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€400,000,000Floating Rate National Capital Instruments

Issue Price 100 per cent.

having the benefit of a limited subordinated guarantee of

National Australia Bank Limited(ABN 12 004 044 937)

(incorporated with limited liability in Australia)

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The £400,000,000 Floating Rate National Capital Instruments (the "NCIs") are expected to be issued on 29 September 2006(the "Issue Date") by National Capital Instruments [Euro] LLC 2 (the "Issuer"). The NCIs will entitle holders, subject to theconditions described in this Prospectus, to receive non-cumulative distributions ("Distributions"), quarterly in arrears oneach 29 March, 29 June, 29 September and 29 December of each year, commencing on 29 December 2006 (each, a"Distribution Payment Date").

Distributions on the NCIs will accrue from the Issue Date at a rate equal to three-month EURIBOR (as defined in clause 3.1("Distributions") of the terms of issue of the NCIs (the "NCI Terms") (see Terms and Conditions of the NCIs below)) plus amargin of 0.95 per cent. per annum up to (but not including) 29 September 2016 (the "Step-Up Date") and, from theStep-Up Date at a rate equal to three-month EURIBOR plus a margin of 1.95 per cent. per annum (the "DistributionRate") (see further Terms and Conditions of the NCIs—Distributions below).

Payment of any Distribution on the NCIs is subject to the Issuer having sufficient funds to pay that Distribution. The fundsavailable to the Issuer in respect of any Distribution Payment Date will be limited to the funds it receives in respect of thesubordinated notes issued by National Capital Instruments [Euro] LLC 1 ("National LLC 1") and held by the Issuer (the"LLC Notes"). Payments of interest on the LLC Notes are limited to payments received by National LLC 1 on thesubordinated debentures issued by National Australia Bank Limited ("National") acting through its New York Branch andheld by National LLC 1 (the "Subordinated Debentures"). In addition, interest on the LLC Notes and the SubordinatedDebentures is subject to the payment tests and conditions contained in the terms of the LLC Notes and SubordinatedDebentures (see Summary of Principal Documents—Terms of the LLC Notes and Summary of Principal Documents—Terms ofthe Subordinated Debentures below). Distributions are non-cumulative and holders of NCIs ("NCI Holders") will not beentitled to recover any Distributions which are not paid because those tests have not been met.

The NCIs have the benefit of a limited and subordinated guarantee by National (see Summary of Principal Documents—Terms of the NCI Subordinated Guarantee below). They are not otherwise guaranteed by, or a liability of, any other person.

The NCIs are perpetual instruments with no set maturity date. However, the NCIs may be redeemed or converted intopreference shares of National (the "Preference Shares") in the circumstances described in this Prospectus. NCI Holders willhave no right to require the NCIs to be redeemed or converted into Preference Shares.

The NCIs are expected to be assigned on issue a rating of A—" by Standard & Poor's Rating Services, a division of theMcGraw Hill Companies Inc ("Standard & Poor's"), "A2" by Moody's Investor Services Inc ("Moody's") and "A+" by FitchRatings Limited ("Fitch"). A credit rating is not a recommendation to buy, sell or hold securities and may be subject torevision, suspension or withdrawal at any time by the relevant rating agency.

See Risk Factors below for a discussion of certain factors that should be considered by prospective investors.

The NCIs and the Preference Shares have not been and will not be registered under the U.S. Securities Act of 1933, asamended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the UnitedStates. Unless they are so registered, the NCIs and the Preference Shares (if issued) may be offered only in transactions thatare exempt from, or not subject to registration under, the Securities Act or the securities laws of any other jurisdiction.Accordingly, the NCIs and the Preference Shares (if issued) may only be offered outside the United States to non-U.S. personsin reliance on Regulation S under the Securities Act.

The NCIs do not represent deposit liabilities of National or any affiliate of National for the purposes of the Banking Act 1959of Australia, or any similar law of any jurisdiction.

Application has been made to the Commission de surveillance du secteur financier in its capacity as competent authority underthe Luxembourg act relating to prospectuses for securities (loi relative aux prospectus pour vale= mobilieres) (the"Competent Authority") to approve this Prospectus. Application has also been made to the Luxembourg Stock Exchange forthe NCIs to be admitted to the official list and traded on the Regulated Market of the Luxembourg Stock Exchange inaccordance with Directive 2003/71/EC (the "Prospectus Directive"). References in this Prospectus to NCIs being listed (andall related references) shall mean that such NCIs have been admitted to the official list and to trading on the RegulatedMarket of the Luxembourg Stock Exchange.

The NCIs will be in registered form and issued in the denomination of €50,000 per NCI. The NCIs will be initiallyrepresented by a single global certificate in registered form (the "Registered Global NCI") and registered in the name of anominee of, and deposited with, a common depositary for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking,sociite anonyme, Luxembourg ("Clearstream, Luxembourg"). NCIs issued in definitive certificated form ("RegisteredDefinitive NCIs") will only be available in certain limited circumstances. See Terms and Conditions of the NCIs—Form andranking below.

Joint Lead Managers

DEUTSCHE BANK JPMORGAN(Structuring Adviser)

The date of this Prospectus is 27 September 2006

National Capital Instruments [Euro] LLC 2as Issuer of

€400,000,000Floating Rate National Capital Instruments

Issue Price 100 per cent.

having the benefit of a limited subordinated guarantee

National Australia Bank Limited(ABN 12 004 044 937)

(incorporated with limited liability in Australia)

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The €400,000,000 Floating Rate National Capital Instruments (the "NCIs") are expected to be issued on 29 September 2006(the "Issue Date") by National Capital Instruments [Euro] LLC 2 (the "Issuer"). The NCIs will entitle holders, subject to theconditions described in this Prospectus, to receive non-cumulative distributions ("Distributions"), quarterly in arrears oneach 29 March, 29 June, 29 September and 29 December of each year, commencing on 29 December 2006 (each, a"Distribution Payment Date").

Distributions on the NCIs will accrue from the Issue Date at a rate equal to three-month EURIBOR (as defined in clause 3.1("Distributions") of the terms of issue of the NCIs (the "NCI Terms") (see Terms and Conditions of the NCIs below)) plus amargin of 0.95 per cent. per annum up to (but not including) 29 September 2016 (the "Step-Up Date") and, from theStep-Up Date at a rate equal to three-month EURIBOR plus a margin of 1.95 per cent. per annum (the "DistributionRate") (see further Terms and Conditions of the NCIs—Distributions below).

Payment of any Distribution on the NCIs is subject to the Issuer having sufficient funds to pay that Distribution. The fundsavailable to the Issuer in respect of any Distribution Payment Date will be limited to the funds it receives in respect of thesubordinated notes issued by National Capital Instruments [Euro] LLC 1 ("National LLC 1") and held by the Issuer (the"LLC Notes"). Payments of interest on the LLC Notes are limited to payments received by National LLC 1 on thesubordinated debentures issued by National Australia Bank Limited ("National") acting through its New York Branch andheld by National LLC 1 (the "Subordinated Debentures"). In addition, interest on the LLC Notes and the SubordinatedDebentures is subject to the payment tests and conditions contained in the terms of the LLC Notes and SubordinatedDebentures (see Summary of Principal Documents—Terms of the LLC Notes and Summary of Principal Documents—Terms ofthe Subordinated Debentures below). Distributions are non-cumulative and holders of NCIs ("NCI Holders") will not beentitled to recover any Distributions which are not paid because those tests have not been met.

The NCIs have the benefit of a limited and subordinated guarantee by National (see Summary of Principal Documents—Terms of the NCI Subordinated Guarantee below). They are not otherwise guaranteed by, or a liability of, any other person.

The NCIs are perpetual instruments with no set maturity date. However, the NCIs may be redeemed or converted intopreference shares of National (the "Preference Shares") in the circumstances described in this Prospectus. NCI Holders willhave no right to require the NCIs to be redeemed or converted into Preference Shares.

The NCIs are expected to be assigned on issue a rating of "A — " by Standard & Poor's Rating Services, a division of theMcGraw Hill Companies Inc ("Standard & Poor's"), ",k2" by Moody's Investor Services Inc ("Moody's") and "A +" by FitchRatings Limited ("Fitch"). A credit rating is not a recommendation to buy, sell or hold securities and may be subject torevision, suspension or withdrawal at any time by the relevant rating agency.

See Risk Factors below for a discussion of certain factors that should be considered by prospective investors.

The NCIs and the Preference Shares have not been and will not be registered under the U.S. Securities Act of 1933, asamended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the UnitedStates. Unless they are so registered, the NCIs and the Preference Shares (if issued) may be offered only in transactions thatare exempt from, or not subject to registration under, the Securities Act or the securities laws of any other jurisdiction.Accordingly, the NCIs and the Preference Shares (if issued) may only be offered outside the United States to non-U.S. personsin reliance on Regulation S under the Securities Act.

The NCIs do not represent deposit liabilities of National or any affiliate of National for the purposes of the Banking Act 1959of Australia, or any similar law of any jurisdiction.

Application has been made to the Commission de surveillance du secteur financier in its capacity as competent authority underthe Luxembourg act relating to prospectuses for securities (loi relative aux prospectus pour valeurs mobiliêres) (the"Competent Authority") to approve this Prospectus. Application has also been made to the Luxembourg Stock Exchange forthe NCIs to be admitted to the official list and traded on the Regulated Market of the Luxembourg Stock Exchange inaccordance with Directive 2003/71/EC (the "Prospectus Directive"). References in this Prospectus to NCIs being listed (andall related references) shall mean that such NCIs have been admitted to the official list and to trading on the RegulatedMarket of the Luxembourg Stock Exchange.

The NCIs will be in registered form and issued in the denomination of €50,000 per NCI. The NCIs will be initiallyrepresented by a single global certificate in registered form (the "Registered Global NCI") and registered in the name of anominee of, and deposited with, a common depositary for Euroclear Bank SA/NV ("Euroclear") and Clearstream Banking,societê anonyme, Luxembourg ("Clearstream, Luxembourg"). NCIs issued in definitive certificated form ("RegisteredDefinitive NCIs") will only be available in certain limited circumstances. See Terms and Conditions of the NCIs—Form andranking below.

Joint Lead Managers

DEUTSCHE BANK JPMORGAN(Structuring Adviser)

The date of this Prospectus is 27 September 2006

IMPORTANT NOTICE

Prospectus

This Prospectus comprises a prospectus for the purposes of Article 5.4 of the Prospectus Directive and forthe purpose of giving information with regard to the Issuer and National Australia Bank Limited("National").

This Prospectus does not relate to, and is not relevant for, any other purpose than to assist the recipient todecide whether to proceed with a further investigation of the NCIs.

No offer

This Prospectus is not, and should not be construed as, an offer or invitation to any person to subscribe foror purchase or otherwise deal in any NCIs.

Responsibility for Information

The Issuer and National (each a "Responsible Person") accept responsibility for the information containedin this Prospectus. To the best of the knowledge of each of the Responsible Persons (each having taken allreasonable care to ensure that such is the case) the information contained in this Prospectus is inaccordance with the facts and does not omit anything likely to affect the import of such information.

No independent verification

None of the Joint Lead Managers, the Initial Subscriber, National LLC 1, the LLC Manager, the Agents,any other party named or referred to in this Prospectus (other than the Responsible Persons) or any oftheir respective affiliates or any external adviser to the Responsible Persons or any of the foregoing (each,an "Other Party") have independently verified the information contained or incorporated in thisProspectus except for having checked their respective names and addresses in the Directory at the back ofthis Prospectus. Accordingly, no representation, warranty or undertaking, express or implied, is made andno responsibility or liability is accepted by any Other Party as to the accuracy or completeness of theinformation contained or incorporated in this Prospectus. No Other Party accepts any liability in relationto the information contained or incorporated by reference in this Prospectus. The Other Parties and theResponsible Persons are together referred to in this Prospectus as the "Parties".

Currency of information

The delivery of this Prospectus, or any offer or issue of NCIs, at any time after the date of this Prospectusdoes not imply, nor should it be relied upon as a representation or warranty, that:

(a) there has been no change since the date of this Prospectus in the affairs or financial condition of theIssuer, National LLC 1, National or any other party named in this Prospectus; or

(b) the information contained in this Prospectus is correct at such later time.

It should not be assumed that the information contained in this Prospectus is necessarily accurate orcomplete in the context of any offer to subscribe for or an invitation to subscribe for or buy any of the NCIsat any time after the date of this Prospectus, even if this Prospectus is circulated in conjunction with theoffer or invitation.

Supplementary Prospectus

Following the publication of this Prospectus, the Issuer will, in the event of any significant new factor,material mistake or inaccuracy relating to information included in this Prospectus which is capable ofaffecting the assessment of the NCIs, prepare a supplement to this Prospectus approved by the CompetentAuthority pursuant to Article 16 of the Prospectus Directive. Pursuant to Article 14(2) of the ProspectusDirective, copies of any such supplementary prospectus will be available, free of charge, at the offices ofNational and of the Luxembourg Paying Agent referred to in the Directory at the back of this Prospectusand on the website of the Luxembourg Stock Exchange (being at the date of this Prospectus,www.bourse.lu).

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Authorised Material

No person is or has been authorised by any Responsible Person to give any information or to make anyrepresentation which is not expressly contained in or consistent with this Prospectus and any informationor representation not contained in this Prospectus must not be relied upon as having been authorised by oron behalf of the Responsible Persons or the Joint Lead Managers.

Intending Purchasers to make Independent Investment Decision

This Prospectus is not intended to be, and does not constitute, a recommendation by any Party that anyperson subscribe for or purchase any NCIs. Accordingly, any person contemplating the subscription orpurchase of the NCIs must:

(a) make their own independent investigation of:

(i) the terms of the NCIs, including reviewing the Transaction Documents; and

(ii) the financial condition, affairs and creditworthiness of the Issuer and the other Parties,

after taking all appropriate advice from qualified professional persons; and

(b) base any investment decision on the investigation and advice referred to in paragraph (a).

Any person contemplating the subscription or purchase of the NCIs should have regard to the factorsdescribed under the section headed Risk Factors below. However, this Prospectus does not describe all ofthe risks of an investment in the NCIs.

Offering restrictions

The distribution of this Prospectus and the offer or sale of NCIs and Preference Shares (if issued) may berestricted by law in certain jurisdictions. No Party represents that this document may be lawfullydistributed, or that any NCIs or Preference Shares (if issued) may be lawfully offered, in compliance withany application, registration or other requirements in any such jurisdiction, or pursuant to an exemptionavailable thereunder, or assume any responsibility for facilitating any such distribution or offering. Inparticular, no action has been taken by any Party which would permit a public offering of any NCIs orPreference Shares (if issued) or distribution of this Prospectus in any jurisdiction where action for thatpurpose is required. Accordingly, no NCIs or Preference Shares (if issued) may be offered or sold, directlyor indirectly, and neither this Prospectus nor any advertisement or other offering material may bedistributed or published in any jurisdiction, except under circumstances that will result in compliance withany applicable laws and regulations. Persons into whose possession this Prospectus or any NCIs orPreference Shares (if issued) come must inform themselves about, and observe, any such restrictions.

For a description of certain restrictions on offers, sales and deliveries of NCIs and on the distribution ofthe Prospectus and other offering material relating to the NCIs see Subscription and Sale below. Inparticular, the NCIs have not been and will not be registered under the United States Securities Act of1933 (as amended) ("Securities Act"). Subject to certain exceptions, NCIs may not be offered, sold ordelivered within the United States or to U.S. persons.

Disclosure of Interest

Each of the Structuring Adviser, the Joint Lead Managers and the Initial Subscriber discloses that it and itsrespective affiliates and their respective directors and employees:

(a) may have a pecuniary or other interest in the NCIs; and

(b) will receive fees, brokerage and commissions, and may act as principal, in any dealings in the NCIs.

References to credit ratings

There are references in this Prospectus to credit ratings. A credit rating is not a recommendation to buy,sell or hold securities and does not comment on the adequacy of market price or the suitability of anysecurity for a particular investor. A credit rating may be subject to revision, suspension, withdrawal orplaced on ratings watch at any time by the relevant rating agency. Each rating should be evaluatedindependently of any other rating.

No rating agency has been involved in the preparation of this Prospectus.

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Not a deposit liability

The NCIs do not represent deposits or other liabilities of National or any affiliate of National. The NCIsare guaranteed by National only to the limited extent provided in the NCI Subordinated Guarantee and anNCI Holder otherwise has no claim on National for payment of any amount in respect of the NCIs.

Risk Factors

The holding of the NCIs is subject to investment risk, including possible delays in repayment and loss ofdistributions or return of investment in respect of the NCIs (see Risk Factors below).

Stabilisation

In connection with the issue of the NCIs, Deutsche Bank AG, London Branch (the "Co-ordinatingStabilising Manager") and J.P. Morgan Securities Ltd. (together with the Co-ordinating StabilisingManager, the "Stabilising Managers") (or any person acting on behalf of the Stabilising Managers) mayover-allot NCIs (provided that the aggregate principal amount of NCIs allotted does not exceed 105% ofthe aggregate principal amount of the NCIs) or effect transactions outside Australia, on a market operatedoutside Australia, with a view to supporting the market price of the NCIs at a level higher than that whichmight otherwise prevail for a limited period. However, there is no assurance that the Stabilising Managers(or persons acting on behalf of the Stabilising Managers) will undertake stabilisation action. Anystabilisation action may begin on or after the date on which adequate public disclosure of the terms of theoffer of the NCIs is made and, if begun, may be ended at any time, but it must end no later than the earlierof 30 days after the issue date of the NCIs and 60 days after the date of the allotment of the NCIs and mustbe in compliance with all relevant laws and regulations.

Definitions

Unless the context otherwise requires, all capitalised terms used in this Prospectus and not separatelydefined will have the meanings given to them in the Terms and Conditions of the NCIs below. All termsdefined in this Prospectus are indexed in the Index of Defined Terms appearing at the end of thisProspectus.

Unless otherwise stated, all references in this Prospectus to a "Member State" are references to a MemberState of the European Economic Area, references to "C', "Euro" or "EUR" are to the single currencywhich was introduced at the start of the third stage of European Economic and Monetary Union pursuantto the Treaty establishing the European Community, as amended, references to "US dollars" or "U.S. 5"are to the lawful currency of the United States, references to "pounds sterling", "Sterling", "I", "pence"or "p" are to the lawful currency of the United Kingdom and references to "As" or "Australian dollars"are to the lawful currency of Australia.

Documents Incorporated by Reference

This Prospectus is to be read in conjunction with all of the documents that are incorporated by reference(see Documents Incorporated by Reference below).

Transaction Documents

The definitive terms and conditions of the Component Instruments are contained in the documentsdescribed in General Information—Documents Available (the "Available Documents"), which should bereviewed by any intending purchaser. If there is any inconsistency between this Prospectus and theAvailable Documents, the Available Documents should be regarded as containing the definitiveinformation. A copy of the Available Documents may be viewed by intending purchasers at the offices ofNational or of the Luxembourg Paying Agent referred to in the Directory at the back of this Prospectus.

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U.S. INFORMATION

NEITHER THE NCIS NOR THE PREFERENCE SHARES HAVE BEEN OR WILL BE REGISTEREDUNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITHANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THEUNITED STATES. NEITHER THE NCIS NOR THE PREFERENCE SHARES (IF ISSUED) MAY BEOhl ERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFITOF, U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) UNLESS THENCIS OR THE PREFERENCE SHARES (AS THE CASE MAY BE) ARE REGISTERED UNDER THESECURITIES ACT OR OFFERED AND SOLD IN COMPLIANCE WITH AN EXEMPTION FROM THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATESECURITIES LAWS.

NEITHER THE NCIS NOR THE PREFERENCE SHARES HAVE BEEN APPROVED OR DISAPPROVEDBY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY OTHERSECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY IN THE UNITED STATES,NOR HAVE THE FOREGOING AUTHORITIES APPROVED THIS PROSPECTUS OR CONFIRMEDTHE ACCURACY OR DETERMINED THE ADEQUACY OF THE INFORMATION CONTAINED INTHIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE INTHE UNITED STATES.

NO PARTY MAKES ANY REPRESENTATION TO ANY INVESTOR IN THE NCIS OR THEPREFERENCE SHARES (IF ISSUED) REGARDING THE LEGALITY OF ITS INVESTMENT UNDERANY APPLICABLE LAWS. ANY INVESTOR IN THE NCIS OR THE PREFERENCE SHARES (IFISSUED) SHOULD BE ABLE TO BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE NCISOR THE PREFERENCE SHARES (AS THE CASE MAY BE) FOR AN INDEFINITE PERIOD OF TIME.

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TABLE OF CONTENTS

TRANSACTION DIAGRAM 7

TRANSACTION SUMMARY 8

RISK FACTORS 15

DOCUMENTS INCORPORATED BY REFERENCE 22

DESCRIPTION OF THE ISSUER 24

DESCRIPTION OF NATIONAL LLC 1 28

DESCRIPTION OF NATIONAL 30

TERMS AND CONDITIONS OF THE NCIS 36

SUMMARY OF PROVISIONS RELATING TO THE NCIS IN GLOBAL FORM 54

SUMMARY OF PRINCIPAL DOCUMENTS 56

USE OF PROCEEDS 73

TAXATION 74

SUBSCRIPTION AND SALE 77

GENERAL INFORMATION 82

INDEX OF DEFINED TERMS 85

DIRECTORY 90

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SubordinatedDebentures

SubordinatedDebenture Interest

NationalNew York Branch

NationalHead Office

V

National LLC 1ConvertibleDebentures

LLC Note InterestLLCNotes

Non-interestbearing

Issuer

Distributions

TRANSACTION DIAGRAM

The diagram below sets out a simplified form of the structure of the transaction and of the expected periodiccash flows in the structure. This diagram is qualified in its entirety by the more detailed information containedelsewhere in this Prospectus.

