Notice to 2012-1 & 2012-2 Covered Bondholders

CLYDESDALE BANK PLC

30 St. Vincent Place

Glasgow G1 2HL

(Registered in Scotland under company number SC001111)

(the "Issuer")

£400,000,000 Series 2012-1 Covered Bonds due 2015 issued by Clydesdale Bank PLC and guaranteed by Clydesdale Covered Bonds No.2 LLP (Common Code: XS0789991105)

£700,000,000 Series 2012-2 Covered Bonds due 2026 issued by Clydesdale Bank PLC and guaranteed by Clydesdale Covered Bonds No.2 LLP (Common Code: XS0789991527)

(together, the "Covered Bonds")

Notice of redress exercise in respect of historic payment calculation error

NOTICE IS HEREBY GIVEN TO HOLDERS OF THE COVERED BONDS THAT:

Further to a pre-existing payment calculation error which was rectified in 2010 in respect of certain variable rate mortgage loans made by Clydesdale Bank PLC ("Clydesdale Bank") and Yorkshire Bank Home Loans Limited and the announcement made by the Financial Conduct Authority ("FCA") on 26 September 2013, Clydesdale Bank has made available on its website (http://www.cbonline.co.uk/media/news-releases/2013/response-to-fca-mortgage-decision) information regarding a redress exercise as has been agreed between the FCA and Clydesdale Bank so as to provide redress to relevant mortgage loan borrowers in relation to the historic calculation error.

Some of the affected mortgage loans, which are the subject of the redress exercise have been assigned by Clydesdale Bank to Clydesdale Covered Bonds No.2 LLP (the "LLP").

Clydesdale Bank (in its capacities as the Servicer of the mortgage loans in the mortgage portfolio and as Cash Manager) believes that any impact of the redress exercise is neutral from a cashflow and economic perspective for the Programme and that the consequences of the redress exercise:

(i) have no effect on the amount of interest which has been paid by the Issuer in respect of the Covered Bonds; and

(ii) will not affect the ability of the Issuer or the LLP as Guarantor (if required) to make payments of interest and repayments of principal in full when due on the Covered Bonds.

Clydesdale Bank PLC

By:

Dated: 26 September 2013

For further information please contact:

Clydesdale Bank PLC

Structured Funding

Tel: +44 (0)20 7710 1447

Email: [email protected]