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This announcement contains inside information.

Further to its announcement on 13 December 2017 (the “December Announcement”), West Bromwich Building Society (the “Society”) is pleased to announce the launch of its liability management exercise (the “Liability Management Exercise” or “LME”) in relation to its 3,650 Profit Participating Deferred Shares (the “PPDS”) and its £75 million 6.15 per cent. Permanent Interest Bearing Shares (the “PIBS”), on the terms set out in the December Announcement.

Summary

• Society’s capital position to be secured, allowing our existing lending plans to continue unchanged
• Binding commitments received from holders representing approximately 75.5 per cent. of the PPDS and 49.7 per cent. of the PIBS with respect to the LME
• Society’s capital structure to be modernised through issues of Core Capital Deferred Shares (the “CCDS”) and 11 per cent. Tier 2 subordinated notes (the “Tier 2 Notes”)
• Professional investors holding PPDS to be invited to exchange their holdings for a combination of CCDS, Tier 2 Notes and cash on the terms outlined here
• Professional investors holding PIBS to be invited to exchange their holdings for a combination of CCDS and cash on the terms outlined here
• Retail holders of PIBS to be invited to tender their holdings for cash on the terms outlined here
• Resolutions proposed to holders of the PPDS and the PIBS to enable the Society, amongst other things, to effect mandatorily the sweep-up of any remaining PPDS for CCDS, Tier 2 Notes and cash, on substantially the same economic terms as the terms of the PPDS exchange offer
• Prudential Regulation Authority (the “PRA”) re-affirmed its acceptance of the plan for the LME, with settlement of the LME subject to final results of the LME and regulatory approvals
• Upon successful conclusion of the LME and assuming only those PIBS holders from whom binding commitments have been received by the Society participate in the LME, on an indicative basis (had the LME been successfully completed on 30 September 2017 - the latest reporting date of the Society prior to this announcement), the Society expects that its common equity tier 1 (“CET1”) ratio would have decreased by approximately 0.4 percentage points to 13.7 per cent., its total capital ratio (with full impact of CRD IV implementation) would have increased by approximately 0.4 percentage points to 15.2 per cent. and Member Reserves would have increased by approximately £42 million. On the same basis but assuming that 100 per cent. of PIBS holders participate in the LME, the Society expects that its CET1 ratio would have increased by approximately 0.3 percentage points to 14.4 per cent., its total capital ratio (with full impact of CRD IV implementation) would have increased by approximately 1.1 percentage points to 15.9 per cent. and Member Reserves would have increased by approximately £52 million.

Jonathan Westhoff, Chief Executive of the Society, said:

“Today marks an important milestone for the LME. Following our announcement in December, we have worked diligently with our advisers to progress the necessary regulatory approvals and prepare the necessary documents, and I am delighted to be able to announce the launch of the LME. The Board continues to consider the measures put forward to be in the best interests of the members of the Society as a whole. This modernisation of the Society’s capital base will secure the strong capital position of the Society and allow us to focus on serving our membership.”

To access full details regarding the LME and today’s announcement, please click here.