated term loans and short-termborrowings.

The following table shows the sources of GIB’s funding as at 31 December 2007 and 2008 and 30 June2009:

As at 31 December As at 30 June–––––––––––––––––––––––––––––––––––––––––––––––

2007 2008 2009––––––––––––––––––––– ––––––––––––––––––––– –––––––––––––––––––––

Percentage Percentage PercentageU.S.$ MM of total U.S.$ MM of total U.S.$ MM of total

Deposits from banks . . . . . . . . . . 5,970.7 20% 3,385.9 13% 2,663.7 16%Deposits from customers . . . . . . 13,674.0 45% 15,009.1 60% 8,946.4 52%Securities sold underagreements torepurchase . . . . . . . . . . . . . . . . . . . 4,141.5 14% 1,244.8 5% 477.8 3%Securities sold but notyet purchased . . . . . . . . . . . . . . . . 233.2 1% – 0% 0%Other liabilities . . . . . . . . . . . . . . . 511.5 2% 486.7 2% 330.0 2%Senior term financing . . . . . . . . . 2,657.8 9% 2,431.5 10% 2,302.6 13%Subordinated termfinancing . . . . . . . . . . . . . . . . . . . . 550.0 2% 550.0 2% 550.0 3%Equity . . . . . . . . . . . . . . . . . . . . . . . 2,215.3 7% 1,925.5 8% 1,846.2 11%

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total . . . . . . . . . . . . . . . . . . . . . . . . 29,954.0 100% 25,033.5 100% 17,116.7 100%

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

The maturity profile of GIB’s deposits as at 30 June 2009 was as follows:

DepositsDeposits from from Deposits from

Customers governments Banks Total DepositsU.S.$ MM U.S.$ MM U.S.$ MM U.S.$ MM

Within 3 months . . . . . . . . . . . . . . . . 1,748.2 6,443.4 1,957.0 10,148.6More than 3 months . . . . . . . . . . . . . 750.3 4.5 706.7 1,461.5

–––––––– –––––––– –––––––– ––––––––Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,498.5 6,447.9 2,663.7 11,610.1

–––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– ––––––––

The deposit maturities are based on contractual repayment arrangements and as such do not takeaccount of their actual term as indicated by GIB’s deposit retention records. GIB’s formal liquidity controlsare based on contractual asset and liability maturities.

At 30 June 2009, 34 per cent. of all deposits were denominated in U.S. dollars. The balance was principallydenominated in euro, Saudi riyals and Sterling.

As at 30 June 2009, GIB’s senior term financing comprises of bilateral and syndicated loans; such loans donot include any unusual or abnormally onerous covenants.

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As at 30 June 2009, 51 per cent. of all deposits were derived from counterparties in Saudi Arabia and 39per cent. of all deposits were derived from counterparties in the Middle East and North Africa region(excluding Saudi Arabia).

Risk ManagementGIB maintains a prudent and disciplined approach to risk-taking by upholding a comprehensive set of riskmanagement policies, processes and limits, employing professionally qualified people with theappropriate skills, investing in technology and training, and actively promoting a culture of sound riskmanagement at all levels. A key tenet of this culture is the clear segregation of duties and reporting linesbetween personnel transacting business and personnel processing that business. GIB’s risk managementis underpinned by its ability to identify, measure, aggregate and manage the different types of risks itfaces.

The Board Risk Policy Committee, the Management Committee and the Group Risk Committee undertakethe Issuer’s Risk Management Function.

The Board of Directors has created from among its members a Board Risk Policy Committee to review theGroup’s risk taking activities and report to the Board in this regard. The Board Risk Policy Committee ismandated to meet not less than four times a year. The Board sets the overall risk parameters andtolerances within which the Group conducts its activities. The Board periodically reviews the Group’soverall risk profile and significant risk exposures as well as the Group’s major risk policies, processes andcontrols.

The Management Committee, chaired by the CEO, has the primary responsibility for sanctioning risktaking policies and activities within the tolerances defined by the Board. The Group Risk Committeeassists the Management Committee to perform its risk related functions. The Group Risk Committee,comprising the bank’s most senior risk professionals, provides a forum for the review and approval of newproducts, risk measurement methodologies and risk control processes. The Committee also reviews allrisk policies and limits that require approval by the Management Committee. Both the ManagementCommittee and the Group Risk Committee meet as frequently as required, but at least once a month.

From a control perspective, the process of risk management is facilitated through a set of independentfunctions, which report directly to senior management. These functions include Risk Management, CreditRisk Control, Market Risk Control, Operational Risk Control, Financial Controls and Internal Audit. Thismulti-faceted approach aids the effective management of risk by identifying, measuring and monitoringrisks from a variety of perspectives.

