Impact of Acquisition on FirstRand Bank Ltd

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15 NOVEMBER 2017

IMPACT OF THE FIRSTRAND GROUP'S PROPOSED ACQUISITIONOF ALDERMORE ON FIRSTRAND BANK LIMITED

On 6 November 2017, FirstRand Limited (together with its subsidiaries, the "FirstRand Group"), announced that the boards of FirstRand International Limited ("FirstRand Offeror") and Aldermore Group PLC ("Aldermore") had reached agreement on the terms of a recommended cash offer to be made by the FirstRand Offeror for the entire issued and to be issued ordinary share capital of Aldermore (the "Offer"). FirstRand Limited is the parent company of FirstRand Bank Limited (the "Bank"). The Offer values the entire issued and to be issued ordinary share capital of Aldermore at approximately £1.1 billion. The Offer is intended to be effected by means of a Court-sanctioned scheme of arrangement under part 26 of the Companies Act 2006 (the "Scheme"). The Offer remains subject to certain conditions which are set out in the Announcement, including that the Scheme becomes unconditional and effective on or before 30 April 2018 or such later date as FirstRand Offeror and Aldermore may agree (subject to court approval, if required).

Aldermore is a UK-based bank providing asset finance, invoice finance, mortgage and deposit products to Small and Medium-sized Enterprises, homeowners, landlords and savers. Founded in 2009, Aldermore is listed on the Main Market of the London Stock Exchange, is a constituent of the FTSE 250 leading share index and had total assets of £9.6 billion (at 30 September 2017).

FirstRand Offeror is a wholly-owned subsidiary of FirstRand Limited. The impact of the transaction on the FirstRand Group was disclosed to shareholders in FirstRand Limited's announcement of 6 November 2017.

This announcement by the Bank provides holders of the Bank's debt securities with specific information relating to the impact of this transaction on the Bank should the Scheme become effective.

MotoNovo Finance ("MotoNovo") is currently a business segment of the Bank's London Branch and contributed R727 million (4%) of the Bank's total normalised earnings of R18 089 million for the year ended 30 June 2017.

If the Scheme becomes effective, the FirstRand Group's current UK retail and business/SME operations, which include MotoNovo, will be integrated into Aldermore to form a separate pillar. MotoNovo has historically been funded through a combination of securitisations, warehouse facilities and the Bank's balance sheet. Once integrated into Aldermore, MotoNovo will be supported by Aldermore's funding platform which is only utilised for UK lending books. All new business by MotoNovo will be funded through further scaling Aldermore's deposit and funding platform. MotoNovo's current loans will continue to be funded through existing funding mechanisms, but will be run down over time. As a result, MotoNovo will ultimately cease to form part of the Bank's operating activities as Aldermore will not be a subsidiary of the Bank.

The Bank believes that the transaction would have the additional benefit of freeing up funding and liquidity capacity on the Bank's balance sheet, currently utilised for MotoNovo, which can now be deployed into the FirstRand Group's South African and rest of Africa growth strategies.

The consideration payable under the Offer will be funded from the FirstRand Group's existing cash resources. To finance the acquisition, the FirstRand Offeror has entered into an intra-group loan agreement with the Bank pursuant to which the Bank has agreed to provide FirstRand Offeror with a loan facility of an aggregate principal amount of up to GBP1.3 billion (or such higher amount as they may agree).

Any goodwill arising from the transaction will effectively result in an impairment against the FirstRand Group's capital for purposes of determining capital adequacy. The FirstRand Group will back the goodwill arising from this transaction with CET1 capital, a portion of which will be provided from the Bank's excess regulatory CET1 capital.

The Bank considered a range of variables in assessing the likely impact of this transaction on its CET1 ratio, these include:

· a range for the final goodwill amount, as this is yet to be finalised; and

· the anticipated capital generation of the Bank and other Group entities before the transaction is concluded, which would impact the portion of the goodwill that would have to be backed by CET1 capital provided by the Bank.

Given the above, if the Scheme becomes effective, the impact on FirstRand Bank's CET1 ratio is currently estimated to be a reduction of between approximately 90 and 130 basis points.

Enquiries:

FirstRand Bank Ltd Tel: +27 (0) 11 282 1341

Sam Moss, Head of Investor Relations