Nationallegalentity

7

TRANSACTION SUMMARY

This summary must be read as an introduction to this Prospectus and any decision to invest in NCIs should bebased on a consideration of this Prospectus as a whole, including the documents incorporated by reference.Following the implementation of the relevant provisions of the Prospectus Directive in each Member State of theEuropean Economic Area, no civil liability will attach to the Responsible Persons in any such Member State inrespect of this summary, including any translation of it, unless it is misleading, inaccurate or inconsistent whenread together with the other parts of this Prospectus. Where a claim relating to information contained in thisProspectus is brought before a court in a Member State of the European Economic Area, the plaintiff may,under the national legislation of the Member State where the claim is brought, be required to bear the costs oftranslating this Prospectus before the legal proceedings are initiated.

Key parties

Issuer National Capital Instruments [Euro] LLC 2, a limited liabilitycompany established under the laws of Delaware, United States.National Capital Holdings I Inc. ("National Sub"), a subsidiaryof National, will be the manager of the Issuer under Delawarelaw but neither it, nor National, will hold any equity interest inthe Issuer. See further Description of the Issuer below.

National LLC 1 National Capital Instruments [Euro] LLC 1, a limited liabilitycompany established under the laws of Delaware, United States.National Sub will be the manager of National LLC 1 and willhold all memberships interests in National LLC 1. See furtherDescription of National LLC 1 below.

National National Australia Bank Limited (ABN 12 004 044 937), alimited liability company established under the laws of Australia.National is the holding company of National group, whichconsists of National and its consolidated subsidiaries (the"National Group"). See further Description of National below.

National New York Branch National acting through its branch office at Level 28, 245 ParkAvenue, New York, New York, United States of America 10167("National New York Branch").

National Head Office National acting through its head office at Level 13, 140 WilliamStreet, Melbourne, Victoria 3000, Australia ("National HeadOffice").

Initial Subscriber Deutsche Bank AG, acting through its London Branch atWinchester House, 1 Great Winchester Street, LondonEC2N 2DB, United Kingdom.

Registrar Deutsche Bank Luxembourg S.A., of 2 Boulevard KonradAdenauer, L-1115 Luxembourg or any other person appointedby the Issuer to maintain the Register (the "Registrar").

Principal Paying Agent Deutsche Bank AG, acting through its London Branch atWinchester House, 1 Great Winchester Street, LondonEC2N 2DB, United Kingdom or any successor principal payingagent appointed in accordance with the Agency Agreement (the"Principal Paying Agent").

Transfer Agent Deutsche Bank Luxembourg S.A., of 2 Boulevard KonradAdenauer, L-1115 Luxembourg or any successor transfer agentappointed in accordance with the Agency Agreement (the"'Brander Agent").

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Calculation Agent Deutsche Bank AG, acting through its London Branch atWinchester House, 1 Great Winchester Street, LondonEC2N 2DB, United Kingdom or any successor calculation agentappointed in accordance with the Agency Agreement.

Luxembourg Paying Agent Deutsche Bank Luxembourg SA., of 2 Boulevard KonradAdenauer, L-1115 Luxembourg or any successor Luxembourgpaying agent appointed in accordance with the AgencyAgreement (the "Luxembourg Paying Agent" and, together withthe Registrar, the Principal Paying Agent, the Transfer Agentand the Calculation Agent, the "Agents").

Structuring Adviser Deutsche Bank AG, acting through its London Branch atWinchester House, 1 Great Winchester Street, LondonEC2N 2DB, United Kingdom (the "Structuring Adviser").

Summary of the Offering

Issue The Issuer will issue f400,000,000 Floating Rate NationalCapital Instruments (the "NCIs") to investors.

The NCIs will rank pan passu among themselves in all respects.NCIs do not represent deposits or securities of National, areguaranteed by National only to the limited extent as describedunder Summary of Principal Documents—Terms of the NCISubordinated Guarantee below and, apart from under thatlimited guarantee, an NCI Holder has no claim on National forpayment of any amount in respect of the NCIs.

Issue Date

The NCIs are expected to be issued on 29 September 2006 (the"Issue Date").

Maturity Date The NCIs are perpetual instruments with no set maturity date.However, an NCI is redeemable for cash (subject to APRA'sprior written approval) and in certain circumstances will beautomatically converted into a preference share of National("Preference Share") according to the terms of issue of the NCIs(the "NCI Terms").

Use of Proceeds The proceeds of issue of the NCIs will be used to purchase theLLC Notes and the Convertible Debentures as described underSubscription and Sale—Subscription, Assignment and Sale of theRelevant Instruments below.

National New York Branch will use the ultimate proceeds ofissue for its general business purposes including on-lending (seefurther Use of Proceeds below).

Distributions on the NCIs

NCIs will pay distributions ("Distributions") at a floating rate.

Distributions on the NCIs will be paid quarterly in arrears on29 March, 29 June, 29 September and 29 December of each yearcommencing on 29 December 2006 (each a "DistributionPayment Date").

The amount of each Distribution will be calculated inaccordance with the relevant formula set out in the NCI Terms(see Terms and Conditions of the NC's—Distributions below).

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Distribution Limitations Distributions on the NCIs are limited to interest received by theIssuer from National LLC 1 on the LLC Notes. Payment ofinterest on the LLC Notes is subject to the tests and conditionsset out in the terms of the LLC Notes (see Summary of PrincipalDocuments—Terms of the LLC Notes below). In turn, interest onthe LLC Notes is limited to interest received by National LLC 1from National New York Branch in respect of the SubordinatedDebentures. Payment of interest on the SubordinatedDebentures is also subject to similar tests and conditions as setout in the terms of the Subordinated Debentures (see Summaryof Principal Documents—Terms of the Subordinated Debenturesbelow).

Distributions on the NCIs are non-cumulative and the holders ofthe NCIs (the "NCI Holders") will have no claim for anyDistribution not paid, or for any part of any Distribution notpaid, pursuant to the limitations discussed above.

However, on and from the occurrence of a CapitalDisqualification Event, Distributions on the NCIs will not besubject to the limitations described above but will be absoluteand unconditional liabilities of the Issuer on each DistributionPayment Date.

A "Capital Disqualification Event" will occur if:

(a) the NCIs would not be eligible to qualify (save where suchnon-qualification is only as a result of any applicablelimitation on the amount of such capital) as Tier 1 regulatorycapital for National on a Level 1 or a Level 2 basis underapplicable regulatory capital requirements; and

(b) the Australian Prudential Regulation Authority ("APRA")has confirmed to National in writing that the NCIs wouldnot be eligible to qualify as Tier 1 regulatory capital forNational on a Level 1 or a Level 2 basis.

NCI Subordinated Guarantee National guarantees Distributions on the NCIs, the RedemptionPrice of the NCIs, and, if the Issuer is wound up, the LiquidationAmount of the NCIs, in each case to the extent the Issuer:

(a) has funds available to make the payment after payment ofany creditors it may have; and

(b) does not make the payment,

(the "NCI Subordinated Guarantee") (see Summary of PrincipalDocuments—Terms of the NCI Subordinated Guarantee below).

Consequences of Non-Payment of

Failure to pay in full, for any reason, Distributions on or withinDistributions seven Business Days of the scheduled Distribution Payment

Date, will trigger the Conversion Event (except where a CapitalDisqualification Event has occurred) (see Terms and Conditionsof the NCIs—Conversion), but will not constitute an event ofdefault and will not otherwise entitle the NCI Holder to a returnof its investment.

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Failure to pay in full, for any reason, Distributions on thescheduled Distribution Payment Date, will also immediatelytrigger distribution restrictions for National as described in theTerms and Conditions of the NCIs—Distributions—Restrictions inthe case of non-payment and, when the Preference Shares areissued, substantially in the form described in Summary ofPrincipal Documents—Terms of the Preference Shares-Dividends—Distribution Restrictions below.

Withholding Tax and Additional

The Issuer will make all payments of Distributions withoutAmounts deduction or withholding for, or on account of, tax unless that

deduction or withholding is required by law. If any deduction isrequired, the Issuer must pay the full amount required to bededucted to the relevant revenue authority and, subject to:

(a) certain exceptions (see Terms and Conditions of the NCIs-Payments to NCI Holders—Gross-up below); and

(b) having received sufficient amounts from National LLC 1 inrespect of the LLC Notes or from National under the NCIGross-Up Indemnity (as defined below),

an additional amount ("Additional Amount") to the NCIHolders so that the NCI Holders receive the same amount inrespect of that payment as if no such deduction had been madefrom the payment.

National will covenant in a deed of covenant entered intobetween National, National LLC 1 and the Issuer (the "Deed ofCovenant") to indemnify the Issuer for the payment of anyAdditional Amounts (see Summary of Principal Documents —Terms of the Deed of Covenant—Undertakings by National below)(the "NCI Gross-Up Indemnity"), subject to the same tests andconditions that apply to payment of interest on the SubordinatedDebentures (see Summary of Principal Documents—Terms of theSubordinated Debentures—Interest below).

Conversion Events In certain circumstances the Conversion Event (as defined in theNCI Terms (see Terms and Conditions of the NCIs—Conversionbelow)) will occur with respect to the NCIs. An NCI Holder maynot initiate the Conversion Event.

Conversion Mechanics Upon the occurrence of the Conversion Event, each NCI will beredeemed in consideration for the delivery of a PreferenceShare in accordance with the steps set out under Summary ofPrincipal Documents—Terms of the Convertible Debentures—Conversion below. In certain circumstances National may beprevented by law from issuing the Preference Shares (seeSummary of Principal Documents—Terms of the ConvertibleDebentures—Failure to Issue Preference Shares below). NCIs willnot convert into Preference Shares after a CapitalDisqualification Event occurs.

Optional Redemption

Subject to APRA!s prior written approval, National has theoption to redeem for cash:

(a) all (but not some) of the Convertible Debentures on theoccurrence of a Regulatory Event, a Tax Event or anAcquisition Event (each as defined in the NCI Terms (seeTerms and Conditions of the NCIs—Interpretation andDefinitions—Definitions below)); and

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Redemption Price

(b) some or all of the Convertible Debentures on the Step-UpDate or any subsequent date which is a DistributionPayment Date in respect of the NCIs.

A redemption of the Convertible Debentures will, in turn,trigger a redemption of the NCIs for cash (see Terms andConditions of the NCIs Redemption below).

Where the NCIs are redeemed as provided under "OptionalRedemption" above, they will be redeemed in consideration ofthe payment of the Redemption Price. This will generally be anamount equal to the Liquidation Amount of the NCIs plus anyaccrued but unpaid Distribution for the then currentDistribution Period.

See further—Tenons and Conditions of the NC's—Redemption-Redemption Price below.

Voting and Other Rights The agreement under which the Issuer is constituted (the"Issuer LLC Agreement") contains provisions for conveningmeetings of the NCI Holders to consider any matter affectingtheir interests, including any variation of the NCI Terms whichrequires the consent of NCI Holders.

Subject as provided above, NCI Holders will have no votingrights in respect of National Head Office, National New YorkBranch, National LLC 1, the Issuer, the LLC Manager orNational Sub (each a "National Entity") unless and until thePreference Shares are issued (see further Summary of PrincipalDocuments—Terms of the Preference Shares—Voting and OtherRights below).

No Set-Off An NCI Holder has no right to set off any amounts owing by itto any National Entity against any claims owing by any NationalEntity and no offsetting rights or claims on any National Entityif a National Entity does not pay a Distribution or interest whenscheduled under any Component Instrument.

Not Deposit Liabilities The NCIs do not represent deposit liabilities of National or anyaffiliate of National. The NCIs are guaranteed by National onlyto the limited extent provided in the NCI SubordinatedGuarantee and an NCI Holder otherwise has no claim onNational for payment of any amount in respect of the NCIs.

Rating It is expected that the NCIs, when issued, will be assigned arating of "A —" by Standard & Poor's, "A2" by Moody's and"A+" by Fitch.

A credit rating is not a recommendation to buy, sell or holdsecurities and does not comment on the adequacy of marketprice or the suitability of any security for a particular investor. Acredit rating may be subject to revision, suspension, withdrawalor placed on ratings watch at any time by the relevant ratingagency. Each rating should be evaluated independently of anyother rating.

No rating agency has been involved in the preparation of thisProspectus.

Indication of yield The yield depends on a number of factors including:

(a) the amount and timing of any return of investment withrespect to the NCIs; and

(b) the amount of Distributions paid in respect of the NCIs.

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Under certain assumptions including that the NCIs areredeemed on the Step-Up Date and an issue price of €50,000per NCI, an indication of yield is the Distribution Rate on theNCIs. It is not an indication of future yield and it in no wayindicates that the NCIs will be redeemed on the Step-Up Date.

Listing and admission to trading of

Application has been made to the Commission de surveillance duNCIs secteur financier in its capacity as competent authority under the

Luxembourg act relating to prospectuses for securities (loirelative aux prospectus pour valeurs mobilieres) (the "CompetentAuthority") to approve this Prospectus.

Application has also been made to the Luxembourg StockExchange for the NCIs to be admitted to the official list andtraded on the Regulated Market of the Luxembourg StockExchange in accordance with Directive 2003/71/EC (the"Prospectus Directive"). References in this Prospectus to NCIsbeing listed (and all related references) shall mean that suchNCIs have been admitted to the official list and to trading on theRegulated Market of the Luxembourg Stock Exchange.

EU Directive 2004/109/EC ("'transparency Directive") waspassed on 15 December 2004 and came into force on 20 January2005. The Transparency Directive must be implemented byMember States of the European Union by 20 January 2007. Ifthe implementation imposes obligations on the Issuer that areunduly burdensome, the Issuer may decide to de-list the NCIsfrom the official list and trading on the Regulated Market of theLuxembourg Stock Exchange. If the Issuer elects to do so, itmust use its reasonable endeavours to obtain an alternativelisting, quotation or admission to trading for the NCIs on suchother stock exchange or exchanges or securities market ormarkets as the Issuer may decide on which it is then generallyaccepted in the sphere of international issues of securities to list,quote or admit to trading securities such as the NCIs.

Clearing and Settlement The NCIs have been accepted for clearance through Euroclearand Clearstream, Luxembourg. If issued, National will apply toEuroclear and Clearstream, Luxembourg, to accept thePreference Shares. See further Summary of Provisions Relating tothe NCIs in Global Form and General Information—ClearingSystems below.

Risk Factors An investment in the NCIs is subject to investment risks,including possible delays in repayment and loss of distributionsand the amount invested in respect of the NCIs. See Risk Factorsbelow.

Selling Restrictions The NCIs are only to be offered or sold in circumstances whichcomply with laws and restrictions of any applicable jurisdiction.There are also specific restrictions on offering or selling theNCIs in Australia, the United Kingdom, Hong Kong, Singapore,Japan, the United States, the Republic of Italy and France. SeeSubscription and Sale below.

Governing Law The NCIs, the NCI Terms, the Issuer LLC Agreement, the LLC1 Agreement, the Issuer Management Agreement, the LLC 1Management Agreement and the LLC 1 Common Securities aregoverned by the laws of the State of Delaware, United States ofAmerica.

The Preference Shares (if issued) and the Preference ShareTerms will be governed by the laws of Victoria, Australia.

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Each of the other Component Instruments and TransactionDocuments will be governed by English law.

Transaction Documents Means:

(a) each Component Instrument (including, in each case, theterms of such Component Instrument);

(b) each document constituting a Component Instrument;

(c) the Agency Agreement, the NCI Subscription Agreementand the Subscription, Sale and Assignment Agreement; and

(d) the LLC 1 Agreement, the LLC 1 Management Agreementand the Issuer Management Agreement,

(the "Transaction Documents").

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RISK FACTORS

Prospective investors should consider carefully the risks set forth below and the other information contained inthis Prospectus prior to making any investment decision with respect to the NCIs.

Each of the risks highlighted below as being risks relating to National and its business could have a materialadverse effect on National's business, operations, financial condition or prospects, which, in turn, could have amaterial adverse effect on the amount which investors will receive in respect of the NCIs. In addition, each ofthe risks highlighted below as being risks relating to the NCIs could adversely affect the trading price of the NCIsor the rights of investors under the NCIs and, as a result, investors could lose some or all of their investment.

Prospective investors should note that the risks described below are not the only risks faced by the Issuer andNational. The Issuer and National have described only those risks relating to their operations that they considerto be material. There may be additional risks that the Issuer or National currently considers not to be materialor of which it is not currently aware, and any of these risks could have the effects set forth above.

Risks relating to the Issuer

The assets of the Issuer are limited

The assets of the Issuer consist only of its rights against National LLC 1 on the LLC Notes and againstNational on the Convertible Debentures.

If the assets of the Issuer are not sufficient to make payments of Distributions or repayments of theamount invested in respect of the NCIs, then payments to NCI Holders will be reduced.

Under applicable Delaware law, the Issuer cannot make a distribution to an NCI Holder to the extent thatat the time of the Distribution, after giving effect to the Distribution, all liabilities of the Issuer (other thanliabilities to NCI Holders on account of the NCIs) exceed the fair value of its assets.

Risks relating to National and its business

General Economic Activity

The business activities of National are dependent on the level of banking, finance and financial servicesrequired by its customers. In particular, levels of borrowing are heavily dependent on customer confidence,employment trends, the state of the economy and market interest rates at the time. As National conductsits business in various locations, including Australia, the United Kingdom and New Zealand, itsperformance is influenced by the level and cyclical nature of business activity in those locations, which is, inturn, affected by both domestic and international economic and political events. There can be no assurancethat a weakening in the economies in which National operates will not have a material effect on its futureresults.

Risks relating to the business of National

As a result of its business activities, National is exposed to a variety of risks, the most significant of whichare credit risk, market risk, operational risk and liquidity risk. Failure to control these risks could result inmaterial adverse effects on the financial performance and reputation of National.

Credit Risk

Risks arising from changes in credit quality and the recoverability of loans and amounts due fromcounterparties are inherent in a wide range of the businesses of National. Adverse changes in the creditquality of its borrowers and counterparties or a general deterioration in the economic conditions in thelocations in which it operates or globally, or arising from systemic risks in the financial systems, could affectthe recoverability and value of its assets and require an increase in the provision for bad and doubtful debtsand other provisions of National.

Market Risk

The most significant market risks National faces are interest rate, foreign exchange and bond and equityprice risks. Changes in interest rate levels, yield curves and spreads may affect the interest rate marginrealised between lending and borrowing costs. Changes in currency rates affect the value of assets andliabilities denominated in foreign currencies and may affect income from foreign exchange dealing. The

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performance of financial markets may cause changes in the value of the investment and trading portfoliosof National. National has implemented risk management methods to mitigate and control these and othermarket risks to which it is exposed and exposures are constantly measured and monitored. However, it isdifficult to predict with accuracy changes in economic or market conditions and to anticipate the effectsthat such changes could have on the financial performance and business operations of National.

Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people andsystems or from external events. Losses can result from fraud, errors by employees, failure to documenttransactions properly or to obtain proper internal authorisation, failure to comply with regulatoryrequirements and conduct of business rules, equipment failures, natural disasters or the failure of externalsystems, for example, those of suppliers or counterparties. Although National has implemented riskcontrols and loss mitigation actions and substantial resources are devoted to developing efficientprocedures and to staff training, there are always elements of residual operational risk which cannot beentirely mitigated.

Liquidity Risk

The inability of any bank, including National, to anticipate and provide for unforeseen decreases orchanges in funding sources could have consequences on such bank's ability to meet its obligations whenthey fall due.

Impact of Regulatory Changes

National is subject to financial services laws, regulations, administrative actions and policies in thelocations in which it operates. Changes in supervision and regulation, in particular in Australia, couldmaterially affect the business of National, the products and services offered or the value of its assets.Although National works closely with its regulators and continually monitors the situation, future changesin regulation, fiscal or other policies can be unpredictable and are beyond the control of National.

National is subject to capital requirements that could limit its operations

National is subject to capital adequacy guidelines adopted by the APRA for a bank or a bank holdingcompany, which provide for a minimum ratio of total capital to risk-adjusted assets both on a solo basisand on a consolidated basis. National's failure to maintain its ratios may result in administrative actions orsanctions against it which may impact its ability to fulfil its obligations under the Subordinated Debentures(with the effect that the Issuer would not be able to make scheduled payments on the NCIs) or thePreference Shares (if issued). APRA has recently revised its capital adequacy regime following theintroduction of Australian equivalent International Financial Reporting Standards ("AIFRS"). This revisedregime became effective on 1 July 2006 and the NCIs are being issued under this regime. The revisedregime also provides for transition arrangements and National is working in conjunction with APRA as tothe application of transition provisions to it.

In addition, the risk-adjusted capital guidelines (the "Basel Accord") promulgated by the Basel Committeeon Banking Supervision (the "Basel Committee"), which form the basis for APRAs capital adequacyguidelines, have recently been revised. In June 2004, the Basel Committee published InternationalConvergence of Capital Measurement and Capital Standards, a Revised Framework ("Basel II"). APRAcurrently expects to implement Basel II on a common starting date of 1 January 2008. The principalchanges effected by the revised guidelines include the application of risk-weighting (depending upon thecredit status of certain customers, using an "internal ratings-based" approach to credit risk, and subject toapproval of supervising authorities), allocation of risk assets in relation to operational risk and supervisoryreview of the process of evaluating risk measurement and capital ratios. At this time, National is unable topredict how the revised guidelines will affect its calculations of capital and the impact of these revisions onother aspects of its operations.

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Risks relating to the NCIs

NCIs may not be a suitable investment for all investors

Each potential investor in any NCIs must determine the suitability of that investment in light of its owncircumstances. In particular, each potential investor should:

(a) have sufficient knowledge and experience to make a meaningful evaluation of the NCIs, the meritsand risks of investing in the NCIs and the information contained or incorporated by reference in thisProspectus;

(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of itsparticular financial situation, an investment in the NCIs and the impact such investment will have onits overall investment portfolio;

(c) have sufficient financial resources and liquidity to bear all of the risks of an investment in the NCIs,including where the currency for payments in respect of the NCIs is different from the potentialinvestor's currency;

(d) understand thoroughly the terms of the NCIs; and

(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios foreconomic, interest rate and other factors that may affect its investment and its ability to bear theapplicable risks.