Credit RiskCredit risk is actively managed and rigorously monitored in accordance with well-defined credit policiesand procedures. Prior to the approval of a credit proposal, a detailed credit risk assessment is carried outwhich includes an analysis of the obligor’s financial condition, market position, business environment andquality of management. The risk assessment generates an internal credit risk rating for each exposure,which affects the credit approval decision and the terms and conditions of the transaction; the credit riskrating is intended to provide a consistent measurement of risk based on the probability of default, whichultimately drives portfolio limits, risk approval levels and capital allocation. For cross border transactionsan analysis of country risk is also conducted. GIB bases its credit decision for an individual counterpartyon the aggregate Group exposure to that counterparty and all its related entities. Groupwide credit limitsetting and approval authorisation requirements are conducted within Board approved guidelines, andthe measurement, monitoring and control of credit exposures are done on a Groupwide basis in aconsistent manner.

Overall exposures are evaluated to ensure broad diversification of credit risk. Potential concentration risksby product, industry, single obligor, credit risk rating and geography are regularly assessed with a view toimproving overall portfolio diversification. Established limits and actual levels of exposure are regularlyreviewed by the Chief Credit Officer and other members of senior management. In general, all credit

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decisions are reviewed at least once a year. Credit policies and procedures are designed to identify, at anearly stage, exposures which require more detailed monitoring and review.

Market riskMarket risk arises from the Group’s trading, asset and liability management and investment activities. Thecategories of market risk faced by the Group include interest rate risk, credit spread risk, foreign exchangerisk and equity risk.

The Group seeks to manage the market risks it faces through diversification of exposures across dissimilarmarkets and establishment of hedges in related securities or off balance sheet derivative instruments. Tomanage the Group’s exposures, in addition to the exercise of business judgement and managementexperience, the Group utilises limit structures including those relating to positions, portfolios, maturitiesand maximum allowable losses.

A key element in the Group’s market risk management framework is the estimation of potential futurelosses that may arise from adverse market movements. The Group utilises value-at-risk (“VaR”) toestimate such losses. The VaR is derived from quantitative models that use statistical and simulationmethods that take account of all market rates and prices that may cause a change in a position’s value.These include interest rates, foreign exchange rates and equity prices, their respective volatilities and thecorrelations between these variables. The Group’s VaR is calculated on a Monte Carlo simulation basisusing historical volatilities and correlations to generate a profit and loss distribution from severalthousand scenarios.

The VaR takes account of potential diversification benefits of different positions both within and acrossdifferent portfolios. Consistent with general market practice, VaR is computed for all financial instrumentsfor which there are readily available daily prices or suitable proxies. VaR is viewed as an effective riskmanagement tool and a valuable addition to the non-statistically based limit structure. It permits aconsistent and uniform measurement of market risk across all applicable products and activities.Exposures are monitored against a range of limits both by risk category and portfolio and are regularlyreported to and reviewed by senior management and the Board of Directors. Based on the repricingprofile at 30 June 2009, and assuming that the financial assets and liabilities were to remain until maturityor settlement with no action taken by the Group to alter the interest rate risk exposure, an immediate andsustained one per cent. (100 basis points) increase in interest rates across all maturities would result in areduction in net income before tax for the following twelve months and in the Group’s equity byapproximately U.S.$0.9 million and U.S.$20.7 million respectively. The impact on the Group’s equityrepresents the cumulative effect of the increase in interest rates over the entire duration of themismatches in the repricing profile of the interest rate sensitive financial assets and liabilities.

The Group is also exposed to the impact of changes in credit spreads on the fair value of available-for-sale debt securities. Credit spread risk is managed within VaR limits and through the use of models toevaluate the sensitivity of changes in equity to movements in credit spreads. Based on the available-for-sale debt securities held at 30 June 2009, a one basis point increase in credit spreads would result in aU.S.$0.5 million decrease in fair value.

An inherent limitation of VaR is that past market movements may not provide an accurate prediction offuture market losses. Historic analyses of market movements have shown that extreme marketmovements (i.e. beyond the 99 per cent. confidence level) occur more frequently than VaR modelspredict. Stress tests are designed to estimate the potential economic losses in such abnormal markets.Therefore, stress testing combined with VaR provides a more comprehensive picture of market risk. TheGroup regularly performs stress tests that are constructed around changes in market rates and pricesresulting from pre-defined market stress scenarios, including both historical and hypothetical marketevents. Historical scenarios include the 1998 Russian crisis, the events of 9/11 and the 2007/2008 creditcrisis. In addition, the Group performs stress testing based on internally developed hypothetical marketstress scenarios. Stress testing is performed for all material market risk portfolios.

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Liquidity RiskLiquidity risk is the risk that sufficient funds are not available to meet the Group’s financial obligations ona punctual basis as they fall due.

Liquidity management policies are designed to ensure that funds are available at all times to meet thefunding requirements of the Group, even in adverse conditions. In normal conditions the objective is toensure that there are sufficient funds available not only to meet current financial commitments but alsoto facilitate business expansion. These objectives are met through the application of prudent liquiditycontrols. These controls provide security of access to funds without undue exposure to increased costsfrom the liquidation of assets or the aggressive bidding for deposits. The Group’s liquidity controls ensurethat, over the short term, the future profile of cash flows from maturing assets is adequately matched tothe maturity of liabilities. Liquidity controls also provide for the maintenance of a stock of liquid andreadily realisable assets and a diversified deposit base in terms of both maturities and range of depositors.

