Tesco Bank Fixed Rate Bond

The information contained herein may only be released, published or distributed in the United Kingdom, Jersey, Guernsey and the Isle of Man in accordance with applicable regulatory requirements. The information is not for release, publication or distribution in or into the Republic of Ireland, United States, Australia, Canada, Japan, South Africa, or in any other jurisdiction where it is unlawful to distribute this document. The Bonds may only be sold in Jersey in compliance with the provisions of the Control of Borrowing (Jersey) Order 1958.

FINAL VERSION FOR RELEASE

2 May 2012

Back by Popular Demand

-Tesco Bank Launches new 5.00% 8.5 year Sterling Fixed Rate Bond

Tesco Bank is issuing its third retail bond (the "Bond") aimed at retail investors. This follows two successful retail bonds in 2011, both of which exceeded initial demand and raised £185m in total.

The Bond will be issued by Tesco Bank and can be bought and sold at any time before maturity* exclusively through stockbrokers with a minimum initial investment of £2,000. Investors should seek independent advice from their tax adviser regarding the ISA and SIPP eligibility of the Bonds.

The Bond is intended to pay a fixed rate of interest of 5.00% each year for as long as investors hold them, until 21 November 2020 when the Bond is intended to return 100% of the face value of £100**. The Bond is expected to be listed on the Official List of the UK Listing Authority and admitted to trading on both the regulated market of the London Stock Exchange the London Stock Exchange's Order Book for Retail Bonds.

Benny Higgins, Chief Executive of Tesco Bank commented:  "Retail bonds form an important part of our funding strategy as we move towards offering a full retail banking service for Tesco customers.

We are delighted with investors' reaction to the retail bonds launched last year and the way they continue to trade."

The Bond will be funded on the closing date of 21 May 2012 and interest will accrue from this date. Interest of £2.50 is paid twice a year on each £100 face value of Bond held until the maturity, starting from 21 November 2012. 

The Bond is not covered by the Financial Services Compensation Scheme ("FSCS"). In the event Tesco Bank cannot pay its debts in full or goes out of business, investors may lose some or all of their investment.

- ENDS -

* During market hours and subject to normal market conditions. The Bonds will not be available to buy directly from Tesco Bank. Authorised Distributors are Barclays Stockbrokers, Charles Stanley, Killik & Co, Redmayne-Bentley LLP, Selftrade (Execution Only), Smith and Williamson, Stocktrade (a division of Brewin Dolphin Ltd) and Williams De Broe. Investors can check prices on the London Stock Exchange website, just like shares. Further information can be found at www.londonstockexchange.com/newissues.

** before any deductions for dealing costs or other charges that may apply.

For media enquiries please contact:

George Gordon, Head of Communications, Tesco Bank, Tel. 0131 479 1345

Notes to Editors

1. Tesco Bank

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

·; Our principal activities are credit cards, personal loans, savings and general insurance including car, home, pet and travel insurance. We also provide services through a network of ATM machines.

·; Customers can buy our products in-store, by telephone and online. Headquartered in Edinburgh, all of our call centres and sales staff are based in the UK.

·; Tesco Bank is a trading name of Tesco Personal Finance plc. Registered in Scotland No. 173199. Registered Address: Interpoint Building, 22 Haymarket Yards, Edinburgh, EH12 5BH.

·; 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 Bonds; 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.

2. Key risksThe Bonds involve a variety of risks and investors should seek independent advice from a tax adviser or an investment professional (as appropriate) and from their stockbroker if in doubt as to the suitability of the Bonds. The Bonds are not the same as deposits placed with banks, so investors should be aware of the following key risks associated with purchasing the Bonds:

·; in the event Tesco Bank can't pay its debts in full or goes out of business, investors may lose some or all of their investment.

·; the Bonds are not covered by the FSCS.

·; Inflation may mean the real value of the Bonds to investors in the future is less that the value of the Bond now.

·; the market price of the Bonds could fall below their face value of £100 during the life of the Bonds.

·; if investors sell the Bonds before maturity and their market price is lower than when the Bonds were purchased, the investors will make a loss.

Before buying or selling any Bonds investors should make sure that they fully understand and accept the risks summarised above and set out in full in the Offering Circular (as defined below). Investors should also determine whether the investment is appropriate for them on the basis of all information contained in the Offering Circular and Final Terms (as defined below).

3. The Bond

Investors should refer to the information booklet dated 2 May 2012 ("Information Booklet"), an offering circular dated 16 August 2011 as supplemented by a supplementary offering circular no. 1 dated 11 November 2011 and a further supplementary offering circular no. 2 dated 27 April 2012 ("Offering Circular") and the final terms relating to the Bonds ("Final Terms"). As stated above, Tesco Bank is a trading name for Tesco Personal Finance PLC which is the legal entity that will issue the Bonds. References to Tesco Bank in this press release are references to Tesco Personal Finance PLC. Tesco Bank is authorised and regulated in the United Kingdom by the Financial Services Authority. This is a press release and is not a prospectus for the purposes of EU Directive 2003/71/EC or Part VI of the Financial Services and Markets Act 2000 (the "FSMA"). The Offering Circular and the Final Terms have been prepared and made available to the public as required by Part VI of the FSMA. Investors should not purchase any Bonds except on the basis of information contained in the Offering Circular and the Final Terms. Investors may obtain copies of the Offering Circular and the Final Terms relating to the Bonds from the website of the London Stock Exchange and inspect copies on request at the registered office of Tesco Bank at Interpoint Building, 22 Haymarket Yards, Edinburgh EH12 5BH. Tesco Bank does not provide legal, tax, accounting or investment advice in relation to the Bonds and is not responsible for any advice investors may receive from any third party. Tesco Bank and its affiliates, connected companies, employees or clients may have an interest in securities of the type described in this press release. This is not an offer of securities for sale in the United States. The Bonds have not been and will not be registered under the United States Securities Act of 1933, as amended, and include Bonds in bearer form that are subject to certain U.S. tax law requirements. Subject to certain exceptions, the Bonds may not be offered, sold or delivered within the United States of America or to, or for the account of or benefit of, U.S. persons. There will be no public offering in the United States.