The NCIs are complex fmancial instruments. A potential investor should not invest in NCIs unless it hasthe expertise (either alone or with a financial adviser) to evaluate how the NCIs will perform underchanging conditions, the resulting effects on the value of the NCIs and the impact this investment will haveon the potential investor's overall investment portfolio.

If National's financial condition were to deteriorate, holders could lose all or a part of their investment

If National's financial condition were to deteriorate, payments of distributions or other payments on theSubordinated Debentures (and, therefore, the NCIs) or the Preference Shares (if issued) could besuspended and holders would not receive any distributions or other payments. Potential investors shouldnot assume that unfavourable market or other conditions or events will not harm National's financialcondition. If National liquidates, dissolves or winds up, NCI Holders and holders of the Preference Shares(if issued) could lose all or a part of their investment. No Component Instrument is a deposit liability ofNational for the purposes of the Banking Act or any other similar law of any jurisdiction and noComponent Instrument will be insured by any governmental agency or compensation scheme of Australiaor any other jurisdiction.

If National does not issue the Preference Shares pursuant to the terms of the Convertible Debenturesfollowing the occurrence of the Conversion Event, NCI Holders will not receive them and will continue tohold the NCIs, and the LLC Notes will automatically vest in National Head Office as assignee (see furtherSummary of Principal Documents—Terms of the LLC Notes—Assignment below). In addition, in the event ofthe liquidation or dissolution of the Issuer in circumstances where National has not issued the PreferenceShares in redemption of the NCIs, NCI Holders may not receive the full Liquidation Amount per NCI andthe accrued and unpaid distribution for the then current Distribution Period if the Issuer does not havesufficient funds after it pays any creditors it may have.

Distributions on the NCIs are subject to payment and other restrictions and are non-cumulative

A Distribution on the NCIs will only be payable if and to the extent that the Issuer has sufficient funds tomake the payment of that Distribution. The funds available to the Issuer in respect of any DistributionPayment Date will be limited to the interest received from National LLC 1 on the LLC Notes. Payments ofinterest on the LLC Notes are limited to payments received by National LLC 1 on the SubordinatedDebentures. In addition, interest on the LLC Notes and the Subordinated Debentures is subject to thepayment tests and conditions described in the LLC Notes and Subordinated Debentures (see Summary ofPrincipal Documents—Terms of the LLC Notes and Summary of Principal Documents—Terms of theSubordinated Debentures for details of these tests and conditions). These conditions include the exercise ofthe sole discretion of:

(a) in the case of the LLC Notes, the LLC Manager as manager of National LLC 1; and

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(b) in the case of the Subordinated Debentures, the directors of National.

Distributions will only be paid when so determined and applicable law so permits, if sufficient resourcesexist and if all the conditions to payment are satisfied. NCI Holders will not be entitled to recover missedDistributions because they are non-cumulative. Accordingly, if Distributions on the NCIs for anyDistribution Period are not paid, the NCI Holders will not be entitled to receive such Distributions (or anypayment in respect of such Distributions) whether or not funds are, or subsequently become, available.

Upon the occurrence of the Conversion Event (see further Summary of Principal Documents—Terms of theConvertible Debentures—Conversion below), unless National is legally unable or otherwise fails to issue thePreference Shares on the scheduled Conversion Date, the NCIs will be redeemed for Preference Shares.Dividends on the Preference Shares are also non-cumulative and subject to payment tests and conditions(see Summary of Principal Documents—Terms of the Preference Shares below). If the Conversion Event isthe failure of the Issuer to pay a Distribution in full on the NCIs and of National to pay that amount underthe NCI Subordinated Guarantee, holders of the Preference Shares issued as a result of that ConversionEvent will also not receive any Dividends on those Preference Shares for the corresponding Dividendperiod, unless National pays an Optional Dividend in its absolute discretion and with the consent ofAPRA. National will pay Dividends on the Preference Shares only if and when declared by the directors. Ifthe directors do not declare all or any part of a Dividend payable on any Dividend Payment Date, thenholders will have no right to receive that Dividend at any time, even if National pays other Dividends in thefuture.

Distributions on the NCIs may be restricted by the terms of other similar instruments

The terms of certain of National's outstanding instruments could limit National's ability to make paymentson the Subordinated Debentures, the Convertible Debentures or the Preference Shares (if issued). If theIssuer does not make payments on the NCIs, distributions may not be permitted to be made in respect ofother capital instruments National has previously issued having similar economic rights and benefits as theNCIs (such as certain other Tier 1 capital instruments issued by National, directly or indirectly). If ascheduled payment is not made in full on those capital instruments, Distributions will not be permitted tobe made in respect of the NCIs.

Perpetual nature of the NCIs and the Preference Shares

Neither the NCIs nor the Preference Shares (if issued) have a fixed final maturity date and holders have norights to call for the redemption of the NCIs or the Preference Shares. Although the NCIs or thePreference Shares (if issued) may be redeemed (subject to APRAs prior written approval) in certaincircumstances (including at National's option on the Step-Up Date or on any Distribution Payment Datethereafter or following the occurrence of a Tax Event, a Regulatory Event or an Acquisition Event throughthe redemption of the Convertible Debentures which will, in turn, trigger a redemption of the NCIs), thereare limitations on National's ability to do so. Therefore, holders should be aware that they may be requiredto bear the financial risks of an investment in the NCIs for an indefinite period of time.

If a holder wishes to obtain the cash value of its investment, that holder will have to sell the NCIs or thePreference Shares (if issued). Neither the Distribution Rate on the NCIs nor the rate of Dividend on thePreference Shares will be adjusted to reflect subsequent changes in interest rates or other marketconditions, National's results of operations or financial condition or any decline in the market price ofNational's ordinary shares. As a result, a holder may not be able to sell the NCIs or the Preference Shares(if issued) for the amount of that holder's original investment.

NCIs may be redeemed at the option of National

National's ability to cause the NCIs to be redeemed may limit the market value of the NCIs (see Summaryof Principal Documents—Terms of the Convertible Debentures and Terms and Conditions of the NCIs-Redemption for the circumstances in which this optional redemption right may be exercised by National).During any period when National may elect to cause the NCIs to be redeemed, the market value of theNCIs generally will not rise substantially above the price at which they can be redeemed. This also may betrue prior to any redemption period. The Preference Shares (if issued) will be subject to similarredemption rights and, accordingly, their market value may be similarly limited.

In the period post the Step-Up Date, National may be expected to bring about the redemption of the NCIsor the Preference Shares (if issued) when its cost of borrowing is lower than the Distribution Rate on the

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NCIs or the Preference Shares (as the case may be). At those times, an investor generally would not beable to reinvest the redemption proceeds at an effective rate as high as the rate of Distribution on the NCIsor the rate of Dividend on the Preference Shares (as the case may be) being redeemed and may only beable to do so at a significantly lower rate. Potential investors should consider reinvestment risk in light ofother investments available at that time.

NCIs may be converted into Preference Shares

Because NCI Holders will receive Preference Shares when the Conversion Event occurs (unless National islegally unable or otherwise fails to issue the Preference Shares at that time), in connection with anyinvestment decision with regard to the NCIs, investors are also making an investment decision with regardto the Preference Shares. Prospective investors should carefully review all the information regarding thePreferences Shares contained in this Prospectus.

If NCI Holders receive Preference Shares following the Conversion Event, the trading value of thosePreference Shares may be lower than the trading value of the NCIs, which may result in a lower returnupon a sale of those Preference Shares.

Subordination

National's obligations under the Subordinated Debentures, the Convertible Debentures and the NCISubordinated Guarantee are unsecured and will rank subordinate and junior in right of payment toNational's obligations to its depositors and other creditors, including other subordinated creditors, otherthan subordinated creditors holding subordinated indebtedness that by its terms ranks equally with, orjunior to, the holders of the Subordinated Debentures the Convertible Debentures and the NCISubordinated Guarantee. Accordingly, National's obligations under the Subordinated Debentures, theConvertible Debentures and the NCI Subordinated Guarantee will not be satisfied unless it can satisfy infull all of its other obligations ranking senior to the Subordinated Debentures, the Convertible Debenturesand the NCI Subordinated Guarantee.

Further, in the event that National is wound-up, liquidated or dissolved, the assets of National would beavailable to pay obligations under the Subordinated Debentures or in respect of the Preference Shares (ifissued) only after all payments have been made on such senior liabilities and claims.

There are no terms in the NCIs, the LLC Notes, the Subordinated Debentures, the ConvertibleDebentures, the NCI Subordinated Guarantee or the Preference Shares (if issued) that limit National'sability to incur additional indebtedness, including indebtedness that ranks senior to or equally with theSubordinated Debentures, the Convertible Debentures, the NCI Subordinated Guarantee or thePreference Shares (if issued) or to issue other instruments which rank senior to or equally with theSubordinated Debentures, the Convertible Debentures, the NCI Subordinated Guarantee or thePreference Shares (if issued). For example, as part of its ongoing capital management programme,National issued A$400,000,000 of similar Tier 1 capital instruments in the Australian markets on18 September 2006.

Although the NCIs may pay a higher rate of interest than comparable instruments which are notsubordinated, there is a real risk that an investor in NCIs will lose all or some of his investment shouldNational become insolvent.

The NCIs and the Preference Shares have limited voting rights

A NCI Holder has no voting rights in respect of the Issuer and has limited voting rights at a meeting ofNCI Holders (see Terms and Conditions of the NCIs—General provisions—Voting and Description of theIssuer—Issuer LLC Agreement below). A holder of Preference Shares after the Conversion Date will alsohave limited voting rights as a shareholder of National (see Summary of Principal Documents—Terms of thePreference Shares—Voting and Other Rights below). This limits the rights of holders to take action withrespect to the NCIs or the Preference Shares (as the case may be).

In addition, holders acknowledge in the terms of the NCIs and in the terms of the Preference Shares (ifissued) that they have no right to apply for the winding-up or administration of any of National HeadOffice, National New York Branch, National LLC 1, the Issuer, the LLC Manager or National Sub (each a"National Entity"), or to cause a receiver, or a receiver and manager, to be appointed in respect of aNational Entity merely on the grounds that the National Entity does not make a scheduled payment ofDistributions or interest.

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NCI Holders will not receive Preference Shares on the Conversion Date if National is legally unable orotherwise fails to issue the Preference Shares

If on the Conversion Date National is prohibited by law from issuing the Preference Shares, National willissue the Preference Shares if and when it is no longer prohibited from doing so.

Under current Australian law, National may be prevented from issuing the Preference Shares on theConversion Date if:

• National is in liquidation;

• APRA has assumed control of National under the Banking Act 1959 of Australia (the "Banking Act")and APRA does not cause National to issue the Preference Shares; or

• APRA has appointed a statutory manager under the Banking Act to take control of National'sbusiness and the statutory manager does not cause National to issue the Preference Shares.

See further Summary of Principal Documents—Terms of the Convertible Debentures—Failure to IssuePreference Shares below.

A holder of NCIs has no rights as a shareholder of National

A holder of NCIs, will not have any rights conferred on holders of the Preference Shares, including rightsto receive any Dividends or other distributions in respect of the Preference Shares or to vote as a holder ofthe Preference Shares, until the Preference Shares are issued on the Conversion Date.

There is no prior market for NCIs or the Preference Shares

The NCIs and the Preference Shares (if issued) each constitute new issues of securities with no establishedtrading market. National cannot predict whether an active or liquid trading market for the NCIs or thePreference Shares (if issued) will develop or be sustained.

Therefore, investors may not be able to sell their NCIs or their Preference Shares (if issued) easily or atprices that will provide them with a yield comparable to similar investments that have a developedsecondary market. Illiquidity may have a severely adverse effect on the market value of the NCIs or thePreference Shares (if issued).

Modification, waivers and substitution

Provisions in the Issuer LLC Agreement permit defined majorities of NCI Holders to bind all NCI Holdersincluding NCI Holders who did not attend and vote at the relevant meeting and NCI Holders who voted ina manner contrary to the majority.

The Issuer LLC Agreement also provides that:

(a) the Issuer may, without the consent of the NCI Holders, agree to certain additions and amendmentsto the Issuer LLC Agreement (including the NCI Terms) without the consent of NCI Holders; and

(b) each Component Instrument (other than the NCIs and the Preference Shares (if issued) but includingthe Preference Share Terms prior to the issue of the Preference Shares) may be added to or amendedin certain circumstances without the consent of NCI Holders.

See further Description of the Issuer—Issuer LLC Agreement—Amendments and Modifications below.

Similar provisions are contained in the terms of the Preference Shares (if issued).

Change of law

The terms of each instrument (other than the NCIs, the LLC 1 Common Securities and the PreferenceShares (if issued)) are based on English law in effect as at the date of this Prospectus. The terms of theNCIs and the LLC 1 Common Securities are based on Delaware law at that date and the terms of thePreference Shares are based on the laws of Victoria, Australia as at that date. National is formed underand subject to the laws in force in Australia and National LLC 1 and the Issuer are formed under andsubject to the laws in force in Delaware. No assurance can be given as to the impact of any possible changeto English, Australian or Delaware law, judicial decision or administrative practice after the date of thisProspectus.

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Exchange rate risks and exchange controls

Distributions and repayments of amounts invested in respect of the NCIs and the Preference Shares (ifissued) will be made in Euro. This presents certain risks relating to currency conversions if an investor'sfinancial activities are denominated principally in a currency or currency unit (the "Investor's Currency")other than Euro. These include the risk that exchange rates may significantly change (including changesdue to devaluation of Euro or revaluation of the Investor's Currency) and the risk that authorities withjurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in thevalue of the Investor's Currency relative to Euro would decrease (a) the Investor's Currency-equivalentyield on the NCIs or the Preference Shares (if issued), (b) the Investor's Currency-equivalent value of anyrepayments of amounts invested in respect of the NCIs or the Preference Shares (if issued) and (c) theInvestor's Currency-equivalent market value of the NCIs or the Preference Shares (if issued).

Government and monetary authorities may impose (as some have done in the past) exchange controls thatcould adversely affect an applicable exchange rate. As a result, investors may receive lesser amounts inrespect of the NCIs or the Preference Shares (if issued) than expected, or no amounts.

Credit ratings may not reflect all risks

One or more independent credit rating agencies may assign credit ratings to the NCIs. The ratings may notreflect the potential impact of all risks related to structure, market, additional factors discussed above, andother factors that may affect the value of the NCIs. A credit rating is not a recommendation to buy, sell orhold securities and may be revised or withdrawn by the rating agency at any time.

Legal investment considerations may restrict certain investments

The investment activities of certain investors are subject to legal investment laws and regulations, or reviewor regulation by certain authorities. Each potential investor should consult its legal advisers to determinewhether and to what extent (a) NCIs or, if issued, the Preference Shares, are legal investments for it,(b) NCIs or, if issued, the Preference Shares, can be used as collateral for various types of borrowing and(c) other restrictions apply to its purchase or pledge of any NCIs or, if issued, the Preference Shares.Financial institutions should consult their legal advisors or the appropriate regulators to determine theappropriate treatment of NCIs under any applicable risk-based capital or similar rules.

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DOCUMENTS INCORPORATED BY REFERENCE

Pursuant to Article 11 of the Prospectus Directive, the following documents which have previously beenpublished and have been filed with the Competent Authority are incorporated in, and form part of, thisProspectus on the basis set out below:

(a) National's Annual Reports on Form 20-F for the financial years ended 30 September 2004 and 30September 2005 (including the audit report and the consolidated audited financial statements of theNational Group and the non-consolidated audited financial statements of National for the financialyears ended 30 September 2004 and 30 September 2005 respectively);

(b) National's Half Year Consolidated Report on Appendix 4D for the six months ended 31 March 2006(including the consolidated unaudited financial statements of the National Group for the six monthsended 31 March 2006); and

(c) the statutory documents of National.

The documents listed at (a) and (b) above contain financial information on National, as described in thetable below. Information contained in such documents but not included in the cross-reference list isincorporated by reference into this Prospectus for information purposes only.

Balance sheet

Income statement

Cash flow statement

Accounting policies and explanatory notes

Review report

2004 Page 101Form 20-F


2006 Page 20Appendix 4D






2006 Page 22-23Appendix 4D

2004 Page 103-226Form 20-F

2005 Page 117-249Form 20-F

2006 Page 24-80Appendix 4D


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Audit reports

Legal and arbitration proceedings


2005 Page 251-252Form 20-F


2005 Note 44 at page 201-204Form 20-F

2006 Note 16 at page 77-78Appendix 4D

Copies of documents incorporated by reference in this Prospectus can be obtained from the registeredoffice of National. Requests for such documents should be directed to National at its office set out in theDirectory at the end of this Prospectus. In addition such documents will also be available from the offices ofthe Luxembourg Paying Agent set out in the Directory at the end of this Prospectus and to view on thewebsite of the Luxembourg Stock Exchange (as at the date of this Prospectus, www.bourse.lu).

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DESCRIPTION OF THE ISSUER

Introduction and Organisational Structure

National Capital Instruments [Euro] LLC 2 (the "Issuer") is a Delaware limited liability company that wasformed on 5 September 2006 under the Delaware Limited Liability Company Act (the "LLC Act") by filinga certificate of formation with the Secretary of the State of Delaware in the United States pursuant to aninitial limited liability company agreement, which was amended and restated on 26 September 2006 (asamended and restated, the "Issuer LLC Agreement"). National Capital Holdings I Inc. is the holder of theinitial limited liability company interest in the Issuer and will be the manager of the Issuer (the "LLCManager").

The Issuer LLC Agreement provides, among other things, for the issuance by the Issuer of a class oflimited liability company interests, the NCIs. The Issuer will not issue any common securities or other classof limited liability company interest while NCIs are on issue. When NCIs are issued, National CapitalHoldings I Inc. ceases to have any limited liability company interest in the Issuer. However, the LLCManager will at all times remain a wholly-owned subsidiary of National. As described in Description of theIssuer—Administration below, the LLC Manager solely administers and manages the Issuer and, as such,controls the Issuer. Accordingly, whilst National will not retain any limited liability company interest in theIssuer, it will, through its ownership of the LLC Manager, at all times retain control of the Issuer. Seefurther Description of the Issuer—Administration below.

The registered Delaware office of the Issuer is c/o The Corporation Trust Company, Corporation TrustCenter, 1209 Orange Street, Wilmington, Delaware 19801, United States of America telephone number+1 212 986 5252.

All correspondence in respect of the Issuer should be directed to the LLC Manager (see Description of theIssuer—Administration below).

Sole Activity

The Issuer was established for the sole purpose of:

• issuing the NCIs;

• investing the proceeds of the NCIs in the LLC Notes and the Convertible Debentures; and

• engaging in any related or incidental activities.

The Issuer has carried out no operations since its registration other than in relation to the creation of theNCIs and the other transactions contemplated by the Transaction Documents to which it is a party,including holding the LLC Notes and the Convertible Debentures. There are no recent events particular tothe Issuer that are, to a material extent, relevant to the evaluation of its solvency. There has been nomaterial adverse change in the prospects of the Issuer since the date of its formation. There has been nosignificant change in the financial or trading position of the Issuer since the date of its formation.

Under the Deed of Covenant, National will agree to pay or reimburse the Issuer on a quarterly basis for allexpenses incurred in connection with the Capital Instrument. However, no NCI Holder will be permittedto take action against National to enforce the Deed of Covenant.

Administration

The Issuer will be solely managed and administrated by the LLC Manager pursuant to and on the terms ofa management agreement to be entered into between the Issuer and the LLC Manager (the "IssuerManagement Agreement"). No NCI Holder may participate in the management or administration of theIssuer.

The registered Delaware office of the LLC Manager is c/o The Corporation Trust Company, CorporationTrust Center, 1209 Orange Street, Wilmington, Delaware 19801, United States of America, telephonenumber +1 212 986 9518. The business address of the LLC Manager (to which all correspondence shouldbe addressed) is c/o National Australia Bank Limited, Level 28, 245 Park Avenue, New York, New York,10167, United States of America (attention "Senior Counsel").

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The Directors of the LLC Manager are as follows:

Name Business Address Principal Activities

Rick Sawers Level 13, 140 William Street,Melbourne, Victoria 3000,Australia

Bruce Richards 245 Park Avenue, New York,New York, United States ofAmerica

Mark Cahaney 245 Park Avenue, New York,New York, United States ofAmerica

Dwayne McCallum 245 Park Avenue, New York,New York, United States ofAmerica

Thomas DeMaio 245 Park Avenue, New York,New York, United States ofAmerica

Group Treasurer, NationalAustralia Bank Limited

General Manager—Americas,National Australia Bank Limited

Head of Legal & Risk—America, National AustraliaBank Limited

Senior Vice President & Headof Finance—Americas, NationalAustralia Bank Limited

Senior Vice President, MarketsDivision, Americas, NationalAustralia Bank Limited

There are no potential conflicts of interest between any duties of these people as the manager of the Issuerand their private interests or other duties.

Under the terms of the Issuer Management Agreement, the LLC Manager may appoint a successor LLCManager, which must be a wholly-owned direct or indirect subsidiary of National. National will alsoundertake in the Deed of Covenant to ensure that any successor manager of the Issuer will at all times be adirectly or indirectly wholly-owned subsidiary of National.

The LLC Manager is also the manager of National LLC 1, which is separately established and whose assetsare segregated from those of the Issuer.

Covenants in the terms of the Component Instruments (including restrictions on National in the case ofnon-payment in respect of the NCIs (see Terms and Conditions of the NCIs—Distributions—Restrictions inthe case of non-payment) and transfer restrictions in respect of the Convertible Debentures and the LLCNotes held by the Issuer) ensure that control of the Issuer is not abused.

Capitalisation and Indebtedness

Opening balance

The following table sets out the opening balance of the Issuer as at 5 September 2006.

As at 5 September 2006(Euro)

AssetsCash 0Total assets 0

Share CapitalLimited liability company interests 0

Notes:1. The holder of the initial limited liability company interest is National Capital Holdings I Inc. The

initial limited liability company interest was issued to National Capital Holdings I Inc. without anycapital contribution.