The management of liquidity and funding is primarily conducted in the Group’s individual geographicentities within limits set and approved by the Board of Directors. The limits take account of the depth andliquidity of the market in which the entity operates. It is the Group’s general policy that each geographicentity should be self-sufficient in relation to funding its own operations.

The Group’s liquidity management policies include the following:

• the monitoring of (i) future contractual cash flows against approved limits, and (ii) the level of liquidassets available in the event of a stress event;

• the monitoring of balance sheet liquidity ratios;

• the monitoring of the sources of funding in order to ensure that funding is derived from a diversifiedrange of sources;

• the monitoring of depositor concentrations in order to avoid undue reliance on individualdepositors;

• the maintenance of a satisfactory level of term financing; and

• the maintenance of liquidity and funding contingency plans; these plans identify early indicators ofstress conditions and prescribe the actions to be taken in the event of systemic or other crisis, whileminimising adverse long term implications for the Group’s business activities.

The Group has established limits which restrict the volume of liabilities maturing in the short term. Anindependent risk management function monitors the future cash flow maturity profile against approvedlimits on a daily basis. The cash flows are monitored against limits applying to both daily and cumulativecash flows occurring over a 14 day period. The cash flow analysis is also monitored on a weekly basis bythe Assets and Liabilities Committee (ALCO).

Customer deposits form a significant part of the Group’s funding. The Group places considerableimportance on maintaining the stability of both its customer and interbank deposits. The stability ofdeposits depends on maintaining confidence in the Group’s financial strength and financial transparency.

Operational riskA framework and methodology has been developed to identify and control the various operational risks.Whilst operational risk cannot be entirely eliminated, it is managed and mitigated by ensuring that theappropriate infrastructure, controls, systems, procedures and trained and competent people are in placethroughout the Group. The various procedures and processes used to manage operational risk includeeffective staff training, appropriate controls to safeguard assets and records, regular reconciliation ofaccounts and transactions, close monitoring of risk limits, segregation of duties, management awareness,remedial action plans, a rigorous audit process and financial management and reporting. In addition,other control strategies, including business continuity planning and insurance, are in place tocomplement the operational risk management procedures, as applicable. While measures have beenimplemented to minimise the risk of business disruption due to systems failures, adequately tested

80

contingency arrangements are also in place to support operations in the event of a range of possibledisaster scenarios.

GIB’s compliance function, which reports directly to the CEO, maintains best practice and proceduresrelating to the management of the risk of failure to comply with legal and regulatory requirements. Theinformation security function secures GIB’s information assets and payment and settlement systems.A strong internal audit function makes regular, independent appraisals of the control environment in allidentified risk areas

Regulatory CapitalThe Group’s lead regulator, the CBB, sets and monitors capital requirements for the Group as a whole. Theparent company and individual banking operations are directly supervised by their local regulators.

At 30 June 2009, GIB had a total capital base of U.S.$2,691.2 million and total risk-weighted exposure ofU.S.$13,450.3 million. GIB’s capital adequacy ratio calculated in accordance with the CBB Basel IIguidelines was 20.0 per cent., exceeding the CBB minimum requirement of 12.0 per cent. The CBB’sminimum capital adequacy ratio is 12 per cent. compared to a minimum ratio of 8 per cent. prescribedby the Basel Committee on Banking Supervision. The Group calculates regulatory capital requirements forgeneral market risk in its trading portfolios using a value-at risk model and uses the CBB’s prescribed riskweightings to determine risk-weighted amounts for credit risk and specific market risk.

The regulatory capital base of GIB as at 30 June 2009 is set out in the table below:

U.S.$ millions Tier 1 Tier 2 TotalShare capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500.0 – 2,500.0Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 – 7.6Compulsory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169.2 – 169.2Voluntary reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.7 – 106.7Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (820.6) – (820.6)Unrealised gains on fair valuing AFS equityinvestments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 10.2 10.2Collective impairment provisions (subject to1.25 per cent. limitation) . . . . . . . . . . . . . . . . . . . . . . . . . . . – 168.1 168.1Subordinated term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . – 550.0 550.0

–––––––– –––––––– ––––––––Tier 1 and tier 2 capital base . . . . . . . . . . . . . . . . . . . . . . . . 1,962.9 728.3 2,691.2

–––––––– –––––––– –––––––––––––––– –––––––– ––––––––

The Group’s risk exposures are categorised as either trading book or banking book, and risk-weightedassets are determined according to specified requirements that seek to reflect the varying levels of riskattached to assets and off-balance sheet exposures.

The Group’s policy is to maintain a strong capital base so as to sustain investor, creditor and marketconfidence and to preserve the future development of the business. The impact of the level of capital onshareholders’ return is also recognised as well as the need to maintain a balance between the higherreturns that might be possible with greater gearing and the advantages and security afforded by a soundcapital position. The Group manages its capital structure and makes adjustments to the structure takingaccount of changes in economic conditions and strategic business plans.

