Inflation-linked Retail Bond

The information contained herein may only be released, published or distributed in the United Kingdom, Jersey and Guernsey in accordance with applicable regulatory requirements. The information contained herein is not for release, publication or distribution in or into the United States, Australia, Canada, Japan, South Africa, the Republic of Ireland or in any other jurisdiction where it is unlawful to distribute this document.

29 November 2011

Tesco Bank returns with an Inflation-linked Retail Bond

Following the success of its inaugural retail bond earlier this year, Tesco Bank is issuing a second bond aimed at retail investors. The eight-year bond will be linked to the Retail Price Index (RPI) and will be issued by Tesco Bank. It can be bought and sold by investors exclusively through stockbrokers or wealth managers with a minimum purchase of £2,000. It can be held within a stocks and shares ISA or SIPP.*

Over the eight-year term, the bonds will pay interest twice a year at a 1% annual gross rate of interest adjusted to take account of changes in the RPI**. On maturity, the amount due will be the full value of the bonds plus any overall increase in the RPI. If the RPI has fallen during the term, Tesco Bank has committed to repay the bonds at no less than their full face value.

Benny Higgins, Chief Executive of Tesco Bank commented:  "Our first retail bond was very successful, exceeding all expectations. It attracted interest from a broad customer base and there was unfulfilled demand when the book was closed. The issue of our second bond, in an inflation-linked format, offers a further opportunity to investors."

The Tesco Bank RPI-linked Retail Bond will be funded on the settlement date of 16 December 2011 and interest will be earned from this date. Investors can sell the bond at the prevailing market price (which may be more or less than the face value) before maturity on the open market through stockbrokers.*** The Tesco Bank RPI-linked Retail Bond will be listed on the London Stock Exchange's Order Book for Retail Bonds.

The Tesco Bank RPI-linked Retail Bond is not covered by the Financial Services Compensation Scheme (FSCS). In the unlikely event that Tesco Bank defaults or becomes insolvent, customers may lose some or all of their investment.

- ENDS -

For media enquiries please contact:

George Gordon, Head of Communications, Tesco Bank, 07825680197

* If a customer has, or is eligible to set up, a Stocks & Shares ISA or a SIPP which can hold bonds, depending on their individual tax circumstances and subject to any future changes in legislation, they should be able to earn the interest tax free.

** Inflation adjustments will be calculated by comparing the RPI level relating to the month which is 8 months before each payment is due with the RPI level relating to the month which was 8 months before the December 2011 issue date, i.e. April 2011. For more information please read the Information Booklet, Offering Circular, Drawdown Prospectus and Final Terms relating to the bonds.

*** During market hours and subject to normal market conditions. The Tesco Bank RPI-linked Retail Bond will not be available to buy directly from Tesco Bank.

Notes to editors:

·; The retail bond is open to investors in the United Kingdom, Jersey and Guernsey in accordance with applicable regulatory requirements.

·; The Tesco Bank RPI-linked Retail Bond may not be suitable for all investors. Customers should ensure they fully understand the risks and seek independent financial advice.

·; Investors should note that the price of the bonds can rise and fall during the life of the investment and the price of the Tesco Bank RPI-linked Retail Bond could fall below the Issue price of £100.

·; The Tesco Bank RPI-linked Retail Bonds are not guaranteed by Tesco PLC or any other entity. In the unlikely event that Tesco Bank defaults or becomes insolvent, customers may lose some or all of their investment.

Tesco Bank

·; Tesco Bank is the UK's largest supermarket bank. Since our launch in 1997, we have grown to 6.5 million customer accounts across a range of financial products and services.

·; Our principal activities are: general insurance - motor, home, pet and travel; credit cards and personal loans; personal savings; and a network of cash machines (ATMs).

·; We sell our products through multiple channels including in-store, by telephone and online.

·; Tesco Bank is fully owned by Tesco plc.

·; Tesco Bank is a trading name of Tesco Personal Finance PLC which is the legal entity that will issue the Tesco Bank RPI-linked Retail Bond and references to Tesco Bank are references to Tesco Personal Finance PLC. Tesco Bank is authorised and regulated in the United Kingdom by the Financial Services Authority. Registered in Scotland No. 173199. Registered Address: Interpoint Building, 22 Haymarket Yards, Edinburgh, EH12 5BH

·; This is not a prospectus for the purposes of EU Directive 2003/71/EC (the "Directive") and/or Part VI of the Financial Services and Markets Act 2000. A Offering Circular, Drawdown Prospectus and Final terms have been prepared and made available to the public in accordance with the Directive. Investors should not subscribe for any securities referred to in this advertisement except on the basis of information contained in the Offering Circular, Drawdown Prospectus and Final Terms. Investors may obtain copies of the Offering Circular, Drawdown Prospectus and Final Terms on the website of the London Stock Exchange and in hard copy at the registered office of Tesco Bank at Interpoint Building, 22 Haymarket Yards, Edinburgh EH12 5BH.

·; Before buying or selling a Tesco Bank RPI-linked Retail Bond, prospective customers should make sure that they fully understand the risks and determine that it is appropriate for them. Tesco Bank does not provide legal, tax, accounting or investment advice in relation to the Tesco Bank RPI-linked Retail Bond. Tesco Bank is not responsible for any advice you may receive from any third party. You should be aware that securities involve a variety of risks. Please read the Offering Circular and Drawdown Prospectus for the Tesco Bank RPI-linked Retail Bond which sets out these risks. Tesco Bank and its affiliates, connected companies, employees or clients may have an interest in securities of the type described in this advertisement.

·; This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy, securities to any person in the United States, Australia, Canada, Japan, the Republic of Ireland or South Africa or to any other person to whom, or in any other jurisdiction in which, such offer or solicitation is unlawful. The securities referred to herein may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the "Securities Act") or an exemption from the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, Canada, Japan, the Republic of Ireland or South Africa or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan, the Republic of Ireland or South Africa. The securities referred to herein have not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan, the Republic of Ireland or South Africa. There will be no public offer of the securities in the United States.

·; The securities referred to herein, which are in bearer form, are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or to U.S. persons (as defined in Section 7701(a)(30) of the Internal Revenue Code of 1986, as amended).

·; The information contained herein may only be released, published or distributed in the United Kingdom, Jersey and Guernsey in accordance with applicable regulatory requirements. The information contained herein is not for release, publication or distribution in or into the United States, Australia, Canada, Japan, the Republic of Ireland or South Africa.