Capitalisation

Under the LLC Act, a Delaware limited liability company, such as the Issuer, can be formed without anyinitial capitalisation. The LLC Act does not require an initial member, such as National Capital HoldingsI Inc., to contribute cash in order to receive its limited liability company interest.

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Immediately following the issue of the NCIs on the Issue Date, the capitalisation of the Issuer will consistof €400,000,000 in aggregate liquidation amount of NCIs.

Indebtedness

Since the date of its formation, the Issuer has not had any loan capital outstanding, has not incurred anyborrowings, has had no contingent liabilities, has not granted any guarantees and does not intend to haveoutstanding any such loan capital, incur any such borrowings, have any such contingent liabilities or grantany such guarantees other than in connection with the Transaction Documents.


Since the date of its formation, the Issuer has not been involved in any governmental, legal or arbitrationproceedings (including any such proceedings which are pending or threatened of which the Issuer isaware), which may have, or have had in the recent past, significant effects on the Issuer's and/or theNational Group's financial position or profitability.

Issuer LLC Agreement

Form of the NCIs

The Issuer LLC Agreement provides that the NCIs will be issued in registered form and will initially berepresented by a global certificate in registered form and interests in the global certificate will beexchangeable for definitive registered NCIs in the limited circumstances described in the Summary of theProvisions relating to the NCIs in Global Form below.

Distributions

The Issuer expects to pay distributions on the NCIs as described in the Terms and Conditions of the NCIs.Under applicable Delaware law, the Issuer cannot make a distribution to an NCI Holder to the extent thatat the time of the Distribution, after giving effect to the Distribution, all liabilities of the Issuer (other thanliabilities to NCI Holders on account of the NCIs) exceed the fair value of its assets.

It is expected that the aggregate periodic interest payments on the LLC Notes held by the Issuer will equalor exceed the aggregate periodic Distribution payments on the NCIs. Under the Issuer LLC Agreement,any excess profits of the Issuer are payable to the LLC Manager. The NCI Holder has no right to suchprofits.

Meetings

The Issuer LLC Agreement contains provisions for convening meetings of the NCI Holders to considerany matter affecting their interests, including any variation of the NCI Terms which requires the consent ofNCI Holders. This does not entitle the NCI Holders to manage or administrate the Issuer or to vote at anymeeting of any other National Entity.

Amendments and Modifications

The Issuer LLC Agreement provides that the Issuer LLC Agreement (including the NCI Terms) may beamended with the approval of APRA (if required) but without the consent or approval of NCI Holders ifthe LLC Manager is of the opinion that the amendment:

• is of a formal, minor or technical nature;

• is made to cure any ambiguity or correct any manifest error;

• is expedient for the purpose of enabling NCIs to be listed or to remain listed on a stock exchange, tobe lodged in a clearing system or to remain lodged in a clearing system or to be offered for sale or forsubscription under the laws for the time being in force in any place and it is otherwise not consideredby the LLC Manager to be materially prejudicial to the interests of NCI Holders as a whole;

• is necessary to comply with the provisions of any statute or the requirements of any statutoryauthority; or

• in any other case, will not materially adversely affect the NCI Holders' rights.

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If the LLC Manager reasonably considers the amendment will materially adversely affect NCI Holders'rights, the amendment may only be made if it has been approved by a Special Resolution.

The Issuer LLC Agreement also provides that each of the Component Instruments (other than the NCIsand the Preference Shares (if issued) but including the Preference Share Terms prior to the issue of thePreference Shares) may be amended with the approval of APRA (if required) but without the consent orapproval of NCI Holders if the issuer of the Component Instrument (the "Relevant Issuer") (or, in thecase of the Deed of Covenant, the Issuer) is of the opinion that the amendment:



• is expedient for the purpose of enabling NCIs to be listed or remain listed on a stock exchange, to belodged in a clearing system or to remain lodged in a clearing system or to be offered for sale or forsubscription under the laws for the time being in force in any place and it is otherwise not consideredby the Relevant Issuer (or, in the case of the Deed of Covenant, the Issuer) to be materiallyprejudicial to the interests of the holder of the Component Instrument or NCI Holders as a whole;


• in any other case, will not materially adversely affect the holder of the Component Instrument or NCIHolders' rights.

In addition, the Convertible Debenture Terms may be amended without the consent of NCI Holders asdescribed under Summary of Principal Documents—Terms of the Preference Shares—Redemption below.

In any other case, the terms of any Component Instrument (other than the NCIs and the PreferenceShares (if issued) but including the Preference Share Terms prior to the issue of the Preference Shares)may be amended or added to if the amendment or addition has been approved by a Special Resolution.

A "Special Resolution" is defined in the Issuer LLC Agreement as a resolution passed:

(a) at a meeting of NCI Holders by a majority of at least 75% of the votes cast; or

(b) by NCI Holders representing at least 75% of the aggregate Liquidation Amount of the NCIs signing adocument stating they are in favour of the resolution,

in each case as provided in the Issuer LLC Agreement.

Dissolution

The Issuer LLC Agreement also provides for the winding up of the Issuer, including in circumstanceswhere National is liquidated, dissolved or wound up.

Limited Liability

Under the Issuer LLC Agreement, except as otherwise provided by the LLC Act, the debts, obligations andliabilities of the Issuer will be solely the debts, obligations and liabilities of the Issuer. The NCI Holderswill not be obligated personally for any such debt, obligation or liability of the Issuer solely by reason ofbeing a member of the Issuer.

Exercise of rights

The Issuer LLC Agreement will be governed by and construed in accordance with the laws of the State ofDelaware United States of America. Accordingly, in order to enforce an NCI Holder's rights under theIssuer LLC Agreement (including the NCI Terms), a NCI Holder may file a claim in the State of Delawarein accordance with the applicable requirements and procedures under the laws of the State of Delaware.

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DESCRIPTION OF NATIONAL LLC 1

Introduction and Organisational Structure

National Capital Instruments [Euro] LLC 1 ("National LLC 1") is a Delaware limited liability companythat was formed on 5 September 2006 under the LLC Act by filing a certificate of formation with theSecretary of the State of Delaware in the United States pursuant to an initial limited liability companyagreement, which was amended and restated on 26 September 2006 (as amended and restated, the "LLC 1Agreement"). The LLC Manager will be the manager of National LLC 1.

The LLC 1 Agreement provides, among other things, for the issuance by National LLC 1 of one class oflimited liability company interests in the form of common securities (the "LLC 1 Common Securities"),which are expected to be issued concurrently with this offering and will be held by National Sub. Terms ofthe LLC 1 Common Securities are set forth in the LLC 1 Agreement.

See further Description of National LLC 1—Administration below.

National LLC 1 has agreed to issue the LLC Notes to the Initial Subscriber and to subscribe for theSubordinated Debentures from National New York Branch.

The registered Delaware office of National LLC 1 is c/o The Corporation Trust Company, CorporationTrust Center, 1209 Orange Street, Wilmington, Delaware 19801, United States of America, telephonenumber +1 212 986 9518.

All correspondence in respect of National LLC 1 should be directed to the LLC Manager (see Descriptionof National LLC 2—Administration above).

Sole Activity

National LLC 1 was established for the sole purpose of:

• issuing the LLC 1 Common Securities to National Sub;

• issuing the LLC Notes as provided under Subscription and Sale—Subscription, Assignment and Sale ofthe Relevant Instruments below;

• investing the proceeds of the LLC Notes in the Subordinated Debentures;

• investing the proceeds of the LLC 1 Common Securities in a non-interest bearing account withNational New York Branch; and

• engaging in any related or incidental activities.

National LLC 1 has carried out no operations since its registration other than in relation to the creation ofthe LLC 1 Common Securities and the LLC Notes and the other transactions contemplated by theTransaction Documents to which it is a party, including holding the Subordinated Debentures.

Under the Deed of Covenant, National will agree to pay or reimburse National LLC 1 on a quarterly basisfor all expenses incurred in connection with the Capital Instrument. However, National will not guaranteeany payments under the LLC Notes and no NCI Holder will be permitted to take action against Nationalto enforce the Deed of Covenant.

Dividends and LLC Note Interest

National LLC 1 expects to dividend any residual income after payments on the LLC Notes and operatingexpenses to the holder of the LLC 1 Common Securities. Under applicable Delaware law, National LLC 1cannot make a distribution on the LLC 1 Common Securities to the extent that at the time of thedistribution, after giving effect to the distribution, all liabilities of National LLC 1 (other than liabilities toNational Capital Holdings I Inc. on account of the LLC 1 Common Securities) exceed the fair value of itsassets.

It is expected that the aggregate periodic interest payments on the Subordinated Debentures held byNational LLC 1 will equal or exceed the aggregate periodic interest payments on the LLC Notes.

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Administration

National LLC 1 will be solely managed and administered by the LLC Manager pursuant to and on theterms of a management agreement to be entered into between National LLC 1 and the LLC Manager (the"LLC 1 Management Agreement").

No NCI Holder may participate in the management or administration of National LLC 1.

The registered office of the LLC Manager and the Directors of the LLC Manager are as set out underDescription of the Issuer—Administration above.

Under the terms of the LLC 1 Management Agreement, the LLC Manager may appoint a successor LLCManager, which must be a wholly-owned direct or indirect subsidiary of National. National will alsoundertake in the Deed of Covenant to procure that the LLC Manager will at all times be a directly orindirectly wholly-owned subsidiary of National.

The LLC Manager is also the manager of the Issuer, which is separately established and whose assets aresegregated from those of National LLC 1.

Capitalisation and Indebtedness

Capitalisation

As at the Issue Date, the capitalisation of National LLC 1 will consist of U.S.$100 in aggregate liquidationamount of the LLC 1 Common Securities.

Indebtedness

Since the date of its registration, National LLC 1 has not had any loan capital outstanding, has notincurred any borrowings, has had no contingent liabilities, has not granted any guarantees and does notintend to have outstanding any such loan capital, incur any such borrowings, have any such contingentliabilities or grant any such guarantees other than in connection with the Transaction Documents.


Since the date of its formation, National LLC 1 has not been involved in or threatened with anygovernmental, legal or arbitration proceedings, which may have, or have had in the recent past, significanteffects on National LLC l's and/or the National Group's position or profitability.

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DESCRIPTION OF NATIONAL

Information about National

History and development of National

The legal name of National is "National Australia Bank Limited" and it trades commercially as "NationalAustralia Bank" and, particularly within Australia, as "National" or "nab".

National was incorporated on 23 June, 1893.

National is a public limited company incorporated in the Commonwealth of Australia and it operatesunder Australian legislation including the Corporations Act 2001 of Australia (the "Corporations Act"). Itsregistered office is Level 13, 140 William Street, Melbourne, Victoria 3000, Australia (telephone number+61 3 8641 3500) and its Australian Business Number ("ABN") is 12 004 044 937.

Business Overview

Principal activities

The National Group is an international financial services group, providing a comprehensive and integratedrange of financial products and services. Globally, as at 31 March 2006, the National Group had:

• total assets of A$459 billion;

• A$96 billion in funds under management and administration; and

• A$442 billion in assets under custody and administration.

The principal activities of the National Group are banking services, credit and access card facilities,leasing, housing and general finance, international banking, investment banking, wealth management,funds management, life insurance, and custodian, trustee and nominee services.

The National Group business operating model runs along regional lines for Australia, Europe and NewZealand, together with Institutional Markets & Services, which operates on a global basis. This operatingmodel is a change to the model that operated before 2005.

Total Australia

The Australian and Asian-based businesses are managed as one regional operation. This has resulted inthe former operations of Financial Services Australia, the Australian components of Corporate &Institutional Banking's Corporate Banking, National Custodian Services and Transactional Solutions units,the Asian component of Corporate & Institutional Corporate Banking, and the Australian components ofWealth Management, being managed as Total Australia.

As at 31 March 2006, Total Australia had 22,871 full-time equivalent employees.

Total UK

The National Group's UK businesses are now managed as one regional operation. This has resulted in theformer operations of Financial Services Europe, the European component of Corporate & InstitutionalBanking's Corporate Banking unit, and the European components of Wealth Management, being managedas Total UK.

As at 31 March 2006, Total UK had 9,246 full-time equivalent employees.

Total New Zealand

The New Zealand-based businesses of the National Group are now managed as one regional operation.This has resulted in the former operations of Financial Services New Zealand, the New Zealandcomponent of Corporate & Institutional Banking's Corporate Banking unit, and the New Zealandcomponents of Wealth Management, being managed as Total New Zealand.

As at 31 March 2006, Total New Zealand had 4,628 full-time equivalent employees.

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Institutional Markets & Services

Institutional Markets & Services ("IMS") is a global business with operations in Australia, the UnitedKingdom, New Zealand, Asia and the United States. Key business lines include Global Markets,Corporate Finance, Structuring & Investments, and Institutional Banking—IMS's relationshipmanagement unit in Australia incorporating blue chip corporate clients and organisations served byNational's Financial Institutions group globally. In Corporate Finance, IMS provides funding solutions viaProject Finance, Leveraged Finance, Structured Asset Finance, Structured Property, Mezzanine Financeand non-quoted equity product. The Structuring & Investments group is responsible for managing theasset portfolio and structuring investment products across such areas as Structured Finance, AlternativeInvestments, Capital Markets Solutions, Securitisation and Strategic Transactions.

As at 31 March 2006, Institutional Markets & Services had 1,944 full-time equivalent employees.

Corporate Centre and Global Funding

The National Group's other services segment comprises Corporate Centre and Global Funding, which arenot considered to be separate reportable operating segments. Corporate Centre comprises CorporateDevelopment, Financial Risk Management, People & Culture, Technology, and the office of the CEO.

As at 31 March 2006, these areas had 609 full-time equivalent employees.

Principal markets

The principal markets in which the National Group operates are banking services, credit and access cardfacilities, leasing, housing and general finance, international banking, wealth management, fundsmanagement, life insurance and custodian, trustee and nominee services.

Organisational Structure

National is the holding company for the National Group, as well as being the main operating company. Asat the date of this Prospectus, National had four main operating subsidiaries: the Bank of New Zealand,MLC Limited, National Australia Financial Management Limited and Clydesdale Bank PLC (whichincludes the whole business and undertaking carried on under the Yorkshire Bank brand).

Trend Information

There has been no material adverse change in the prospects of National since 30 September 2005.

There are no known trends, uncertainties, demands, commitments or events that are reasonably likely tohave a material effect on National's prospects for at least the current financial year, other than as disclosedin the Financial Reports (as defined in Description of National—Financial Information concerningNational's Assets and Liabilities, Financial Position and Profits and Losses—Historical financial informationbelow) of National (as incorporated by reference in this Prospectus) and the contingent liabilitiesdescribed under Description of National—Legal and arbitration proceedings below.

Profit Forecasts or Estimates

National does not intend to make or imply any profit forecasts or profit estimates in this Prospectus. Nostatement contained in this Prospectus should be interpreted as such a forecast or estimate.

Administrative, Management and Supervisory Bodies

The name and function of each of the Directors of National are listed below. The business address of eachDirector is Level 13, 140 William Street, Melbourne, Victoria 3000, Australia.

John Stewart

Managing Director, Group Chief Executive Officer and an Executive Director of National EquitiesLimited.

Michael J Ullmer

Director, Finance & Risk, Group Chief Financial Officer and an Executive Director of National EquitiesLimited.

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Ahmed Fahour

Executive Director, Chief Executive Officer, Australia, and an Executive Director of National EquitiesLimited.

Michael A Chaney

Non-Executive Director, Chairman and a Non-Executive Director of National Equities Limited.

Peter J B Duncan

Non-Executive Director, Chairman of the Remuneration Committee and a Non-Executive Director ofNational Equities Limited.

Daniel T Gilbert

Non-Executive Director, member of the Principal Board Audit Committee and a Non-Executive Directorof National Equities Limited.

Paul J Rizzo

Non-Executive Director, member of the Principal Board Audit Committee, Chairman of the PrincipalBoard Risk Committee and a Non-Executive Director of National Equities Limited.

Jillian S Segal

Non-Executive Director, member of the Remuneration Committee, member of the Principal Board RiskCommittee and a Non-Executive Director of National Equities Limited.

John G Thorn

Non-Executive Director, Chairman of the Principal Board Audit Committee and a Non-Executive Directorof National Equities Limited.

Geoffrey A Tomlinson

Non-Executive Director, member of the Remuneration Committee and a Director of the followingNational Group companies: National Equities Limited, MLC Holdings Limited, MLC Limited, MLCInvestments Limited, National Wealth Management Holdings Limited, Your Prosperity Limited, HeritageManagement Limited, National Australia Financial Management Limited and National Australia FundManagement Limited.

G Malcolm Williamson

Non-Executive Director, Chairman of National Australia Group Europe Limited and a Non-ExecutiveDirector of National Equities Limited.

T Kerry McDonald

Non-Executive Director, Chairman of Bank of New Zealand, member of the Principal Board AuditCommittee and a Non-Executive Director of National Equities Limited.

Patricia A Cross

Non-Executive Director, member of the Principal Board Risk Committee and a Non-Executive Director ofNational Equities Limited.

There are no potential conflicts of interest between any duties of these people to National and their privateinterests or their other duties.

Major Shareholders

National is a public limited company. As at 31 July 2006, the following shareholders each held more than1% of the issued share capital of National:

• National Nominees Limited (13.13%)

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• J.P. Morgan Nominees Australia Limited (10.96%)

• Westpac Custodian Nominees Limited (10.08%)

• Citicorp Nominees Pty Limited (3.11%)

• ANZ Nominees Limited (3.04%)

• Cogent Nominees Pty Limited (1.55%)

• Queensland Investment Corporation (1.12%)

• AMP Life Limited (1.08%)

There are several provisions of Australian law that are relevant to the ability of any person to gain controlof National.

Mergers, acquisitions and divestments of Australian public companies listed on the ASX (such as National)are regulated by detailed and comprehensive legislation and the rules and regulations of the ASX.

In summary, under the Corporations Act, a person must not acquire a relevant interest in issued votingshares in an Australian listed company if, broadly, because of the transaction, that person's or someoneelse's voting power in the company increases from 20% or below to more than 20%, or from a startingpoint that is above 20% and below 90%, unless those shares are acquired in a manner specificallypermitted by law. This restriction also limits the options available to a shareholder wanting to sell ashareholding of more than 20% in an Australian listed company.

Australian law also regulates acquisitions which would have the effect, or be likely to have the effect, ofsubstantially lessening competition in a market in Australia, in a state or in a territory of Australia.

Acquisitions of certain interests in Australian listed companies by foreign interests are also subject toreview and approval by the Treasurer of the Commonwealth of Australia ("Australian Treasurer").

There are also specific limitations on the acquisition of a shareholding in a bank under the Financial Sector(Shareholdings) Act 1998 of Australia (the "FSSA"). Under the FSSA, a person (including a company)must not acquire an interest in an Australian financial sector company where the acquisition would takethat person's voting power (which includes the voting power of the person's associates) in the financialsector company to more than 15% of the voting power of the financial sector company without firstobtaining the Australian Treasurer's approval. Even if a person has less that 15% of the voting power, theAustralian Treasurer has the power to declare that a person has practical control of that company and, byapplying for an order from the Federal Court of Australia may require the person to relinquish thatcontrol. The definition of a financial sector company includes banks such as National.

Financial Information concerning National's Assets and Liabilities, Financial Position and Profits andLosses

Historical financial information

The following financial information in relation to National for its financial years ended 30 September 2004and 30 September 2005 is contained in its Annual Reports on Form 20-F for the years ended 30 September2004 and 30 September 2005 respectively (the "Full Year Reports") and in its Half Year ConsolidatedReport on Appendix 4D for the six months ended 31 March 2006 (the "2006 Half Year Report" and,together with the Full Year Reports, the "Financial Reports") (at the locations listed) which areincorporated by reference in this Prospectus:

• the balance sheet for each such year (at pages 101, 115 and 20 respectively, referred to as the"Statement of Financial Position");

• the income statement for each such year (at pages 100, 114 and 19 respectively, referred to as the"Statement of Financial Performance");

• the cash flow statement for each such year (at pages 102, 116 and 22-23 respectively, referred to as the"Statement of Cash Flows"); and

• the accounting policies and explanatory notes (at pages 103-227, 117-249 and 24-80 respectively,referred to as the "Notes to the financial statements").

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In accordance with Article 35(3) of Regulation (EC) No 809/2004 (the "Prospectus Regulation"), theobligation to restate historical financial information according to Regulation (EC) No 1606/2002 (the "IASRegulation") set out in Annex XI item 11.1 of the Prospectus Regulation does not apply to National. Thefinancial information relating to National in the Full Year Reports described above and incorporated byreference in this Prospectus has therefore been prepared in accordance with Australian GenerallyAccepted Accounting Principles ("AGAAP") and not in accordance with the international accountingstandards adopted pursuant to the procedure of Article 3 of the IAS Regulation. However, the financialinformation relating to National in the 2006 Half Year Report described above and incorporated byreference into this Prospectus has been prepared in accordance with AIFRS.

There may have been material differences in the financial information had the same accounting standardsbeen applied to each of the Financial Reports.

The financial statements referred to above contain both National's own statements and consolidatedstatements for the National Group.

See further Documents Incorporated by Reference above.

Auditing of historical annual financial information

The historical annual financial information referred to above has been audited; please see the Auditors'Statements at page 228 of the Annual Report on Form 20-F for the year ended 30 September 2004 and atpages 251 and 252 of the Annual Report on Form 20-F for the year ended 30 September 2005 which areincorporated by reference in this Prospectus.


Except as listed below, there are no governmental, legal or arbitration proceedings (including any suchproceedings which are pending or threatened of which National is aware) in the 12-month period beforethe date of this Prospectus which may have, or have had in the recent past, significant effects on thefinancial position or profitability of National and/or that of the National Group.