SubsidiariesGIB has six (directly or indirectly) wholly-owned subsidiaries (excluding financing vehicles): GIBUK, GIBFS,GIB Investment S.P.C., GIB Nominees Ltd., GIB (UK) Capital Investments Limited, SIB Portfolio Advisors Inc.,SIB Private Equity Management L.L.C. and GIB (UK) Nominees Limited (although certain shares insubsidiaries may be held by GIB through nominees acting on behalf of GIB).

GIBUK is incorporated in the United Kingdom and is regulated by the FSA. As part of a recentrestructuring, GIBUK discontinued its proprietary trading activities, so as to concentrate on its core

81

strength in asset management. GIBUK is also in the process of outsourcing certain functions to GIB inBahrain, which will result in the number of employees of GIBUK reducing from 119 to about 60 before theend of 2009.

At the beginning of 2008, in order to comply with specific regulatory changes in Saudi Arabia, GIBestablished GIBFS; GIBFS offers various investment banking services in Saudi Arabia. GIBFS is incorporatedin Saudi Arabia and has a paid up share capital of SAR 60 million. GIBFS is regulated by the CapitalMarkets Authority of Saudi Arabia.

GIB (UK) Capital Investments Limited, incorporated in England, is a limited partner in Falcon PrivateEquity LP.

SIB Portfolio Advisors Inc., incorporated in the United States, provides portfolio advisory services.

GIB Investment S.P.C., a single person company incorporated in the Kingdom of Bahrain, is a holdingcompany for a number of equity or equity related investments.

SIB Private Equity Management L.L.C., incorporated in the United States, is the general partner of FalconPrivate Equity LP.

GIB (UK) Nominees Ltd., incorporated in England, holds shares in GIB (UK) Capital Investments Limited.

Of GIB’s subsidiaries, only GIBUK currently makes a significant contribution to GIB’s consolidated revenues(16 per cent. of consolidated net interest and other income for the half year ending 30 June 2009). GIBFSis a newly established entity and, as such, does not currently make a significant contribution toconsolidated revenues. The other subsidiaries are either non-operating companies or are not material interms of assets, liabilities or revenues.

The following chart shows the organisation of GIB’s principal subsidiaries and branches(1):

Notes:

(1) Excludes special purpose companies and non-principal subsidiaries.

(2) Gulf International Bank B.S.C. operates six international branches; London (UK), Riyadh and Jeddah (both in SaudiArabia), New York (US), Cayman Islands (US) and IBF (International Bank Facility) (US) as well as representative officesin the United Arab Emirates and Lebanon.

Gulf International Bank B.S.C.2

LondonNew York

Cayman IBF Riyadh Jeddah

Gulf International Bank B.S.C.

(UK ) Limited

GIB (UK) Capital Investments

Limited

GIB Investment S.P.C. Bahrain

GIBFS, Saudi Arabia

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Management and Human ResourcesBoard of DirectorsIn August 2009, the general assembly of the shareholders of GIB unanimously elected a new board ofdirectors; previously, members of the board of directors had been nominated by the respectiveshareholders. This election resulted in a board of seven directors. GIB considers all but one of the directorsto be independent, in accordance with criteria established by the CBB for the purpose of determiningwhether directors should be classified as being “independent”. All members of the Board of directors haveequal voting rights, except in the circumstances where the Chairman may be able to exercise a castingvote in respect of a deadlocked approval.

The current board of directors comprises of the following members:

H.E. Jammaz Bin Abdulla Al-SuhaimiChairman, Saudi Arabian Citizen.

H.E. Jammaz Bin Abdulla Al-Suhaimi was appointed to the Board in 2008. Previously Chairman and ChiefExecutive Officer of the Capital Markets Authority, Saudi Arabia. He is chairman of the ExecutiveCommittee of the Bank.

Mansoor Al MaimanVice Chairman, Saudi Arabian Citizen.

Mr. Al-Maiman was appointed to the Board in 2009 and is currently Deputy Minister and SecretaryGeneral of the Public Investment Fund in Saudi Arabia,

He is chairman of the Human Resources & Compensation Committee of the Bank and a member of theExecutive Committee of the Bank.

Dr. Hamad Bin Sulaiman Al-BazaiBoard Member, Saudi Arabian Citizen.

Dr. Al-Bazai was appointed to the Board in 1999 and is Deputy Minister of Finance at the Ministry ofFinance, Kingdom of Saudi Arabia. He is a Member of the Preparatory Committee of the SupremePetroleum Council and a Board Member of the Human Resources Development Fund, the SouthernRegion Cement Company and the Higher Education Fund. He is chairman of the Risk Policy Committeeof the Bank and is a member of the Executive Committee of the Bank.

Abdullah Al-Abdul-GaderBoard Member, Saudi Arabian Citizen.

Mr. Al-Abdul-Gader was appointed to the Board in 2009 and is the Professor of Information Technologyat the King Fahd University of Petroleum and Minerals, previously having been a Commissioner of theSaudi Capital Markets Authority (2004-2009).

He is a member of the Human Resources & Compensation Committee of the Bank and is the chairman ofthe Audit Committee of the Bank.

Sulaiman Al-HamdanBoard Member, Saudi Arabian Citizen.