On 29 August 2003, a civil class action complaint was filed in the US District Court, Southern District ofNew York, against the National Group and others for alleged violations of the US federal securities lawrelating primarily to disclosure concerning the valuation of the mortgage servicing rights held byHomeSide US (sold in October 2002). The complaint failed to specify any quantum of damages. Theplaintiffs in the complaint filed their consolidated amended class action complaint on 30 January 2004, andthe National Group moved to dismiss the consolidated amended class action complaint on 11 March 2004.It is anticipated that the court will rule on the motion to dismiss during the 2006 financial year.

On 26 February 2004, National announced that it had received a voluntary document request from the USSecurities and Exchange Commission ("SEC") as part of an investigation into certain Australianregistrants and public accounting firms. The document request covers National and controlled entities andincludes issues relating to audit independence. In addition, National has provided certain information tothe SEC about the accounting and internal controls of National and its controlled entities, including theforeign currency options trading matter and HomeSide US.

For further information on contingent liabilities of the National Group, refer to note 44 in the financialreport included in National's Annual Report on Form 20-F for the year ended 30 September 2005incorporated by reference into this Prospectus. These contingent liabilities include amended assessmentsfrom the Australian Tax Office regarding ExCaps and amended assessments from the New Zealand InlandRevenue Department.

Recent events

National continues to consider a range of options to optimise its corporate structure to best support thebank's operations domestically and internationally.

A non-operating holding company structure is one of the options being considered in response to thechanging regulatory environment and its impact on capital and for future flexibility to deliver shareholdervalue.

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Consideration of various structural options involves a range of complex issues and the analysis and anysubsequent decision on a particular path are expected to take some time to complete. National is currentlyparticipating in industry-wide consultation with regulators in relation to the matter.

As part of any structural review process, National remains committed to retaining the existing level ofcredit ratings for the National Group.

Any non-operating holding company would continue to be regulated by APRA.

Once any proposal is sufficiently advanced stakeholders will be consulted.

There are no recent events particular to National that are, to a material extent, relevant to the evaluationof its solvency.

Significant change in the financial or trading position of National

There has been no significant change in the financial or trading position of the National Group since31 March 2006.

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TERMS AND CONDITIONS OF THE NCIs

The following are the terms and conditions of the NCIs in the form in which they will be set out in the IssuerLLC Agreement. These terms and conditions are subject to the provisions of the Issuer LLC Agreement.

These NCI Terms have been established pursuant to and are incorporated by reference into, the limited liabilitycompany agreement of National Capital Instruments [Euro] LLC Z a Delaware limited liability company (the"Issuer"), dated as of 5 September 2006 (as amended and restated on 26 September 2006 and as otherwiseamended from time to time, the Issuer LLC Agreement") and, together with the Issuer LLC Agreement,constitute the limited liability company agreement of the Issuer within the meaning of the Act (as defined in theIssuer LLC Agreement). In the event of any inconsistency between the Issuer LLC Agreement and these NCITerms, the provisions of these NCI Terms shall prevail.

1. LIQUIDATION AMOUNT

Each NCI will be issued with a Liquidation Amount of €50,000. Each NCI must be paid for in full onapplication.

2. FORM AND RANKING

2.1 Form

Each National Capital Instrument (NCI) is a limited liability company interest in the Issuer conferring therights set out in these NCI Terms. A NCI is Redeemable for cash and Convertible into a Preference Shareaccording to these NCI Terms. NCIs are not Redeemable or Convertible at the option of an NCI Holder.

NCIs do not represent deposits or securities of National. NCIs are guaranteed by National only to thelimited extent provided in the NCI Subordinated Guarantee and an NCI Holder otherwise has no claim onNational for payment of any amount in respect of NCIs.

NCIs are issued according to the Issuer LLC Agreement of which these NCI Terms form part.

2.2 Registered Global NCIs and Registered Definitive NCIs

(a) NCIs are issued in registered form and will be initially represented by a global certificate in registeredform (Registered Global NCI), which will be registered in the name of a nominee of, and depositedwith a common depository for, Euroclear and Clearstream, Luxembourg.

(b) On the occurrence of an Exchange Event, interests in the Registered Global NCI will be exchangeable(in whole but not in part and in the manner set out in the Issuer LLC Agreement) for definitiveregistered NCIs (Registered Definitive NCIs). The Issuer must notify NCI Holders in accordance withclause 12 ("Notices") of the occurrence of an Exchange Event.

2.3 Ranking

Each NCI ranks equally with all other NCIs in all respects and subordinate to all creditors of the Issuer.

3. DISTRIBUTIONS

3.1 Distributions

Subject to these NCI Terms, each NCI entitles the NCI Holder on a Record Date to receive on therelevant Distribution Payment Date a distribution in respect of the period ending on (but not including)that Distribution Payment Date (Distribution) calculated according to the following formula:

Distribution = Distribution Rate x Liquidation Amount x D360

where:

Distribution Rate (expressed as a percentage per annum) is calculated according to the followingformula:

Distribution Rate = EURIBOR + Margin

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where:

EURIBOR means the rate determined by the Calculation Agent on the date (the DeterminationDate) which is two Business Days before the commencement of the relevant Distribution Periodto be:

(A) the three-month EURIBOR rate per annum published on page 248 of the Telerate Monitor(or such other screen page of Telerate or such other information service that is designated asthe successor to Telerate Page 248 for the purpose of displaying comparable rates) (ScreenPage) on the relevant Determination Date at or about 11:00am (Brussels time) as the rateoffered in the interbank market in the Euro-zone for deposits in Euro for a period of3 months; and

(B) if EURIBOR cannot be so determined for any reason, then EURIBOR for the relevantDistribution Period is the arithmetic mean (rounded, if necessary, to the nearest oneten-thousandth of a percentage point, with 0.00005 being rounded upwards), determined bythe Calculation Agent, of the rates which five major banks in the Euro-zone interbankmarket, (Reference Banks) selected by the Calculation Agent, quote to prime banks in theinterbank market in the Euro-zone at approximately 11:00am (Brussels time) on the relevantDetermination Date for deposits in Euro for a period of 3 months for an amount that isrepresentative for a single transaction in that market at that time.

If two or more of the Reference Banks provide the relevant quotation, the arithmetic meanshall be calculated as described above on the basis of the quotations supplied. If less thantwo Reference Banks provide a quotation, then EURIBOR for the relevant DistributionPeriod shall be the arithmetic mean (rounded if necessary to the nearest one-ten-thousandthof a percentage point, with 0.00005 being rounded upwards) which leading banks in theEuro-zone, selected by the Calculation Agent are quoting on the Determination Date toleading European banks for a period of 3 months. If banks so selected by the CalculationAgent are not quoting, EURIBOR for the Distribution Period is the rate in effect for the lastpreceding Distribution Period;

Euro-zone means the region comprised of Member States of the European Union that adopt thesingle currency in accordance with the Treaty establishing the European Community, as amended(the Treaty);

Margin (expressed as a percentage per annum) means, for a Distribution Period:

(a) up to (but not including) the Step-Up Date, the Initial Margin; and

(b) from (and including) the Step-Up Date, the Initial Margin plus 1.00% per annum; and

D means in respect of:

(a) the first Distribution Payment Date, the number of days from (and including) the Issue Dateto (but not including) the first Distribution Payment Date; and

(b) each subsequent Distribution Payment Date, the number of days from (and including) thepreceding Distribution Payment Date to (but not including) that Distribution Payment Date.

3.2 Distribution Payment Dates

The Distribution Payment Dates are each 29 March, 29 June, 29 September and 29 December,commencing on 29 December 2006, until the date on which the NCIs are Redeemed or Converted inaccordance with these NCI Terms (and, if such date is also a Distribution Payment Pate, including suchdate).

If a Distribution Payment Date is a day which is not a Business Day, then the Distribution Payment Date isthe next Business Day, or if that day would fall in the next calendar month, the preceding Business Day.

3.3 Distributions subject to Issuer having Available Amount

(a) The payment of a Distribution, including payment of any gross-up payable under clause 7.2("Gross-up"), is subject to the Issuer having received sufficient amounts on the ComponentInstruments (Available Amount) in respect of that Distribution Period.

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(b) The Issuer will not have sufficient Available Amounts in respect of a Distribution Period if, for anyreason, (including because an APRA Condition has occurred) a distribution scheduled to be paid inrespect of that Distribution Period on any of the Component Instruments has not been paid or has notbeen paid in full or is subject to a withholding or deduction for which the issuer of that ComponentInstrument is not required to gross up.

(c) If, in any Distribution Period, the Available Amounts are less than the amount which is required topay the scheduled Distribution in respect of each NCI in full, the NCI Holder will receive a pro ratashare of the Distribution it would otherwise have been entitled to in accordance with these NCITerms.

3.4 Distributions are non-cumulative

Distributions are non-cumulative. If all or any part of a Distribution is not paid (an Unpaid Distribution)on or within seven days after the relevant Distribution Payment Date because of the restrictions inclause 3.3 ("Distributions subject to Issuer having Available Amount"), the Issuer has no liability to paythe Unpaid Distribution and, notwithstanding the ability of the Issuer to make an Optional Distribution,the NCI Holder has no claim in respect of such Unpaid Distribution. No interest accrues on any unpaidDistribution or Optional Distribution and the NCI Holder has no claim or entitlement in respect ofinterest on any Unpaid Distribution or Optional Distribution.

3.5 Restrictions in the case of non-payment

Subject to clause 3.6 ("Exceptions to restrictions"), if:

(a) a Distribution (including any gross-up on that Distribution payable under clause 7.2 ("Gross-up")) hasnot been paid in full on the Distribution Payment Date because of the restrictions in clause 3.3("Distributions subject to Issuer having Available Amount"); or

(b) a Conversion Event has occurred as a result of the Issuer for any reason not paying in full theDistribution payable on the NCIs on any Distribution Payment Date,

National must not without approval of an Ordinary Resolution passed by NCI Holders:

(i) pay any interest, dividends or similar distributions on any other capital instruments of Nationalwhich rank for dividends equal with or junior to the Preference Shares (as if such PreferenceShares had been issued); or

(ii) redeem, buy-back or reduce capital on any other capital instruments of National which rank forreturn of capital in a winding up equal with or junior to the Preference Shares (as if suchPreference Shares had been issued),

(in each case other than by way of pro rata payments on the NCIs and the other capital instruments ofNational which rank for distributions or return of capital in a winding up (as the case may be) equal withthe Preference Shares (as if such Preference Shares had been issued)), and unless and until, since the dateof the failure to pay a Distribution as stated in clause 3.5(a) or the occurrence of a Conversion Event asstated in clause 3.5(b):

(A) National shall have paid in full, either:

(1) consecutive Distributions on the NCIs on each Distribution Payment Date during the12 month period following the non-payment of the Distribution; or

(2) with APRNs prior written approval, an optional Distribution equal to the unpaid amount ofthe scheduled Distributions for the period of 12 months prior to the date of payment of theoptional Distribution (Optional Distribution); or

(B) all NCIs have been:

(1) Redeemed; or

(2) Converted and National is permitted to do so in accordance with the Preference ShareTerms.

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3.6 Exceptions to restrictions

The foregoing restrictions do not apply to:

(a) a redemption, buy-back or return of capital in connection with:

(i) any employment contract, benefit plan or other similar arrangement;

(ii) any dividend reinvestment plan or shareholder share purchase plan; or

(iii) the issuance of National's shares, or securities convertible into or exercisable for such shares, asconsideration in an acquisition entered into prior to the occurrence of the Unpaid Distribution orthe Conversion Event;

(b) an exchange, redemption or conversion of any class of National's shares, or any shares of a subsidiaryof National, for any class of National's shares, or any class of National's indebtedness for any class ofNational's shares;

(c) the purchase of fractional interests in National's shares under the conversion or exchange provisionsof the shares or the security being converted or exchanged;

(d) any payment or declaration of a dividend in connection with any shareholder's rights plan or theredemption or repurchase of rights pursuant to the plan;

(e) any dividend in the form of shares, warrants, options or other rights where the dividend shares or theshares issuable upon exercise of such warrants, options or other rights are the same class of shares asthose on which the dividend is being paid or rank equal or junior to those shares; or

(f) any capital raising through a rights issue.

3.7 Notification of Distribution Rate

The Issuer will notify, or procure that the Calculation Agent notifies, the Distribution Rate and theamount of the Distribution for each Distribution Period:

(a) as soon as possible after determination to NCI Holders in accordance with clause 12 ("Notices"); and

(b) in any event, to any Stock Exchange on which the NCIs are for the time being listed or admitted totrading, not later than the first day of the relevant Distribution Period.

4. REDEMPTION

4.1 Redemption

If NCIs are to be Redeemed, on the Redemption Date the Issuer must pay to the NCI Holder theRedemption Price in respect of each NCI which is Redeemed (Redemption).

4.2 Redemption by Issuer

If National (with the prior written approval of APRA) redeems:

(a) some or all of the Convertible Debentures on the Step-Up Date;

(b) some or all of the Convertible Debentures on a Distribution Payment Date after the Step-Up Date; or

(c) all (but not some) of the Convertible Debentures on or following the occurrence of an AcquisitionEvent, a Regulatory Event or a Tax Event,

the Issuer must Redeem a number of NCIs equal to the number of Convertible Debentures redeemedupon receipt of the Redemption Amounts.

4.3 Redemption Price

The Redemption Price is equal to the Par Redemption Amount.

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4.4 Redemption Notice

Before it Redeems, the Issuer must give a Redemption Notice which must state:

(a) the Redemption Date, being a Business Day no less than 20 Business Days after the date of theRedemption Notice; and

(b) if less than all NCIs are being Redeemed on the Redemption Date, state the proportion of NCIs to beRedeemed on that Redemption Date.

A Redemption Notice is irrevocable once given and constitutes a promise by the Issuer, subject to receiptof the Redemption Amounts, to Redeem the NCIs specified in the Redemption Notice on the RedemptionDate.

4.5 Partial Redemption

If some but not all NCIs are Redeemed the Issuer must, in each case, endeavour to treat all NCI Holders:

(a) in the case of Registered Global NCIs, in accordance with the rules of Euroclear and/or Clearstream,Luxembourg; and

(b) in the case of Registered Defmitive NCIs, as far as practicable in the proportion that the aggregateLiquidation Amount of Registered Definitive NCIs held by that NCI Holder bears to the aggregateLiquidation Amount of all Registered Defmitive NCIs.

5. CONVERSION

5.1 Meaning of Conversion

Conversion of a NCI means that the NCI is redeemed by the Issuer either delivering, or directing Nationalto issue, the Preference Share to the NCI Holder on the Conversion Date.

5.2 Conversion

The NCIs are to be Converted when the first of the following events occurs (the Conversion Event):

(a) the Business Day prior to 29 September 2055;

(b) National gives a National Conversion Notice (which National may do in its absolute discretion);

(c) a scheduled Distribution is not paid in full (either by the Issuer or by National under the NCISubordinated Guarantee) for any reason on or within seven Business Days after any DistributionPayment Date;

(d) National LLC 1 or the Issuer:

(i) ceases to be managed by a wholly-owned subsidiary of National; or

(ii) is wound up or dissolved;

an order is made or effective resolution is passed for the winding up of National;

an APRA Capital Event; or

the Redemption Price is not paid in full for any reason on or within seven Business Days of aRedemption Date.

53 Conversion Dates

The Conversion Date will be, if the Conversion Date occurs under:

(a) clause 5.2(a), 5.2(d) or 5.2(e) ("Conversion"), the date of the Conversion Event;

(b) clause 5.2(b) ("Conversion"), the date specified in the National Conversion Notice (which must be nolater than 20 Business Days after the date of the National Conversion Notice); or

(c) clause 5.2(c), 5.2(f) or 5.2(g) ("Conversion"), the date which is 10 Business Days after the date theConversion Event occurs.

(e)

(f)

(g)

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5.4 Conversion Notice

Except where clause 5.2(a) ("Conversion") applies, the Issuer must give a Conversion Notice stating theConversion Date in accordance with clause 5.3 ("Conversion Dates"):

(a) where clause 5.2(b) ("Conversion") applies, immediately on receipt of a National Conversion Notice;and

(b) in any other case, within 3 Business Days of the Conversion Event.

A Conversion Notice is irrevocable once given. Failure to give a Conversion Notice when required by thisclause 5.4 ("Conversion Notice") does not affect the obligation of National to Convert.

5.5 Failure to Convert

If on a Conversion Date, a Preference Share is not issued or delivered in respect of a NCI, that NCIremains on issue until the Preference Share is issued or delivered to the NCI Holder or the NCI Holderreceives the Redemption Price in accordance with clause 4 ("Redemption"). This clause 5.5 ("Failure toConvert") does not affect the obligation of National to issue the Preference Share.

6. REDEMPTION AND CONVERSION COMMON PROVISIONS

6.1 Effect of Redemption or Conversion

Upon Redemption or Conversion of a NCI, and payment of the Redemption Price or the issue of thePreference Share and payment of any amount due and payable on the Conversion Date, in both cases, inrespect of that NCI, all other rights conferred, or restrictions imposed, by that NCI will no longer haveeffect.

6.2 NCI Holder acknowledgements

Each NCI Holder by subscribing for or acquiring an NCI irrevocably:

(a) agrees to be bound by the terms of the Issuer LLC Agreement;

(b) upon a Conversion, consents to becoming a member of National and agrees to be bound by thePreference Share Terms;

(c) agrees it is obliged to accept the Preference Shares upon a Conversion notwithstanding anythingwhich might otherwise affect Conversion including:

(i) any change in the financial position of National since the Issue Date;

(ii) any disruption to the market or potential market for the Preference Shares or to capital marketsgenerally;

(iii) any breach by any National Entity of any obligation in connection with the Capital Instrument;

(iv) it being impossible or impracticable to list the Preference Shares on a Stock Exchange; or

(v) it being impossible or impracticable to sell or otherwise dispose of Preference Shares.

(d) agrees to provide to the Issuer any information necessary to give effect to a Redemption or aConversion and to surrender, or (as the case may be) instruct Euroclear and/or Clearstream,Luxembourg to surrender, any NCI against payment of the Redemption Price or issue of thePreference Shares, as the case may be;

(e) appoints the Issuer as its agent and attorney with power in the name and on behalf of the NCI Holderto do all things necessary to give effect to a Redemption or a Conversion, including:

(i) completing and executing such instruments for and on the NCI Holder's behalf as the Issuerconsiders necessary or desirable to give effect to a Redemption or a Conversion; and

(ii) appointing in turn its own agent or delegate;

(f) acknowledges and agrees that a NCI Holder has no right to request a Redemption or a Conversion;

(g) acknowledges and agrees that a NCI Holder has no right to apply for any National Entity to be woundup, or placed in administration, or to cause a receiver, or a receiver and manager, to be appointed in

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respect of a National Entity merely on the grounds that a National Entity does not pay a Distributionor interest when scheduled under any Component Instrument; and

(h) acknowledges and agrees that these NCI Terms contain no events of default. Accordingly (but withoutlimitation) failure to pay in full, for any reason, a Distribution on the scheduled Distribution PaymentDate will not constitute an event of default.

7. PAYMENTS TO NCI HOLDERS

7.1 Calculation of payments

All calculations of payments will be rounded to four decimal places. For the purposes of making anypayment in respect of a NCI Holder's aggregate holding of NCIs, any fraction of a cent will be disregarded.

7.2 Gross-up

The Issuer may deduct from any payment payable to a NCI Holder the amount of any withholding or othertax, duty or levy required by law to be deducted in respect of such payment.

If any deduction is required the Issuer must pay:

(a) the full amount required to be deducted to the relevant revenue authority within the time allowed forsuch payment without incurring penalty under the applicable law; and

(b) subject to clause 3.3 ("Distributions subject to Issuer having Available Amount"), if the withholdingor other tax, duty or levy deducted is imposed or levied by or on behalf of Australia, the United Statesor any jurisdiction in which a Paying Agent is appointed from time to time (a Paying AgentJurisdiction) (each a Relevant Jurisdiction), and the withholding, tax, duty or levy was imposed orlevied because the payment was made by a Paying Agent in a Paying Agent Jurisdiction, an additionalamount (Additional Amount) to the NCI Holder so that the NCI Holder receives the same amount inrespect of that payment as if no such deduction had been made from the payment, except that noAdditional Amount is payable:

(i) to the extent that the relevant tax is imposed or levied by virtue of a NCI Holder, or a beneficialowner, of the NCIs having some connection (whether present, past or future) with a RelevantJurisdiction or being or having been engaged in any activity, trade or business in a RelevantJurisdiction, other than being a holder, or a beneficial owner, of the NCIs;

(ii) to the extent that the relevant tax is imposed or levied by virtue of a holder, or a beneficial owner,of the NCIs not complying with any statutory requirements or not having made a declaration ofnon-residence in, or other lack of connection with, the Relevant Jurisdiction or similar claim forexemption, if the Issuer or its agent has provided the holder, or the beneficial owner, of the NCIswith at least 60 days' prior written notice of an opportunity to comply with such statutoryrequirements or make a declaration or claim;

(iii) to the extent that the relevant tax is a United States "back-up" withholding tax;

(iv) to the extent that the relevant tax is imposed or levied on a payment to an individual and isrequired to be made pursuant to European Council Directive 2003/48/EC or any lawimplementing or complying with, or introduced in order to conform to, such directive; or

(v) to the extent the relevant NCI is presented for payment by or on behalf of a NCI Holder whowould have been able to avoid such withholding or deduction by presenting to another PayingAgent in a member state of the European Union appointed by the Issuer at that time.

7.3 No set-off or offsetting rights

A NCI Holder has:

(a) no right to set off any amounts owing by it to any National Entity against any claims owing by anyNational Entity to it in respect of any Component Instrument; and

(b) no offsetting rights or claims on any National Entity if a National Entity does not pay a Distribution orinterest when scheduled under any Component Instrument.

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7.4 Payments in respect of NCIs

Subject to all applicable fiscal or other laws and regulations and to clause 7.5 ("Payments in respect of aRegistered Global NCI") below:

(a) each payment in respect of a Distribution on a NCI (whether or not in global form) will be made bycheque and mailed to the NCI Holder of record at such Holder's address as it appears on the Registeron the relevant Record Date; and

(b) any payment in respect of the Redemption Price or the Liquidation Amount (as the case may be) of aNCI (whether or not in global form) will be made by cheque against presentation and surrender of theNCI at the Specified Office of the Registrar or any of the Paying Agents,

provided, however, that a NCI Holder may receive such payment by direct transfer if appropriate directtransfer instructions have been received by the Registrar or the Paying Agent (as the case may be) insufficient time prior to the relevant Payment Date. NCI Holders will not be entitled to any interest or otherpayment for any delay after the due date in receiving the amount due if the due date is not a Business Day,if the NCI Holder is late in surrendering a NCI (if required to do so) or if a cheque mailed in accordancewith this clause 7.4 ("Payments in respect of NCIs") arrives after the due date for payment.

7.5 Payments in respect of a Registered Global NCI

For so long as any of the NCIs is represented by a Registered Global NCI held on behalf of Euroclearand/or Clearstream, Luxembourg, the registered holder of a Registered Global NCI is the only personentitled to receive payments in respect of NCIs represented by such Registered Global NCI and the Issueris discharged by payment to, or to the order of, the registered holder of such Registered Global NCI inrespect of each amount so paid. Each of the persons shown in the records of Euroclear or Clearstream,Luxembourg as the beneficial holder of a particular nominal amount of a NCI represented by suchRegistered Global NCI must look solely to Euroclear or Clearstream, Luxembourg, as the case may be, forthat person's share of each payment so made by the Issuer to the registered holder of that RegisteredGlobal NCI.

7.6 Payment to joint NCI Holders

A payment to any one of joint NCI Holders will discharge the Issuer's liability in respect of the payment.

7.7 Time limit for claims

To the fullest extent permitted by law, a claim against the Issuer for a payment of the Liquidation Amount,any Distribution or the Redemption Price under a NCI is void unless made within 10 years from the dateon which payment first became due.

8. CAPITAL DISQUALIFICATION EVENT

8.1 Capital Disqualification Event

Notwithstanding any other provision of these NCI Terms, a "Capital Disqualification Event" will occur if:

(a) the NCIs would not be eligible to qualify as Tier 1 Capital for National on a Level 1 or a Level 2 basis(except where such non-qualification is only as a result of any applicable limitation on the amount orcomposition of National's Tier 1 Capital); and

(b) APRA has confirmed to National in writing that the NCIs would not be eligible to qualify as Tier 1Capital for National on a Level 1 or a Level 2 basis.

8.2 Consequences of Capital Disqualification Event

On and from the occurrence of a Capital Disqualification Event:

(a) clause 3.3 ("Distributions subject to Issuer having Available Amount"), clause 3.4 ("Distributions arenon-cumulative") and clause 5 ("Conversion") shall be taken not to apply;

(b) the Issuer must pay Distributions calculated in accordance with clause 3.1 ("Distributions") on theDistribution Payment Dates (to the maximum extent permitted by applicable law);

(c) the NCIs cease to be Convertible;

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(d) the definition of "Redemption Price" in clause 4.3 ("Redemption Price") shall be taken to be deletedand replaced with the following definition:

"Redemption Price means the Liquidation Amount together with any accumulated but unpaidDistributions."; and

(e) any consequential amendments or additions to these NCI Terms necessary to give effect to clauses8.2(a), 8.2(b), 8.2(c) and 82(d) ("Consequences of Capital Disqualification Event") above aredeemed to be made to these NCI Terms.

9. TITLE AND TRANSFER OF NCIS

9.1 Title

Title to a NCI passes when details of the transfer are entered in the Register.

9.2 Register conclusive as to ownership

Entries in the Register in relation to a NCI constitute conclusive evidence that the person so entered is theabsolute owner of the NCI subject to correction for fraud or error.

93 Non-recognition of interests

Except as required by law and as provided in this clause 9 ("Title and transfer of NCIs"), the Issuer, theRegistrar, the Paying Agents and the Transfer Agent must treat the person whose name is entered in theRegister as the NCI Holder as the absolute owner of that NCI.

No notice of any trust or other interest in, or claim to, any NCI will be entered in the Register. None of theIssuer, the Registrar, the Paying Agents or the Transfer Agent need take notice of any trust or otherinterest in, or claim to, any NCI, except as ordered by a court of competent jurisdiction or required by law.

For so long as any of the NCIs is represented by a Registered Global NCI held on behalf of Euroclearand/or Clearstream, Luxembourg:

(a) with respect to the payment of amounts in respect a NCI, the registered holder of the RegisteredGlobal NCI shall be treated by the Issuer as the holder of such nominal amount of such NCIs inaccordance with and subject to the terms of the Registered Global NCI; and

(b) for each purpose other than that provided in paragraph (a) above, each person (other than Euroclearor Clearstream, Luxembourg) who is for the time being shown in the records of Euroclear or ofClearstream, Luxembourg as the holder of a particular nominal amount of NCIs (in which regard anycertificate or other document issued by any person shall be conclusive and binding for all purposessave in the case of manifest error) shall be treated by the Issuer as the holder of such nominal amountof such NCIs.

The expression "NCI Holder" shall be construed accordingly.

This clause 9.3 ("Non-recognition of interests") applies whether or not a payment has been made whenscheduled on a NCI and despite any notice of ownership, trust or interest in the NCI.

9.4 Joint holders

Where two or more persons are entered in the Register as the joint NCI Holders then they are taken tohold the NCI as joint tenants, but the Registrar is not bound to register more than three persons as jointholders of a NCI.

9.5 Transfers of NCIs represented by a Registered Global NCI

For so long as any of the NCIs is represented by a Registered Global NCI held on behalf of Euroclearand/or Clearstream, Luxembourg, interests in the Registered Global NCI will be transferable only inaccordance with the rules and procedures for the time being of Euroclear and Clearstream, Luxembourg,as the case may be.

Transfers of beneficial interests in NCIs represented by a Registered Global NCI will be effected byEuroclear or Clearstream, Luxembourg, as the case may be, and, in turn, by other participants and, if

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appropriate, indirect participants in such clearing systems acting on behalf of beneficial transferors andtransferees of such interests.

9.6 Transfer of NCIs represented by Registered Definitive NCIs

Where NCIs are in definitive form, transfers of NCIs may be effected by presentation and, where thetransfer is of all of the NCIs represented by the Registered Definitive NCI, surrender of the relevantRegistered Definitive NCI (together with the transfer certificate relating thereto duly completed on behalfof the transferor and the transferee) at the Specified Office of the Registrar or the Transfer Agent. Ifsatisfied that the transfer should be registered, the Registrar or the Transfer Agent (as the case may be)will enter the transfer in the Register and authenticate and deliver (or procure the authentication anddelivery of) a new Registered Definitive NCI of a like aggregate amount to the Registered Definitive NCI(or the relevant part of the Registered Defmitive NCI) transferred. Delivery will be to the Specified Officeof the Registrar or the Transfer Agent (as the case may be) or by uninsured mail (at the risk of thetransferee) to such address as the transferee may request. The Registrar or the Transfer Agent (as the casemay be) shall only issue a Registered Definitive NCI in multiples of €50,000.

NCI Holders will not be required to bear the costs and expenses of effecting any registration of transfer asprovided above, except for:

(a) any costs or expenses of delivery other than by regular uninsured mail; and

(b) that the Issuer may require the payment of a sum sufficient to cover any stamp or other duty, or othertax or other governmental charge that may be imposed in relation to the registration.

10. LIQUIDATION AMOUNT

10.1 Rights on a Winding Up

In a winding up or dissolution of the Issuer, an NCI Holder is entitled to payment in cash of an amountequal to the aggregate of the Liquidation Amount and the Accrued Distribution (if any) out of the surplus(if any) available for distribution to members of the Issuer, but no further or other right to participate inthe assets of the Issuer or a return of capital in the winding up or dissolution.

10.2 Ranking for Payment

An NCI Holder will rank for payment of the Liquidation Amount and the Accrued Distribution (if any):

(a) in priority to other members of the Issuer; and

(b) junior to all creditors of the Issuer.

11. GENERAL PROVISIONS

11.1 Issues of National shares

Except as set out in these NCI Terms, the NCIs carry no right to participate in any offering of securities byany National Entity or other member of the National Group.

11.2 Variation

The Issuer LLC Agreement contains provisions for amending the Issuer LLC Agreement (including theseNCI Terms) with the consent of NCI Holders and, in certain circumstances, without the consent of NCIHolders.

113 Voting

The Issuer LLC Agreement contains provisions for convening meetings of the NCI Holders to considerany matter affecting their interests, including any variation of these NCI Terms which requires the consentof NCI Holders.

NCI Holders will have no voting rights in respect of the Issuer, National or any other National Entity.

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11.4 Provision of information

Subject to applicable law, NCI Holders are not entitled to be provided with copies of:

(a) any notices of general meeting of National or the Issuer; or

(b) other documents (including annual reports and fmancial statements) sent by National or the Issuer toholders of ordinary shares or securities (if any) in National or the Issuer.

11.5 Replacement of NCIs

If a NCI is damaged or defaced or alleged to have been lost, stolen or destroyed, a new NCI representingthe same NCI may be issued on payment of such fee and on such terms (if any) as evidence and indemnityand the payment of out-of-pocket expenses as the Issuer may reasonably determine and on payment of thecosts of the Issuer incidental to its investigation of the evidence and, if damaged or defaced, as the tearingup of the old NCI at the Specified Office of the Registrar or any Paying Agent.

12. NOTICES

12.1 Notices

Subject to clause 12.2 ("Notices while NCIs are represented by a Registered Global NCI"), all noticesregarding the NCIs will be taken to be validly given if:

(a) sent by first class mail or (if posted to an address overseas) by airmail to the holders (or the firstnamed of joint holders) at their respective addresses recorded in the Register (which will be deemedto have been given on the fourth day after mailing); or

(b) published in a leading English language newspaper of general circulation in Europe (which will bedeemed to have been given on the first day of publication).

12.2 Notices while NCIs represented by a Registered Global NCI

For so long as any of the NCIs is represented by a Registered Global NCI held on behalf of Euroclearand/or Clearstream, Luxembourg, there may be substituted for the method of notice provided inclause 12.1 ("Notices"), delivery of the relevant notice to Euroclear and/or Clearstream, Luxembourg forcommunication by them to the NCIs Holders. Any such notice shall be deemed to have been given to theNCI Holders on the second day after the day on which the notice was given to Euroclear and/orClearstream, Luxembourg.

12.3 Notices while NCIs are listed on a Stock Exchange

For so long as any NCIs are listed on a Stock Exchange and the rules of that Stock Exchange (or any otherrelevant authority) so require, any notice given under this clause 12 ("Notices") will also be published in adaily newspaper of general circulation in Luxembourg (or any other place or places required by thoserules) or on the website of the Luxembourg Stock Exchange (as at the Issue Date, www.bourse.lu).

13. GOVERNING LAW

The Issuer LLC Agreement and the NCIs are governed by, and shall be construed in accordance with, thelaws of the State of Delaware, United States of America.

14 INTERPRETATION AND DEFINITIONS

14.1 Interpretation

(a) Unless otherwise specified in these NCI Terms, a reference to a clause or paragraph is a reference to aclause or paragraph of these NCI Terms.

(b) If a calculation is required under these NCI Terms, unless the contrary intention is expressed, thecalculation will be rounded to five decimal places.

(c) Headings and boldings are for convenience only and do not affect the interpretation of these NCITerms.

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(d) The singular includes the plural and vice versa.

(e) A reference to a statute, ordinance, code or other law includes regulations and other instrumentsunder it and consolidations, amendments, re-enactments or replacements of any of them.

(I) Unless otherwise specified in these NCI Terms, if an event under these NCI Terms must occur on astipulated day which is not a Business Day, then the stipulated day will be taken to be the nextBusiness Day.

(g) A reference to "E" or "Euro" is a reference to the currency introduced at the start of the third stage ofEuropean economic and monetary union pursuant to the Treaty establishing the EuropeanCommunity, as amended from time to time.

(h) Calculations, elections and determinations made by the Issuer, National or National directors underthese NCI Terms are binding on NCI Holders in the absence of manifest error.

(i) Any provisions which refer to the requirements of APRA or any other prudential regulatoryrequirements will apply only if National is an entity, or the holding company of an entity, subject toregulation and supervision by APRA at the relevant time.

(j) Any provisions in these NCI Terms requiring the prior approval of APRA for a particular course ofaction to be taken do not imply that APRA has given its consent or approval to the particular action asof the Issue Date.

(k) The terms "takeover bid", "related body corporate", "relevant interest", "holding company", "wholly-owned subsidiary" and "subsidiary", when used in these NCI Terms have the meaning given in theCorporations Act.

(1) A reference to a party to an agreement or deed includes a reference to a replacement or substitute ofthe party according to that agreement or deed.

(m) A reference to an agreement or deed includes a reference to that agreement or deed as amended,added to or restated from time to time.

(n) The words "includes" or "including", "for example" or "such as" do not exclude a reference to otheritems, whether of the same class or genus or not.

14.2 Definitions

The following words have these meanings in these NCI Terms unless the contrary intention appears:

Accrued Distribution means, in respect of an NCI, the greater of:

(a) nil; and

(b) an amount equal to:

(i) the Redemption Price that would have been payable on that NCI had that NCI been redeemedon the date on which the winding up or dissolution commenced,

less

(ii) the Liquidation Amount.

Acquisition Event means:

(a) a takeover bid is made to acquire all or some of the ordinary shares in National and the offer is, orbecomes, unconditional; and

(i) the bidder has at any time during the offer period, a relevant interest in more than 50% of theordinary shares in National on issue; or

(ii) directors of National, acting as a board, issue a statement recommending acceptance of the offer;or

(b) a court orders the holding of meetings to approve a scheme of arrangement under Part 5.1 of theCorporations Act which scheme would result in a person having a relevant interest in more than 50%of the ordinary shares in National that will be on issue after the scheme is implemented and either:

(i) the holders of National's ordinary shares pass a resolution approving the scheme; or

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(ii) an independent expert issues a report that the proposals in connection with the scheme are in thebest interests of the holders of ordinary shares in National,

in each case other than where such event is initiated by the directors of National, acting as a board, and thebidder or the person having a relevant interest in the ordinal), shares in National after the scheme isimplemented is a non-operating holding company within the meaning of the Banking Act 1959 ofAustralia.

Additional Amount has the meaning given in clause 7.2 ("Gross-up").

Agency Agreement means the agency agreement between the Issuer, National, Deutsche Bank AG, LondonBranch and Deutsche Bank Luxembourg S.A. to be dated on or around 28 September 2006.

APRA means the Australian Prudential Regulation Authority or any authority succeeding to its powers andresponsibilities.

APRA Capital Event means, unless APRA otherwise approves:

(a) APRA determines in writing that National has a Tier 1 Capital Ratio of less than 5% (or such otherpercentage as may be required from time to time by APRA) or a Total Capital Adequacy Ratio of lessthan 8% (or such other percentage as may be required from time to time by APRA) at either or bothof Level 1 or Level 2;

(b) APRA issues a written directive to National under section 11CA of the Banking Act 1959 of Australiafor National to increase its capital;

(c) APRA appoints a statutory manager to National under subsection 13A(1) of the Banking Act 1959 orthe assumption by APRA of control under Australian banking law or proceedings are commenced forthe winding-up of National (other than solvent reconstructions approved by APRA, including inrelation to forming a holding company); or

(d) the retained earnings of National have become negative.

APRA Condition means:

(a) unless APRA otherwise agrees:

(i) the payment of the Distribution (including any gross-up in connection with the CapitalInstrument) will result in the Total Capital Adequacy Ratio or the Tier 1 Capital Ratio ofNational (on a Level 1 basis) or of National Group (on a Level 2 or, if applicable, Level 3 basis)not complying with APRA's then current capital adequacy guidelines as they are applied toNational or National Group (as the case may be) at the time;

(ii) the payment of the Distribution (or any corresponding payment on a Component Instrument)would result in a National Entity becoming, or being likely to become, insolvent; or

(iii) the payment of the Distribution (including any gross-up in connection with the CapitalInstrument) will exceed Distributable Profits as at the Distribution Payment Date for thatDistribution; or

(b) APRA otherwise objects to the payment of the Distribution.

Available Amount has the meaning given in clause 3.3 ("Distributions subject to Issuer having AvailableAmount").

Business Day means a day which is both:

(a) a day on which commercial banks and foreign exchange markets settle payments and are open forgeneral business (including dealing in foreign exchange and foreign currency deposits) in London,Melbourne, Sydney and New York; and

(b) a day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer(TARGET) System (the TARGET System) is open.

Calculation Agent means Deutsche Bank AG, London Branch, or any successor calculation agent appointedin accordance with the Agency Agreement.

Capital Disqualification Event has the meaning given in clause 8 ("Capital Disqualification Events").

Capital Instrument means the capital instrument comprising each of the Component Instruments.

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Change in Law means there is an introduction of, an amendment or clarification to or change in (orannouncement of a prospective introduction of, amendment or clarification to or change in) a law orregulation of the Commonwealth of Australia or any State or Territory thereof or any directive, order,standard, requirement, guideline or statement of APRA (whether or not having the force of law).

Clearstream, Luxembourg means Clearstream Banking, sociite anonyme or its successor.

Component Instruments means each of the NCIs, the Subordinated Debentures, the ConvertibleDebentures, the Preference Shares (if issued), the LLC Notes, the Deed of Covenant and the NCISubordinated Guarantee.

Conversion has the meaning given in clause 5.1 ("Meaning of Conversion"), and Convert, Convertible andConverted have a corresponding meaning.

Conversion Date means the date determined according to clause 53 ("Conversion Dates").

Conversion Event has the meaning given in clause 5.2 ("Conversion").

Conversion Notice means a notice given by the Issuer according to clause 5.4 ("Conversion Notice").

Convertible Debenture Deed Poll means the convertible debenture deed poll to be made by National on orabout 28 September 2006.

Convertible Debentures means the convertible debentures issued by National to the Issuer on the Issue Dateon the Convertible Debenture Terms and convertible into Preference Shares on the occurrence of theConversion Event.

Convertible Debenture Terms means the terms of the Convertible Debentures set out in the schedule to theConvertible Debenture Deed Poll.

Corporations Act means the Corporations Act 2001 of Australia.

D has the meaning given in clause 3.1 ("Distributions").

Deed of Covenant means the deed so named to be dated on or about 28 September 2006 between National,National LLC 1 and the Issuer.

Determination Date has the meaning given in clause 3.1 ("Distributions").

Distributable Profits means an amount calculated in accordance with the following formula:

Distributable Profits = A— B

where:

A is the consolidated net profit after income tax of National (determined before any interest,dividends or distributions paid or payable by a member of National Group on its Upper Tier 2Capital and Tier 1 Capital) for the immediately preceding two six-monthly financial periods forwhich results have been publicly announced by National (or such other amount as determined byAPRA in its discretion to be appropriate in National's circumstances for the purposes of payingdividends or distributions on National Group's Upper Tier 2 Capital and Tierl Capital); and

B is the aggregate amount of any dividends or distributions paid or payable by a member ofNational Group before the relevant Distribution Payment Date on its Upper Tier 2 Capital andTier 1 Capital in relation to the 12 month period prior to the most recent Distribution PaymentDate, but not including any dividend or distribution paid or payable to a member of NationalGroup by another member of National Group.

Distribution has the meaning given in clause 3.1 ("Distributions").

Distribution Payment Date has the meaning given in clause 3.2 ("Distribution Payment Dates").

Distribution Period means, in respect of a NCI:

(a) for the first Distribution Period, the period from (and including) the Issue Date to (and including) thefirst Distribution Payment Date; and

(b) each subsequent period from (but not including) a Distribution Payment Date to (and including) thenext Distribution Payment Date.

Distribution Rate has the meaning given in clause 3.1 ("Distributions").

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EURIBOR has the meaning given in clause 3.1 ("Distributions").

Euroclear means Euroclear Bank SA/NV or its successor.

Euro-zone has the meaning given in clause 3.1 ("Distributions").

Exchange Event has the meaning given in the Issuer LLC Agreement.

Initial Margin means 0.95% per annum.

Issue Date means the date on which the NCIs are issued.

Issuer means National Capital Instruments [Euro] LLC 2, a limited liability company established under thelaws of Delaware, United States of America.

Issuer LLC Agreement means the limited liability company agreement relating to the Issuer dated 5September 2006 (as amended and restated).

Level 1, Level 2 and Level 3 means, in respect of the Total Capital Adequacy Ratio, the Tier 1 Capital Ratioor Tier 1 Capital, those terms as defined by APRA from time to time.

Liquidation Amount has the meaning given in clause 1 ("Liquidation Amount").

LLC Manager means National Capital Holdings.

LLC Note Deed means the deed to be entered into between National, National LLC 1 and the Issuer inrelation to the LLC Notes.

LLC Notes means the subordinated notes issued by National LLC 1 to the Issuer on the LLC Note Terms.

LLC Note Terms means the terms of the LLC Notes set out in the schedule to the LLC Note Deed.

Luxembourg Paying Agent means Deutsche Bank Luxembourg S.A. or any successor Luxembourg payingagent appointed in accordance with the Agency Agreement.

Margin has the meaning given in clause 3.1 ("Distributions").

National means National Australia Bank Limited (ABN 12 004 044 937).

National Capital Holdings means National Capital Holdings I Inc., a Delaware corporation.

National Conversion Notice means a conversion notice given by National under clause 4.2(b)("Conversion") of the Convertible Debenture Terms.

National Entity means each of the Issuer, National Head Office, National New York Branch,National LLC 1, the LLC Manager and National Capital Holdings.

National Group means National and its controlled entities.

National Head Office means National acting through its head office at Level 13, 140 William Street,Melbourne, Victoria, Australia 3000.

National LLC 1 means National Capital Instruments [Euro] LLC 1, a limited liability company establishedunder the laws of Delaware, United States of America.

National New York Branch means National acting through its branch office located at 245 Park Avenue, NewYork, New York, United States of America.

NCI means:

(a) for so long as the NCIs are represented by a Registered Global NCI, a unit of f50,000 in respect of theRegistered Global NCI; or

(b) otherwise, a Registered Definitive NCI.