Mr. Al-Hamdan was appointed to the Board in 2009 and is the Chief Executive Officer of National AirServices (NAS).

He is a member of the Executive Committee and the Risk Policy Committee of the Bank.

83

Khaled Al-ModaiferBoard Member, Saudi Arabian Citizen.

Mr. Al-Modaifer was appointed to the Board in 2009 and is the Vice President for Industrial Affairs at theSaudi Arabian Mining Company (Ma’aden).

He is a member of the Audit Committee and the Human Resources & Compensation Committee of theBank.

Abdulla Al-ZamilBoard Member, Saudi Arabian Citizen.

Mr. Al-Zamil was appointed to the Board in 2009 and is the Chief Operating Officer of Zamil IndustrialDevelopment Company.

He is a member of the Audit Committee and the Risk Policy Committee of the Bank.

The business address for each director listed above is:

Al-Dowali Building3 Palace AvenueP.O. Box 1017ManamaKingdom of Bahrain

Senior ManagementSince the commencement of the continuing credit crisis in 2007, there have been signficiant changes tothe senior management team of GIB, culminating in the appointment of a new Chief Executive Officer inJanuary 2009.

The current senior management team is as follows:

Dr. Yahya AlyahyaChief Executive Officer

Saudi Arabian Citizen

Dr. Alyahya chairs the Board of Shuaibah Water and Electricity Company and sits on the Board of OgerTelecom.

Antoine DijkstraChief Investment and Treasury Officer

Dutch Citizen

Stephen WilliamsChief Financial Officer

British Citizen

Hassan Abdul GhaniHead of Operations and Administration

Bahraini Citizen

Matthew SnyderHead of Asset Management

American Citizen

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Hassan Al-MullaChief Auditor

Bahraini Citizen

Masood ZafarHead of Risk Management

Pakistani Citizen

M. ChandrasekaranHead of Commercial Banking

Indian Citizen

Srinivas VemparalaHead of Investment Banking

Indian Citizen

The business address for each member of senior management listed above is:

Al-Dowali Building3 Palace AvenueP.O. Box 1017ManamaKingdom of Bahrain

ConflictsThere are no potential conflicts of interest between any duties of any director or any member of seniormanagement to the Issuer and any private or other duty (including those listed above) of that director orthat member of senior management.

EmployeesAs at 30 June 2009, GIB had a total of 491 employees (561 employees as at 31 December 2008). Thefollowing table shows the distribution of employees by location as at 30 June 2009:

Number of EmployeesBahrain head office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287GIBUK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119Riyadh branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58GIB Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Jeddah branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5New York branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Abu Dhabi representative office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4London branch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Beirut representative office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

––––––––Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 491

––––––––––––––––

GIBUK is currently in the process of outsourcing certain functions to GIB and this is expected to result inthe number of GIBUK employees reducing by about 60 by the end of 2009.

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Taxation

The following is a general description of certain Bahraini and EU tax considerations relating to the Notes.It does not purport to be a complete analysis of all tax considerations relating to the Notes, whether inthose countries or elsewhere. Prospective purchasers of Notes should consult their own tax advisers as towhich countries’ tax laws could be relevant to acquiring, holding and disposing of Notes and receivingpayments of interest, principal and/or other amounts under the Notes and the consequences of suchactions under the tax laws of those countries. This summary is based upon the law as in effect on the dateof this Base Prospectus and is subject to any change in law that may take effect after such date.

BahrainUnder the current laws of Bahrain, there are no corporate or personal income taxes, withholding orcapital gains taxes or stamp duties that would apply in respect of Notes issued by the Issuer.

EU Savings Tax DirectiveUnder EC Council Directive 2003/48/EC on the taxation of savings income, each Member State isrequired to provide to the tax authorities of another Member State details of payments of interest orother similar income paid by a person within its jurisdiction to, or collected by such a person for, anindividual resident or certain limited types of entity established in that other Member State; however, fora transitional period, Austria, Belgium and Luxembourg may instead apply a withholding system inrelation to such payments, deducting tax at rates rising over time to 35%. 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. Belgium will replace this withholding tax with aregime of exchange of information to the Member State of residence as from 1 January 2010.

A number of non-EU countries, and certain dependent or associated territories of certain Member States,have adopted similar measures (either provision of information or transitional withholding) in relation topayments made by a person within its jurisdiction to, or collected by such a person for, an individualresident or certain limited types of entity established in a Member State. In addition, the Member Stateshave entered into provision of information or transitional withholding arrangements with certain of thosedependent or associated territories in relation to payments made by a person in a Member State to, orcollected by such a person for, an individual resident or certain limited types of entity established in oneof those territories.

On 13 November 2008 the European Commission published a proposal for amendments to the Directive,which included a number of suggested changes which, if implemented, would broaden the scope of therequirements described above. The European Parliament approved an amended version of this proposalon 24 April 2009. Investors who are in any doubt as to their position should consult their professionaladvisers. If any of these proposed changes are made in relation to the Directive 2003/48/EC, they mayamend or broaden the scope of the requirements above.