NCI Holder means a person Registered as the holder of a NCI (including persons jointly Registered) as thecontext may require.

NCI Subordinated Guarantee means the guarantee deed poll given on or about the Issue Date by Nationalin favour of NCI Holders.

NCI Terms means these terms and conditions.

Optional Distribution has the meaning given in clause 3.5(b) ("Restrictions in the case of non-payment").

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Ordinary Resolution has the meaning given in the Issuer LLC Agreement.

Par Redemption Amount means, in respect of a NCI, the Liquidation Amount together with:

(a) if the Redemption Date is also a Distribution Payment Date, any accrued but unpaid Distribution forthe then current Distribution Period; or

(b) if the Redemption Date is not also a Distribution Payment Date, any accrued but unpaid Distributionfor the then current Distribution Period to the Redemption Date calculated as if the RedemptionDate were a Distribution Payment Date.

Paying Agent means the Principal Paying Agent, the Luxembourg Paying Agent and each other paying agentappointed in accordance with the Agency Agreement.

Paying Agent Jurisdiction has the meaning given in clause 7.2 ("Gross-up").

Payment Date means a Distribution Payment Date, the Redemption Date or any other date on which theIssuer is to make a payment in respect of a NCI.

Preference Share means a fully paid preference share in the capital of National issued on Conversion on thePreference Share Terms.

Preference Share Terms means the terms of issue of the Preference Shares annexed to the terms of issue ofthe Convertible Debentures.

Principal Paying Agent means Deutsche Bank AG, London Branch or any successor principal paying agentappointed in accordance with the Agency Agreement.

Record Date means:

(a) in respect of any Distribution to be made by the Issuer under these NCI Terms on a DistributionPayment Date, the date which is one Business Day before the Distribution Payment Date or suchother date as may be approved by the Issuer; or

(b) in respect of any Optional Distribution, the Business Day prior to the date of payment of the OptionalDistribution that is determined by the Issuer.

Redemption has the meaning given in clause 4.1 ("Redemption") and Redeem, Redeemable and Redeemedhave the corresponding meaning.

Redemption Amounts means:

(a) the proceeds of redemption of the Convertible Debentures; and

(b) the Excluded Interest Amounts (if any) as such term is defined in the LLC Note Terms.

Redemption Date means the date specified according to clause 4.4 ("Redemption Notice") or, if NCIs arenot redeemed on that day, the date on which the NCIs are redeemed.

Redemption Notice means a notice given by the Issuer according to clause 4.4 ("Redemption Notice").

Redemption Price has the meaning given in clause 4.3 ("Redemption Price").

Reference Banks has the meaning given in clause 3.1 ("Distributions").

Register means the register, including any branch register, of holders of NCIs established and maintainedby, or on behalf of, the Issuer.

Registered means recorded in the Register.

Registered Definitive NCIs has the meaning given in clause 2.2 ("Registered Global NCIs and RegisteredDefinitive NCIs").

Registered Global NCI has the meaning given in clause 2.2 ("Registered Global NCIs and RegisteredDefinitive NCIs").

Registrar means Deutsche Bank Luxembourg S.A. or any other person appointed by the Issuer to maintainthe Register.

Regulatory Event means:

(a) a Change in Law;

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(b) National receives an opinion of nationally recognised legal counsel in Australia experienced in suchmatters as to the effect of a Change in Law; or

(c) there is any statement, notification, or advice by APRA or a decision by any court or other authorityinterpreting, applying or administering any law, regulation, directive, order, standard, requirement,guideline or statement,

in each case on or after the Issue Date to the effect that the Capital Instrument is not, or will not within90 days be, eligible (in whole or in part) for inclusion in National's Tier 1 Capital on a Level 1, Level 2 orLevel 3 (if applicable) basis.

Relevant Jurisdiction has the meaning given in clause 7.2 ("Gross-up").

Screen Page has the meaning given in clause 3.1 ("Distributions").

Specified Office means, in the case of:

(a) the Principal Paying Agent, 'Winchester House, 1 Great Winchester Street, London EC2N 2DB,United Kingdom; and

(b) the Registrar, the Transfer Agent and the Luxembourg Paying Agent, 2 Boulevard Konrad Adenauer,L-1115 Luxembourg,

or, in each case, such other office as may be notified to the NCI Holders from time to time.

Step-Up Date means 29 September 2016 being the Distribution Payment Date falling on or immediatelyafter the tenth anniversary of the Issue Date.

Stock Exchange means the Luxembourg Stock Exchange or any other stock exchange on which the NCIsmay be listed from time to time.

Subordinated Debenture Deed Poll means the subordinated debenture deed poll to be made by NationalNew York Branch on or about 28 September 2006.

Subordinated Debentures means the subordinated debentures issued by National New York Branch toNational LLC 1 in accordance with the Subordinated Debenture Terms.

Subordinated Debenture Terms means the terms of the Subordinated Debentures set out in the schedule tothe Subordinated Debenture Deed Poll.

Tax Act means the Income Tax Assessment Act 1936 (1936 Act), the Income Tax Assessment Act 1997 (1997Act) or both the 1936 Act and the 1997 Act, as appropriate.

Tax Event means that, after the Issue Date, National receives an opinion from a reputable legal counsel orother tax adviser in Australia, the United States, the United Kingdom or New Zealand or any otherjurisdiction, experienced in such matters that there is more than an insubstantial risk that, as a result of aTax Law Change:

(a) there is a requirement to gross-up any Distribution, interest payment or dividend on the CapitalInstrument or any Component Instrument;

(b) the rights entitling National to have transferred to it the LLC Notes upon the occurrence of aConversion Event are, or will be, treated as controlled foreign entity equity for the purposes ofSubdivision 820-D of the Tax Act;

(c) a payment in connection with the Capital Instrument or any Component Instrument (except thePreference Shares) would be a frankable dividend or frankable distribution for Australian income taxpurposes, other than by reason of a Regulatory Event;

(d) income of National LLC 1, National Capital Holdings, the LLC Manager or the Issuer would besubject to United States federal income tax or Australian income tax;

(e) one or more National Entity would be exposed to more than a de minimis amount of other taxes,assessments or other governmental charges in connection with the Capital Instrument;

(f) the Subordinated Debentures would cease to be treated as equity of National for United States taxpurposes; or

National New York Branch would suffer a material adverse change to its assessment to United Statesfederal income tax in connection with its deployment of Subordinated Debentures issue proceeds.

(g)

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Tax Law Change means:

(a) an amendment to, change in or announced prospective change in any laws or regulations under thoselaws;

(b) a judicial decision interpreting, applying or clarifying those laws or regulations;

(c) an administrative pronouncement or action that represents an official position, including aclarification of an official position of the governmental authority or regulatory body making theadministrative pronouncement or taking any action; or

(d) a challenge asserted or threatened in connection with an audit of any National Entity or any memberof the National Group, or a challenge asserted or threatened in writing against any other taxpayer thathas raised capital through the issuance of securities that are substantially similar to the CapitalInstruments or any of its Component Instruments,

which amendment or change is announced or which action or clarification or challenge occurs on or afterthe Issue Date.

Tier 1 Capital means tier 1 capital as defined by APRA from time to time.

Tier 1 Capital Ratio means at any time the ratio as defined by APRA.

Total Capital Adequacy Ratio means at any time the ratio as defined by APRA.

Transfer Agent means the Luxembourg Paying Agent or any successor transfer agent appointed inaccordance with the Agency Agreement.

Treaty has the meaning given in clause 3.1 ("Distribution").

Unpaid Distribution has the meaning given in clause 3.4 ("Distributions are non-cumulative").

Upper Tier 2 Capital means upper tier 2 capital as defined by APRA from time to time.

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SUMMARY OF PROVISIONS RELATING TO THE NCIS IN GLOBAL FORM

Initial Issue of NCIs

NCIs will be issued in registered form and will be initially represented by interests in a Registered GlobalNCI which will be registered in the name of a nominee of, and deposited with a common depositary for,Euroclear and Clearstream, Luxembourg on the Issue Date. Upon the registration of the NCIs in the nameof a nominee of Euroclear and Clearstream, Luxembourg, and delivery of the Registered Global NCI tothe common depositary for Euroclear and Clearstream, Luxembourg, Euroclear and Clearstream,Luxembourg will credit each subscriber with such number of NCIs equal to the number thereof for whichthat subscriber has subscribed and paid.

Accountholders

So long as an NCI is registered in the name of a nominee for Euroclear and Clearstream, Luxembourg, thenominee for Euroclear and Clearstream, Luxembourg will be the sole registered owner or holder of theNCIs represented by the relevant Registered Global NCI and will be treated by the Issuer as the holder ofthe NCI with respect to all payments (see Summary of Provisions Relating to the NCIs in Global Form—Payments below). As set forth under Terms and Conditions of the NCIs—Title and transfer of NCIs andunder Summary of Provisions Relating to the NCIs in Global Form—Transfers of Interests below, the personsshown in the records of Euroclear and Clearstream, Luxembourg or any other clearing system (an"Alternative Clearing System") as the holders of interests in the NCI evidenced by a Registered Global NCI(each an "Accountholder") will not be entitled to have NCIs registered in their names, will not receive orbe entitled to receive physical delivery of Registered Definitive NCIs but will be considered holders of thenominal amount of NCIs recorded in their name in the clearing system for all other purposes (other thanpayment). Accordingly, each Accountholder must rely upon both the NCI Terms as well as the rules andprocedures of Euroclear and Clearstream, Luxembourg, as the case may be, to exercise the rights andobligations of an NCI Holder under the NCI Terms.

Exchange

Interests in the Registered Global NCI will be exchangeable in whole but not in part (free of charge to theNCI Holder) for Registered Definitive NCIs upon the occurrence of an Exchange Event.

An "Exchange Event" will occur where:

(a) the Issuer has been notified that both Euroclear and Clearstream, Luxembourg have been closed forbusiness for a continuous period of 14 days (other than by reason of holiday, statutory or otherwise) orhave announced an intention permanently to cease business or have in fact done so and in any case nosuccessor clearing system satisfactory to the Issuer is available;

(b) the Conversion Event has occurred but National has failed to issue the Preference Shares inaccordance with the NCI Terms; or

(c) the Issuer has been or will become subject to adverse tax consequences which would not be sufferedwere the NCIs in the form of Registered Definitive NCIs.

Upon the occurrence of an Exchange Event, the Issuer may give notice to the Registrar of its intention toexchange the Registered Global NCI for Registered Defmitive NCIs on or after the Exchange Date and, inthe case of the Exchange Event described in (a) or (b) above, Euroclear and/or Clearstream, Luxembourg(acting on the instructions of any holder of an interest in the Registered Global NCI) may give notice tothe Registrar requesting exchange. For these purposes, "Exchange Date" means a day specified in thenotice requiring exchange falling not less than 10 days after that on which such notice is given and being aday on which banks are open for general business in the place in which the specified office of the Registraris located.

Payments

Each Accountholder must look solely to Euroclear and Clearstream, Luxembourg or such AlternativeClearing System, as the case may be, for its share of each payment made by the Issuer to the registeredHolder subject to and in accordance with the respective rules and procedures of Euroclear andClearstream, Luxembourg or such Alternative Clearing System, as the case may be. Such persons shallhave no claim directly against the Issuer or National in respect of payments due on the NCIs for so long as

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the NCIs are represented by such Registered Global NCI and such obligation of the Issuer and Nationalwill be discharged by payment to the registered holder of the NCIs in respect of each amount so paid.

Transfers of Interests

Accountholders will only be able to transfer their beneficial interests in the NCIs in accordance with therestrictions described under Terms and Conditions of the NCIs—Title and transfer of NCIs and, for so longas any of the NCIs is represented by a Registered Global NCI held on behalf of Euroclear and/orClearstream, Luxembourg, with the rules and procedure of Euroclear and Clearstream, Luxembourg orthe Alternative Clearing System, as the case may be.

Preference Shares

On conversion as described in Terms and Conditions of the NCI Terms—Conversion, National will apply toEuroclear and Clearstream, Luxembourg, to accept the Preference Shares. If these applications areaccepted, the Preference Shares, which will be in registered form, will be initially represented by interestsin a single global certificate in registered form (the "Registered Global Preference Share") which will beregistered in the name of the nominee of, and deposited with a common depository for, Euroclear andClearstream, Luxembourg on the Conversion Date. Upon the registration of the Preference Shares in thename of a nominee of Euroclear and Clearstream, Luxembourg and delivery of the Registered GlobalPreference Share to the common depository for Euroclear and Clearstream, Luxembourg, Euroclear andClearstream, Luxembourg will credit each subscriber with a number of Preference Shares equal to thenumber of NCIs in respect of which the subscriber held an interest through the Registered Global NCIprior to the Conversion Date. The provisions above in relation to Accountholders, &change, Payments andTransfers of Interests will thereafter apply and a reference to NCIs (and holders of interests therein) will betaken to be a reference to Preference Shares (and holders of interests therein).

If those applications are not accepted, registered definitive certificates will be issued in respect of thePreference Shares to each Accountholder in respect of an NCI (if on the Conversion Date an ExchangeDate has not occurred), or otherwise to each NCI Holder, on the Conversion Date.

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SUMMARY OF PRINCIPAL DOCUMENTS

The following is a summary of certain provisions of the principal documents relating to the transactionsdescribed in this Prospectus and is qualified in its entirety by reference to the detailed provisions of theTransaction Documents.

Terms of the NCI Subordinated Guarantee

General

The terms of the NCI Subordinated Guarantee (the "NCI Guarantee Terms") will be set out in a deed pollgiven by National in favour of NCI Holders.

Under the NCI Subordinated Guarantee National irrevocably guarantees on a subordinated basis and tothe extent set out in the NCI Subordinated Guarantee Terms the following amounts (the "GuaranteedAmounts") payable by the Issuer in respect of the NCIs.

The Guaranteed Amounts are:

• any accrued Distributions;

• the Redemption Price; and

• if the Issuer is wound up, the Liquidation Amount,

in each case including any Additional Amount (as described below) and in each case to the extent theamount is unpaid and, except where there is a Capital Disqualification Event (as described in Terms of theNCI Subordinated Guarantee—Capital Disqualification Event below), the Issuer has funds available to paythat amount after payment of any creditors it may have.

Additional Amounts

National will make all payments under the NCI Subordinated Guarantee without deduction or withholdingfor, or on account of, tax unless that deduction or withholding is required by law. If any deduction isrequired, National must pay the full amount required to be deducted to the relevant revenue authority andan additional amount ("Additional Amount") to the NCI Holder so that the NCI Holder receives the sameamount in respect of that payment as if no such deductions had been made from the payment, except thatno Additional Amount is payable in the circumstances under the NCI Terms as described in the Terms andConditions of the NCIs—Payments to NCI Holders—Gross-Up.

Capital Disqualification Event

If a Capital Disqualification Event occurs (as described in the Terms and Conditions of the NCIs—CapitalDisqualification Event), a claim on the NCI Subordinated Guarantee is not subject to the limitation that theIssuer has funds available to pay that amount but, after the occurrence of an Assignment Date, a claim onthe NCI Subordinated Guarantee in respect of an unpaid Distribution will be subject to equivalentrestrictions relating to retained earnings to those applying to payments of interest on the ConvertibleDebentures after that date.

Obligations of National

Under the NCI Subordinated Guarantee, National agrees that it will:

• comply with its obligations described in Terms and Conditions of the NCIs—Distributions—Restrictionsin the case of non-payment;

• on the occurrence of the conversion of the NCIs:

(a) comply with National's obligations to issue the Preference Shares in accordance with theConvertible Debenture Terms as directed by the Issuer;

(b) use its reasonable endeavours to list the Preference Shares on the Stock Exchange; and

(c) pay or reimburse the NCI Holders any amounts on account of certain taxes incurred inconnection with the conversion; and

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• on the occurrence of an Exchange Event, procure that the Issuer issues Registered Definitive NCIs ifrequired to do so by the NCI Terms, the Issuer LLC Agreement or the Registered Global NCI.

Status and liquidation

The NCI Subordinated Guarantee constitutes an unsecured, subordinated obligation of National.

In the event of the dissolution, liquidation, termination or winding up of National, whether voluntary orinvoluntary, any claim in respect of the NCI Subordinated Guarantee will rank senior to the claims of theordinary shares of National and pan passu with the claims of the holders of the Convertible Debentures,the Subordinated Debentures and the Preference Shares (if issued) and junior to the claims of alldepositors and other creditors of National, other than creditors expressed to rank equally with, or juniorto, the NCI Subordinated Guarantee.

Amendment and Modifications

The NCI Subordinated Guarantee provides that the NCI Guarantee Terms may be amended with the priorwritten approval of APRA (if required) but without the consent or approval of the Issuer or NCI Holdersif National is of the opinion that the amendment:



• is expedient for the purpose of enabling NCIs to be listed or to remain listed on a stock exchange orlodged in a clearing system or to remain lodged in a clearing system or to be offered for sale or forsubscription under the laws for the time being in force in any place and it is otherwise not consideredby National to be materially prejudicial to the interests of the NCI Holders as a whole;


• in any other case, will not materially adversely affect the NCI Holders' rights.

In any other case, the NCI Guarantee Terms may be amended or added to by National if the amendmentor addition has been approved by a Special Resolution.

No Set-off or Offsetting Rights

An NCI Holder has no right to set-off any amounts owing by it to any National Entity against any claimsowing to it by any National Entity, including under the NCI Subordinated Guarantee. An NCI Holder alsohas no offsetting rights or claims on any National Entity if a National Entity does not pay a distribution orinterest when scheduled under any Component Instrument.

Governing Law

The NCI Subordinated Guarantee will be governed by, and construed in accordance with, English law.National irrevocably submits to the non-exclusive jurisdiction of the courts of England to settle anydisputes arising out of the NCI Subordinated Guarantee. National irrevocably appoints National AustraliaBank Limited London Branch, at its registered office at 88 Wood Street, London, EC2V 7QQ as its agentfor the service of process in England.

Terms of the LLC Notes

General

National LLC 1 will issue the LLC Notes to the Initial Subscriber, who will then sell the LLC Notes(together with the Convertible Debentures) to the Issuer, as more fully described under Subscription andSale—Subscription, Assignment and Sale of the Relevant Instruments below.

Each LLC Note will be a fully paid subordinated note, in registered form, denominated in Euro, with aface value and principal amount of €50,000 ("Face Value").

The LLC Notes will rank pan passu among themselves in all respects.

The terms of the LLC Notes (the "LLC Note Terms") will be set out in a tripartite deed between National,National LLC 1 and the Issuer (the "LLC Note Deed").

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Interest

LLC Note Interest

The LLC Notes will pay interest ("LLC Note Interest") at a floating rate.

LLC Note Interest will be paid quarterly in arrears on 29 March, 29 June, 29 September and 29 Decemberof each year commencing on 29 December 2006 (each a "LLC Note Interest Payment Date"). The LLCNote Interest Payment Dates will match the Distribution Payment Dates in respect of the NCIs (so long asthe NCIs are on issue).

The amount of each payment of LLC Note Interest will be calculated in accordance with the relevantformula set out in the LLC Note Terms, which, will equal the calculation of the Distributions on the NCIs(see Terms and Conditions of the NC's Distributions above).

LLC Note Interest limitations, tests and conditions

Payment of LLC Note Interest on the LLC Notes is subject and limited to the interest received by NationalLLC 1 from National New York Branch on the Subordinated Debentures. Payment of interest on theSubordinated Debentures is subject to tests and conditions (see Summary of Principal Documents—Termsof the Subordinated Debentures below).

Further, a payment of LLC Note Interest is subject to the LLC Manager resolving to pay the LLC NoteInterest and the specific condition that no APRA Condition exists. The circumstances in which an "APRACondition" will exist are set out in the NCI Terms (see Terms and Conditions of the NC's—Interpretationand Definitions—Definitions above).

LLC Note Interest will be cumulative and, accordingly, any unpaid LLC Note Interest ("Accumulated LLCNote Interest") will accumulate. However:

(a) interest will not accrue on any unpaid amount of Accumulated LLC Note Interest;

(b) National LLC 1 is not permitted (unless approved by APRA) to pay any Accumulated LLC NoteInterest until the first LLC Note Interest Payment Date thereafter on which no APRA Conditionexists and the other interest payment tests are met; and

(c) the Issuer (as holder of the LLC Notes) will have no claim for any Accumulated LLC Note Interest, orfor any part of any Accumulated LLC Note Interest, because, upon the occurrence of a ConversionDate or Redemption Date, the Assignment will occur and, accordingly, the rights to suchAccumulated LLC Note Interest will vest in National Head Office pursuant to the Assignment (seefurther Summary of Principal Documents—Terms of the LLC Notes—Assignment below).

Failure to pay in full, for any reason, LLC Note Interest on or within seven Business Days of the scheduledLLC Note Interest Payment Date, will result in the Issuer having insufficient funds to pay, in full, thecorresponding Distribution scheduled to be paid on the corresponding Distribution Payment Date and,accordingly, will trigger the Conversion Event (see Terms and Conditions of the NCIs—Conversion above).Failure to pay the corresponding Distribution in respect of the NCIs will also immediately triggerdistribution restrictions for National as described in the Terms and Conditions of the NCIs—Distributions-Restrictions in the case of non-payment above and, when the Preference Shares are issued, substantially inthe form described in Summary of Principal Documents—Terms of the Preference Shares—Dividends-Distribution Restrictions below but it will not constitute an event of default and it will not entitle the holderof the LLC Notes to take any other action, including, for example, to require that the LLC Notes beredeemed.

On and from the Assignment but prior to the LLC Notes being redeemed, National LLC l's obligation topay LLC Note Interest may be satisfied by National New York Branch paying all interest (if any) payableon the Subordinated Debentures to National Head Office (see further Summary of Principal Documents—Terms of the LLC Notes—Assignment below).