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Subscription and Sale

Notes may be sold from time to time by the Issuer to any one or more of Barclays Bank PLC, BNP Paribas,CALYON, Citigroup Global Markets Limited, Deutsche Bank AG, London Branch, GIB Financial ServiceL.L.C., HSBC Bank plc, J.P. Morgan Securities Ltd., Mizuho International plc, Nomura International plc,Standard Chartered Bank, The Royal Bank of Scotland plc and UBS Limited (the “Dealers”). Thearrangements under which Notes may from time to time be agreed to be sold by the Issuer to, andpurchased by, Dealers are set out in a Dealer Agreement dated 18 November 2009 (the “DealerAgreement”) and made between the Issuer and the Dealers. Any such agreement will, inter alia, makeprovision for the form and terms and conditions of the relevant Notes, the price at which such Notes willbe purchased by the Dealers and the commissions or other agreed deductibles (if any) payable orallowable by the Issuer in respect of such purchase. The Dealer Agreement makes provision for theresignation or termination of appointment of existing Dealers and for the appointment of additional orother Dealers either generally in respect of the Programme or in relation to a particular Tranche of Notes.

United States of AmericaThe Notes have not been and will not be registered under the Securities Act and may not be offered orsold within the United States or to, or for the account or benefit of, U.S. persons except in certaintransactions exempt from the registration requirements of the Securities Act. Terms used in thisparagraph have the meanings given to them by Regulation S.

The Bearer Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered withinthe United States or its possessions or to a United States person, except in certain transactions permittedby U.S. tax regulations. Terms used in this paragraph have the meanings given to them by the UnitedStates Internal Revenue Code and regulations thereunder.

Each Dealer has agreed, and each further Dealer appointed under the Programme will be required toagree, that except as permitted by the Dealer Agreement, it will not offer, sell or deliver Notes, (i) as partof their distribution at any time or (ii) otherwise until 40 days after the completion of the distribution ofthe Notes comprising the relevant Tranche, as certified to the Fiscal Agent or the Issuer by such Dealer(or, in the case of a sale of a Tranche of Notes to or through more than one Dealer, by each of such Dealersas to the Notes of such Tranche purchased by or through it, in which case the Fiscal Agent or the Issuershall notify each such Dealer when all such Dealers have so certified) within the United States or to, or forthe account or benefit of, U.S. persons, and such Dealer will have sent to each dealer to which it sells Notesduring the distribution compliance period relating thereto a confirmation or other notice setting forththe restrictions on offers and sales of the Notes within the United States or to, or for the account orbenefit of, U.S. persons.

In addition, until 40 days after the commencement of the offering of Notes comprising any Tranche, anyoffer or sale of Notes within the United States by any dealer (whether or not participating in the offering)may violate the registration requirements of the Securities Act.

Public Offer Selling Restriction Under the Prospectus DirectiveIn relation to each Member State of the European Economic Area which has implemented the ProspectusDirective (each, a “Relevant Member State”), each Dealer has represented, warranted and agreed, andeach further Dealer appointed under the Programme will be required to represent, warrant and agree,that with effect from and including the date on which the Prospectus Directive is implemented in thatRelevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offerof Notes which are the subject of the offering contemplated by the Prospectus as completed by the FinalTerms in relation thereto to the public in that Relevant Member State except that it may, with effect fromand including the Relevant Implementation Date, make an offer of such Notes to the public in thatRelevant Member State:

(a) at any time to legal entities which are authorised or regulated to operate in the financial markets or,if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

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(b) at any time to any legal entity which has two or more of (1) an average of at least 250 employeesduring the last financial year; (2) a total balance sheet of more than EUR 43,000,000 and (3) anannual net turnover of more than EUR 50,000,000, all as shown in its last annual or consolidatedaccounts;

(c) at any time to fewer than 100 natural or legal persons (other than qualified investors as defined inthe Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealersnominated by the Issuer for any such offer; or

(d) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive.

provided that no such offer of Notes referred to in (a) to (d) above shall require the Issuer or any Dealerto publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectuspursuant to Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notesin any Relevant Member State means the communication in any form and by any means of sufficientinformation on the terms of the offer and the Notes to be offered so as to enable an investor to decide topurchase or subscribe the Notes, as the same may be varied in that Member State by any measureimplementing the Prospectus Directive in that Member State and the expression “Prospectus Directive”means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant MemberState.

United KingdomEach Dealer has represented and warranted, and each further Dealer appointed under the Programmewill be required to represent and warrant that:

(a) Financial promotion: it has only communicated or caused to be communicated and will onlycommunicate or cause to be communicated any invitation or inducement to engage in investmentactivity (within the meaning of section 21 of the FSMA) received by it in connection with the issueor sale of any Notes in circumstances in which section 21(1) of the FSMA would not, if it was not anauthorised person, apply to the Issuer; and

(b) General compliance: it has complied and will comply with all applicable provisions of the FSMA withrespect to anything done by it in relation to any Notes in, from or otherwise involving the UnitedKingdom.

JapanThe Notes have not been and will not be registered under the Financial Instruments and Exchange Law ofJapan (Law No. 25 of 1948, as amended) and, accordingly, each Dealer has agreed, and each furtherDealer appointed under the Programme will be required to agree, that it will not offer or sell any Notesdirectly or indirectly, in Japan or to, or for the benefit of, any Japanese Person or to others for re-offeringor resale, directly or indirectly, in Japan or to any Japanese Person except under circumstances which willresult in compliance with all applicable laws, regulations and guidelines promulgated by the relevantJapanese governmental and regulatory authorities and in effect at the relevant time. For the purposes ofthis paragraph, “Japanese Person” shall mean any person resident in Japan, including any corporation orother entity organised under the laws of Japan.

Kingdom of BahrainEach Dealer has represented, warranted and agreed that it has not offered, and will not offer, Notes to (i)the Public (as defined in Articles 142 – 146 of the Commercial Companies Law (Decree Law No. 21/2001)of Bahrain) or (ii) any persons in Bahrain who are not “accredited investors”.

For this purpose, an “accredited investor” means:

(a) an individual holding financial assets (either singly or jointly with a spouse) of USD 1,000,000 ormore;

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(b) a company, partnership, trust or other commercial undertaking which has financial assets availablefor investment of not less than USD 1,000,000; or

(c) a government, supranational organisation, central bank or other national monetary authority or astate organisation whose main activity is to invest in financial instruments (such as a state pensionfund).

Kingdom of Saudi ArabiaAny investor in the Kingdom of Saudi Arabia or who is a Saudi person (a “Saudi Investor”) who acquiresNotes pursuant to an offering should note that the offer of Notes is a limited offer under Article 11 of the“Offer of Securities Regulations” as issued by the Board of the Capital Market Authority resolutionnumber 2-11-2004 dated 4 October 2004 and amended by the Board of the Capital Market Authorityresolution number 1-28-2008 dated 18 August 2008 (the “KSA Regulations”). Each Dealer hasrepresented and agreed, and each further Dealer appointed under the Programme will be required torepresent and agree, that the offer of the Notes will not be directed at more than 60 Saudi Investors(excluding “Sophisticated Investors” (as defined in Article 10 of the KSA Regulations)) and the minimumamount payable per Saudi Investor will be not less than Saudi Riyal (SR)1 million or an equivalentamount.

The offer of Notes shall not therefore constitute a “public offer” pursuant to the KSA Regulations, but issubject to the restrictions on secondary market activity under Article 17 of the KSA Regulations. AnySaudi Investor who has acquired Notes pursuant to a limited offer may not offer or sell those Notes to anyperson unless the offer or sale is made through an authorised person appropriately licensed by the SaudiArabian Capital Market Authority and: (a) the Notes are offered or sold to a Sophisticated Investor; (b) theprice to be paid for the Notes in any one transaction is equal to or exceeds SR1 million or an equivalentamount; or (c) the offer or sale is otherwise in compliance with Article 17 of the KSA Regulations.

GeneralEach Dealer has represented, warranted and agreed, and each further Dealer appointed under theProgramme will be required to represent, warrant and agree, that to the best of its knowledge and belief,it will comply with all applicable laws and regulations in each country or jurisdiction in or from which itpurchases, offers, sells or delivers Notes or possesses, distributes or publishes this Base Prospectus or anyFinal Terms or any related offering material.

The Dealer Agreement provides that the Dealers shall not be bound by any of the restrictions relating toany specific jurisdiction (set out above) to the extent that such restrictions shall, as a result of change(s)or change(s) in official interpretation after the date hereof of applicable laws and regulations, no longerbe applicable but without prejudice to the obligations of the Dealers described in the paragraph headed“General” above.

Selling restrictions may be supplemented or modified with the agreement of the Issuer. Any suchsupplement or modification may be set out in the relevant Final Terms (in the case of a supplement ormodification relevant only to a particular Tranche of Notes) or in a supplement to this Base Prospectus.

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General Information

Authorisation1. The establishment of the Programme was authorised by resolutions of the Board of Directors of the

Issuer passed on 15 October 2009. The Issuer has obtained or will obtain from time to time allnecessary consents, approvals and authorisations in connection with the issue and performance ofthe Notes.

Listing of the Notes2. The admission of the Notes to the Official List will be expressed as a percentage of their nominal

amount (excluding accrued interest). It is expected that each Tranche of Notes which is to beadmitted to the Official List and to trading on the London Stock Exchange’s regulated market will beadmitted separately as and when issued, subject only to the issue of a Global Note or Notes initiallyrepresenting the Notes of such Tranche. Application has been made to the UK Listing Authority forNotes issued under the Programme to be admitted to the Official List and the to the London StockExchange for such Notes to be admitted to trading on the London Stock Exchange’s regulatedmarket. The listing of the Programme in respect of the Notes is expected to be granted on or before23 November 2009.

Legal and Arbitration Proceedings3. No member of the Group has been involved in any governmental, legal or arbitration proceedings,

(including any such proceedings which are pending or threatened, of which the Issuer is aware),during the 12 months preceding the date of this Base Prospectus that may have, or have had, asignificant effect on the Issuer’s or the Group’s financial position or profitability.

Significant/Material Change4. Since 31 December 2008 there has been no material adverse change in the prospects of the Issuer

or the Group and since 30 June 2009 there has been no significant change in the financial or tradingposition of Issuer or the Group.

Auditors5. The consolidated financial statements of the Issuer have been audited without qualification for the

years ended 31 December 2007 and 31 December 2008 by KPMG Fakhro, authorised and regulatedby Central Bank of Bahrain and the Ministry of Commerce in the Kingdom of Bahrain.

Documents on Display6. Copies of the following documents may be inspected during normal business hours at the London

branch of the Issuer situated at One Knightsbridge, London SW1X 7XS, United Kingdom for12 months from the date of this Base Prospectus:

(a) the constitutional documents (with English translations thereof ) of the Issuer;

(b) the audited consolidated financial statements of the Issuer in respect of the financial yearsended 31 December 2007 and 31 December 2008, in each case together with the audit reportsprepared in connection therewith;

(c) the unaudited interim condensed consolidated financial statements of the Issuer for thesix months period ended 30 June 2009;

(d) the Agency Agreement;

(e) the Deed of Covenant;

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(f ) the Dealer Agreement; and

(g) the Programme Manual (which contains the forms of the Notes in global and definitive form).

Material Contracts7. The Issuer has not entered into contracts outside the ordinary course of business which could result

in any obligations or entitlement that is material to the Issuer’s ability to meet its obligation toNoteholders in respect of any Notes issued.

Clearing of the Notes8. It is expected that Notes will be accepted for clearance through Euroclear and Clearstream,

Luxembourg. The appropriate common code and the International Securities Identification Numberin relation to the Notes of each Tranche will be specified in the relevant Final Terms. The relevantFinal Terms shall specify any other clearing system as shall have accepted the relevant Notes forclearance together with any further appropriate information.

9. The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium and the address ofClearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg.

Conditions for determining price10. The issue price and the amount of the relevant Notes will be determined before filing of the relevant

Final Terms of each Tranche, based on then prevailing market conditions.

Post-issuance information11. The Issuer does not intend to provide any post-issuance information in relation to any issues of

Notes.

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2009 Third Quarter Consolidated Financial Statements

REGISTERED/HEAD OFFICE OF THE ISSUER

Al-Dowali Building3 Palace Avenue

P.O. Box 1017Manama

Kingdom of Bahrain

ARRANGER

Barclays Bank PLC5 The North Colonnade

Canary WharfLondon E14 4BBUnited Kingdom

DEALERS

Barclays Bank PLC BNP Paribas5 The North Colonnade 10 Harewood Avenue

Canary Wharf London NW1 6AALondon E14 4BB United KingdomUnited Kingdom

CALYON Citigroup Global Markets Limited9, Quai du Président Paul Doumer Citigroup Centre

92920 Paris La Défence Cedex Canada SquareFrance Canary Wharf

London E14 5LBUnited Kingdom

Deutsche Bank AG, London Branch GIB Financial Services L.L.C.Winchester House Al-Dowali Building

1 Great Winchester Street 3 Palace AvenueLondon EC2N 2DB P.O. Box 1017United Kingdom Manama

Kingdom of Bahrain

HSBC Bank plc J.P. Morgan Securities Ltd.8 Canada Square 125 London WallLondon E14 5HQ London EC2Y 5AJUnited Kingdom United Kingdom

Mizuho International plc Nomura International plcBracken House Nomura House

One Friday Street 1 St Martin’s-le-GrandLondon EC4M 9JA London EC1A 4NPUnited Kingdom United Kingdom

Standard Chartered Bank The Royal Bank of Scotland plc6 Battery Road #09-00 135 Bishopsgate

Singapore 049909 London EC2M 3URPost Box No: 24989 United Kingdom

UBS Limited1 Finsbury AvenueLondon EC2M 2PPUnited Kingdom

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FISCAL AGENT

Deutsche Bank AG, London BranchWinchester House

1 Great Winchester StreetLondon EC2N 2DBUnited Kingdom

PAYING AGENTS

Deutsche Bank AG, London Branch Deutsche Bank Luxembourg S.A.Winchester House 2, Boulevard Konrad Adenauer

1 Great Winchester Street L-1115 LuxembourgLondon EC2N 2DBUnited Kingdom

REGISTRAR

Deutsche Bank Luxembourg S.A.2, Boulevard Konrad Adenauer

L-1115 Luxembourg

LEGAL ADVISERS

To the Issuer as to English law: To the Dealers as to English law:Allen & Overy LLP Clifford Chance LLP

One Bishops Square 10 Upper Bank StreetLondon E1 6AD London E14 5JJUnited Kingdom United Kingdom

To the Dealers as to Bahraini law:

Hatim S. Zu’bi & PartnersAttorneys and Legal Consultants

P.O. Box 5021st Floor, Bab El Bahrain Building

ManamaKingdom of Bahrain

AUDITORS TO THE ISSUER

KPMG Fakhro5th Floor

Chamber of Commerce BuildingP.O. Box 710

ManamaKingdom of Bahrain

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sterling 125044