Additional Amounts

National LLC 1 will make all payments of LLC Note Interest without deduction or withholding for, or onaccount of, tax unless that deduction or withholding is required by law. If any deduction is required,

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National LLC 1 must pay the full amount required to be deducted to the relevant revenue authority and,subject to:

(a) a demand being made for that amount by the Issuer (as holder of the LLC Notes); and

(b) having received sufficient amounts from National New York Branch in respect of the SubordinatedDebentures or from National under the LLC 1 Gross-Up Indemnity (as defined below) and the otherinterest payment tests are met,

an additional amount ("Additional Amount") to the Issuer (as holder of the LLC Notes) so that the Issuerreceives the same amount in respect of that payment as if no such deduction had been made from thepayment.

National will covenant in the Deed of Covenant to indemnify National LLC 1 for the payment of anyAdditional Amounts (See Summary of Principal Documents—Terms of the Deed of Covenant—Undertakingsof National below) (the "LLC 1 Gross-up Indemnity"), subject to the same tests and conditions that applyto payment of interest on the Subordinated Debentures.


If a Capital Disqualification Event (as described in the Terms and Conditions of the NCIs—CapitalDisqualification Event above) occurs, LLC Note Interest will not be subject to the limitations describedabove under the Summary of Principal Documents—Terms of the LLC Notes—LLC Note Interest limitations,tests and conditions and will be absolute and unconditional liabilities of National LLC 1 on each InterestPayment Date.

Assignment

On the Issue Date, National Head Office (the "Assignee") will pay the Initial Subscriber the AssignmentPayment (as defined in Subscription and Sale below) in consideration for the rights in connection with theAssignment (as defined below). Payment of the Assignment Payment will entitle the Assignee to receive:

(a) on a Conversion Date;

(b) on a Redemption Date; or

(c) on a Trigger Date after a Capital Disqualification Event occurs, as described in Summary of PrincipalDocuments—Terms of the Convertible Debentures—Capital Disqualification Event,

(an "Assignment Date"), LLC Note Interest and an amount in Euros equal to the Face Value on thatnumber of LLC Notes which equals the number of Convertible Debentures being converted or redeemedon the relevant Assignment Date. Specifically:

(a) until an Assignment Date, all rights to principal and interest on the LLC Notes vest in the Issuer (asholder of the LLC Notes prior to the Assignment); but

(b) on and from an Assignment Date:

(i) all rights to principal and interest payable on LLC Notes in number equal to the number ofConvertible Debentures being redeemed or converted on that date will automatically vest in theAssignee (or, where a Capital Disqualification Event has occurred, all the LLC Notes); and

(ii) that number of LLC Notes will be automatically transferred to the Assignee,

(together the "Assignment"), but without affecting the obligation to pay to the Issuer (as holder of theLLC Notes prior to the Assignment) any Excluded Interest Amounts (as defined below).

An "Excluded Interest Amount" is, in respect of an Assignment Date:

(a) if the Assignment Date is also a LLC Note Interest Payment Date, any accrued but unpaid LLC NoteInterest for the interest period ending on the day before that LLC Note Interest Payment Date; or

(b) if the Assignment Date is not also a LLC Note Interest Payment Date and the Assignment Dateoccurs in connection with a redemption of the NCIs, any amount of LLC Note Interest payable onthat date in accordance with the LLC Note Terms in respect of the period since the immediatelypreceding LLC Note Interest Payment Date (or the Issue Date if there has been no preceding LLCNote Interest Payment Date).

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For the avoidance of doubt "Excluded Interest Amounts" do not include any other amounts of interest(including any Accumulated LLC Note Interest).

Notwithstanding the Assignment, any Excluded Interest Amount will be paid by National LLC 1 to theIssuer (as holder of the LLC Notes prior to the Assignment).

The Assignment will occur even if National fails to, or is unable on account of applicable law, to issue thePreference Shares on the Conversion Date.

Redemption

Redemption by holders

Except for National Head Office (as Assignee), a holder of the LLC Notes has no right to require the LLCNotes be redeemed.

Redemption after Assignment

At any time after the Assignment occurs (and with APRAs prior written approval), the LLC Notes may beredeemed by National LLC 1, in its sole discretion, at their Face Value together with accrued interest (ifany). The LLC Notes must be redeemed if National New York Branch elects to redeem the SubordinatedDebentures.

On and from the Assignment occurring, National LLC l's obligation to pay to National Head Office (asAssignee) the Face Value and accrued interest on redemption of the LLC Notes will be satisfied byNational New York Branch paying the Face Value and all accrued interest (if any) payable on theSubordinated Debenture to National Head Office. On the Issue Date, National LLC 1 will irrevocablydirect National New York Branch to make those payments, without any further act or direction on the partof National LLC 1.

Liquidation

In the event of the dissolution, liquidation, termination or winding up of National LLC 1, whethervoluntary or involuntary, the Assignee is entitled to claim the Face Value and all accumulated and accruedand unpaid LLC Note Interest on the LLC Notes. Any such claim will rank subordinate to all creditors andother indebtedness of National LLC 1 and senior to the LLC 1 Common Securities.

Voting and Other Rights

The Issuer (as holder of the LLC Notes) has no right to vote as a shareholder of National, nor any right tovote on the management of National, National LLC 1 or any other National Entity.

The Issuer (as holder of the LLC Notes) will acknowledge in the LLC Note Terms that a holder has noright to apply for any National Entity to be wound up, or placed in administration, or to cause a receiver,or a receiver and manager, to be appointed in respect of a National Entity merely on the grounds that aNational Entity does not pay a distribution or interest when scheduled under any Component Instrument.


The LLC Note Terms can be amended with the prior written approval of APRA (if required) but, incertain limited circumstances (see Description of the Issuer—Issuer LLC Agreement—Amendments andModifications above), without the consent of the NCI Holders or the Issuer (as holder of the LLC Notes).Any other amendment to the LLC Note Terms will require a Special Resolution of NCI Holders and theapproval of the Issuer (as holder of the LLC Notes).

No Set-Off or Offsetting Rights

The Issuer (as holder of the LLC Notes) has no right to set off any amounts owing by it to any NationalEntity against any claims owing to it by any National Entity. The Issuer also has no offsetting rights orclaims on any National Entity if a National Entity does not pay a distribution or interest when scheduledunder any Component Instrument.

Governing Law

The LLC Note Deed, the LLC Note Terms and the LLC Notes will be governed by, and construed inaccordance with, English law.

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Terms of the Subordinated Debentures

General

National New York Branch will issue the Subordinated Debentures to National LLC 1, as more fullydescribed under Subscription and Sale—Subscription, Assignment and Sale of the Relevant Instrumentsbelow.

Each Subordinated Debenture ("Subordinated Debenture") will be a fully paid subordinated note, inregistered form, denominated in Euro, with a face value of E50,000 ("Face Value"). The SubordinatedDebentures will rank pad passu among themselves in all respects.

The Subordinated Debentures will be constituted under a deed poll (the "Subordinated Debenture DeedPoll") and the terms of the Subordinated Debentures (the "Subordinated Debenture Terms") will bescheduled to the Subordinated Debenture Deed Poll.

Interest

Subordinated Debenture Interest

The Subordinated Debentures will pay interest ("Subordinated Debenture Interest") at a floating rate.

Subordinated Debenture Interest will be paid quarterly in arrears on 29 March, 29 June, 29 September and29 December of each year commencing on 29 December 2006 (each a "Subordinated Debenture InterestPayment Date"). The Subordinated Debenture Interest Payment Dates will match the LLC Note InterestPayment Dates in respect of the LLC Notes (so long as the NCIs are on issue).

The amount of each payment of Subordinated Debenture Interest will be calculated in accordance with therelevant formula set out in the Subordinated Debenture Terms, which, will equal the calculation of theLLC Note Interest on the LLC Notes (see Summary of Principal Documents—Terms of the LLC Notes—Interest above).

Subordinated Debenture Interest limitations, tests and conditions

A payment of Subordinated Debenture Interest is subject to the directors of National resolving to pay thatSubordinated Debenture Interest and the specific condition that no APRA Condition exists. Thecircumstances in which an "APRA Condition" will exist are set out in the NCI Terms (see Terms andConditions of the NCIs—Interpretation and Definitions—Definitions above). The APRA Conditions inrespect of the Subordinated Debentures will mirror the APRA Conditions in respect of the LLC Notes.

Subordinated Debenture Interest will be cumulative and, accordingly, any unpaid Subordinated DebentureInterest will accumulate. However:

(a) interest will not accrue on any unpaid amount of Subordinated Debenture Interest ("AccumulatedSubordinated Debenture Interest");

(b) National New York Branch is not permitted (unless approved by APRA) to pay any AccumulatedSubordinated Debenture Interest until the first Subordinated Debenture Interest Payment Datethereafter on which no APRA Condition exists and the other interest payment tests are met; and

(c) any Accumulated Subordinated Debenture Interest can never be distributed to NCI Holders, because,if the Assignment has occurred, National Head Office will be the holder of the LLC Notes and if theSubordinated Debentures are to be redeemed, National LLC 1 has irrevocably directed National NewYork Branch to pay the redemption amount to National Head Office (see further Summary ofPrincipal Documents—Terms of the LLC Notes—Assignment and Summary of Principal Documents—Terms of the LLC Notes—Redemption above).

Failure to pay in full, for any reason, Subordinated Debenture Interest on or within seven Business Days ofthe scheduled Subordinated Debenture Interest Payment Date, will ultimately result in the Issuer havinginsufficient funds to pay, in full, the corresponding Distribution scheduled to be paid on the correspondingDistribution Payment Date in respect of the NCIs and, accordingly, will trigger the Conversion Event (seeTerms and Conditions of the NCIs—Conversion). Failure to pay that corresponding Distribution in respectof the NCIs will also immediately trigger distribution restrictions for National as described in the Termsand Conditions of the NCIs—Distributions—Restrictions in the case of non-payment and, when thePreference Shares are issued, substantially in the form described in Summary of Principal Documents—Terms of the Preference Shares—Dividends—Distribution Restrictions below but it will not constitute an event

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of default and it will not entitle the holder of the Subordinated Debentures to take any other action,including, for example, to require that the Subordinated Debentures be redeemed.

Payment of accrued interest on Assignment

If an Assignment occurs National New York Branch is required to pay to National LLC 1 (as holder of theSubordinated Debentures) an amount of interest equivalent to any corresponding Excluded InterestAmount (as described under Summary of Principal Documents—Terms of the LLC Notes—Assignmentabove).

Additional Amounts

National New York Branch will make all payments of Subordinated Debenture Interest without deductionor withholding for, or on account of, tax unless that deduction or withholding is required by law. If anydeduction is required, National New York Branch must pay the full amount required to be deducted to therelevant revenue authority and, subject to:

(a) a demand being made for that amount by National LLC 1 (as holder of the SubordinatedDebentures); and

(b) the same tests and conditions that apply to payment of Subordinated Debenture Interest,

an additional amount ("Additional Amount") to National LLC 1 (as holder of the SubordinatedDebentures) so that National LLC 1 receives the same amount in respect of that payment as if no suchdeduction had been made from the payment.


If a Capital Disqualification Event (as described in the Terms and Conditions of the NCIs—CapitalDisqualification Event) occurs, Subordinated Debenture Interest will not be subject to the limitationsdescribed above under Summary of the Principal Documents—Terms of the Subordinated Debentures-Interest—Subordinated Debenture Interest limitations, tests and conditions and will be absolute andunconditional liabilities of National New York Branch on each Interest Payment Date.

Redemption

The holder of the Subordinated Debentures has no right to require the Subordinated Debentures to beredeemed.

At any time after the occurrence of the Assignment, the Subordinated Debentures may, subject to APRNsprior written approval, be redeemed by National New York Branch, in its sole discretion, at their FaceValue together with accrued interest (if any).

If the Subordinated Debentures are redeemed at any time after the Assignment, National LLC l'sobligation to pay to National Head Office (as Assignee) the Face Value and accrued interest onredemption of the LLC Notes will be satisfied by National New York Branch paying the Face Value and allaccrued interest (if any) payable on an equivalent number of Subordinated Debentures to National HeadOffice. On the Issue Date, National LLC 1 will irrevocably direct National New York Branch to makethose payments, without any further act or direction on the part of National LLC 1.


National LLC 1 (as holder of the Subordinated Debentures) has no right to vote as a shareholder ofNational, nor any right to vote on the management of National or any other National Entity.

National LLC 1 (as holder of the Subordinated Debentures) will acknowledge in the SubordinatedDebenture Terms that a holder has no right to apply for any National Entity to be wound up, or placed inadministration, or to cause a receiver, or a receiver and manager, to be appointed in respect of a NationalEntity merely on the grounds that a National Entity does not pay a distribution or interest when scheduledunder any Component Instrument.

Liquidation

In the event of the dissolution, liquidation, termination or winding up of National, whether voluntary orinvoluntary, the holder of the Subordinated Debentures will be entitled to claim the Face Value plus any

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accumulated and accrued interest on the Subordinated Debentures. Any such claim will rank senior to theclaims of the ordinary shares of National and pari passu with the claims of the holders of the ConvertibleDebentures, the Preference Shares (if they were issued) and NCI Holders under the NCI SubordinatedGuarantee and junior to the claims of all depositors and other creditors of National, other than creditorsexpressed to rank equally with, or junior to, the Subordinated Debentures.


The Subordinated Debenture Terms can be amended with the prior written approval of APRA (ifrequired) but, in certain limited circumstances (see Description of the Issuer—Issuer LLC Agreement—Amendments and Modifications above), without the consent of the NCI Holders or National LLC 1 (asholder of the Subordinated Debentures). Any other amendment to the Subordinated Debenture Terms willrequire a Special Resolution of NCI Holders and the approval of National LLC 1 (as holder of theSubordinated Debentures).


National LLC 1 (as holder of the Subordinated Debentures) has no right to set-off any amounts owing by itto any National Entity against any claims owing to it by any National Entity. National LLC 1 also has nooffsetting rights or claims on any National Entity if a National Entity does not pay a distribution or interestwhen scheduled under any Component Instrument.

Governing Law

The Subordinated Debenture Deed Poll, the Subordinated Debenture Terms and the SubordinatedDebentures will be governed by, and construed in accordance with, English law.

Terms of the Convertible Debentures

General

National Head Office will issue convertible debentures to the Initial Subscriber (the "ConvertibleDebentures"). The Initial Subscriber will then sell the Convertible Debentures (and the LLC Notes) to theIssuer, as more fully described under Subscription and Sale—Subscription, Assignment and Sale of theRelevant Instruments below.

Each Convertible Debenture will be a fully paid subordinated convertible note, in registered form,denominated in Euro, with a face value of €50,000 ("Face Value").

The Convertible Debentures will rank pari passu among themselves in all respects.

The Convertible Debentures will be constituted under a deed poll (the "Convertible Debenture DeedPoll") and the terms of the Convertible Debentures (the "Convertible Debenture Terms") will bescheduled to the Convertible Debenture Deed Poll.

Interest

The Convertible Debentures will not bear interest unless:

• National fails to issue Preference Shares on the occurrence of a Conversion Event (see furtherSummary of Principal Documents—Terms of the Convertible Debentures—Failure to Issue PreferenceShares below); or

• a Capital Disqualification Event occurs and the Trigger Date occurs (see further Summary of PrincipalDocuments—Terms of the Convertible Debentures—Capital Disqualification Event).

Redemption

The Issuer (as holder of the Convertible Debentures) has no right to require the Convertible Debenturesto be redeemed.

Subject to APRNs prior written approval, National has the option to redeem:

• all (but not some) of the Convertible Debentures on the occurrence of a Regulatory Event, a TaxEvent or an Acquisition Event, and

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• some or all of the Convertible Debentures on the Step-Up Date or any subsequent date which is aDistribution Payment Date in respect of the NCIs,

provided that where a Convertible Debenture remains on issue after the Conversion Date, the Issuer mayredeem the Convertible Debenture in the circumstances in which it would have been entitled to redeemthe Preference Shares had those Preference Shares been issued to or as directed by the holder of theConvertible Debentures on the Conversion Date.

"Regulatory Event", "Tax Event" and "Acquisition Event" are defined above in the definitions of the NCITerms (see Terms and Conditions of the NCIs Interpretation and Definitions—Definitions above).

Where National elects to redeem the Convertible Debentures, the following events will occurautomatically on the date for redemption provided in the Convertible Debenture Terms ("RedemptionDate"):

• the Assignment will occur (see Summary of Principal Documents—Terms of the LLC Notes—Assignment above);

• National will redeem the Convertible Debentures for cash at their Face Value;

• the Issuer, upon receiving the proceeds of the Convertible Debentures and any Excluded InterestAmounts, will redeem the NCIs for cash at the Redemption Price; and

• the Issuer will be wound up.

Conversion

The Issuer (as holder of the Convertible Debentures) has no right to require conversion.

Following the occurrence of the Conversion Event, the following events will automatically occur on thedate for conversion (the "Conversion Date") provided in the Convertible Debenture Terms:

• the Assignment will occur (see Summary of Principal Documents—Terns of the LLC Notes—Assignment above);

• each Convertible Debenture will convert into one Preference Share;

• the NCIs will be redeemed by the Issuer delivering or directing National to issue the PreferenceShares to, or as directed by, the NCI Holders;

• the Preference Shares will accrue dividends, subject to the applicable payment tests and conditions(see Summary of Principal Documents—Terms of the Preference Shares—Dividends below); and

• the Issuer will be wound-up.

"Conversion Event" is defined above in clause 5.2 ("Conversion") of the Terms and Conditions of the NCIs(see Terms and Conditions of the NCIs—Conversion above).

Failure to Issue Preference Shares

Limitations on Issue of Preference Shares

If on the Conversion Date National is prohibited by law from issuing the Preference Shares, National willissue the Preference Shares if and when it is no longer prohibited from doing so.

Under current Australian law, National may be prevented from issuing the Preference Shares on theConversion Date if:

• National is in liquidation;

• APRA has assumed control of National under the Banking Act and APRA does not cause National toissue the Preference Shares; or

• APRA has appointed a statutory manager under the Banking Act to take control of National'sbusiness and the statutory manager does not cause National to issue the Preference Shares.

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Consequences of a failure to Issue Preference Shares

In the event that National fails to issue the Preference Shares when required to do so:

• the Assignment will still occur (see Summary of Principal Documents—Terms of the LLC Notes—Assignment above); and

• the Issuer will continue to hold the Convertible Debentures until National is no longer preventedfrom issuing the Preference Shares.

However, on and from the occurrence of the Conversion Event and for so long as the Issuer continues tohold the Convertible Debentures, the Issuer will be entitled, as holder of the Convertible Debentures:

• prior to the commencement of the winding up of National, to interest on the Convertible Debenturescalculated in the same manner and subject to the same tests and conditions as the payment ofdividends on the Preference Shares (see Summary of Principal Documents—Terms of the PreferenceShares—Dividends below), had they been issued; and

• in a winding up of National, to claim an amount in respect of the Convertible Debentures such thatthe Issuer recovers the same amount as it would have received if the Preference Shares had beenissued and were held by it.


Notwithstanding the description of the Convertible Debentures in Summary of Principal Documents—Convertible Debentures—Conversion, if a Capital Disqualification Event occurs (as described in Terms andConditions of the NCIs—Capital Disqualification Event), the Convertible Debentures will not convert intoPreference Shares.

If a Capital Disqualification Event occurs, the Assignment (as described in Summary of PrincipalDocuments—Terms of the LLC Notes—Assignment above) will occur on the first to occur of the eventsdescribed in clause 5.2 (a) and (b) of the Terms and Conditions of the NCIs (the "Trigger Date").

On and from such Assignment Date, the Issuer shall continue to hold the Convertible Debentures and willbe entitled to interest on the Convertible Debentures ("Convertible Debentures Interest") until they areredeemed. Convertible Debentures Interest is payable in arrears on each Distribution Payment Date forthe NCIs at a rate equal to the rate payable on the NCIs on the corresponding Distribution Payment Date,subject only to the availability of sufficient retained earnings. Where the Assignment Date occurs on a datethat is not a Distribution Payment Date, the Convertible Debentures Interest will be calculated from theDistribution Payment Date in respect of the NCIs immediately preceding the Assignment Date (or if theAssignment occurs before the first scheduled Distribution Payment Date in respect of the NCIs, the issuedate in respect of the NCIs).

National will make all payments of Convertible Debentures Interest without deduction or withholding for,or on account of, tax unless that deduction or withholding is required by law. If any deduction is required,National must pay the full amount required to be deducted to the relevant revenue authority and, subjectto a demand being made for that amount by the Issuer (as holder of the Convertible Debentures) anadditional amount ("Additional Amount") to the Issuer as holder of the Convertible Debentures so thatthe Issuer receives the same amount in respect of that payment as if no such deduction had been madefrom the payment.


The Issuer (as holder of the Convertible Debentures) has no right to vote as a shareholder of Nationalunless and until the Preference Shares are issued, nor any right to vote on the management of National orany other National Entity.

The Issuer (as holder of the Convertible Debentures) will acknowledge in the Convertible DebentureTerms that a holder has no right to apply for any National Entity to be wound up, or placed inadministration, or to cause a receiver, or a receiver and manager, to be appointed in respect of a NationalEntity merely on the grounds that a National Entity does not pay a distribution or interest when scheduledunder any Component Instrument.

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Liquidation

In the event of the dissolution, liquidation, termination or winding up of National, whether voluntary orinvoluntary, the Convertible Debentures will rank, without any preference amongst themselves, senior tothe claims of the ordinary shares of National and pari passu with the claims of the holders of the PreferenceShares which would have been issued if the Convertible Debentures had converted into Preference Shares,the Subordinated Debentures and the beneficiaries of the NCI Subordinated Guarantee and junior to theclaims of all depositors and other creditors of National, other than creditors expressed to rank equallywith, or junior to, the Convertible Debentures.


The Convertible Debenture Terms can be amended with the prior written approval of APRA (if required)but, in certain circumstances (see Description of the Issuer—Issuer LLC Agreement—Amendments andModifications above), without the consent of the NCI Holders or the Issuer (as holder of the ConvertibleDebentures). Any other amendment to the Convertible Debenture Terms will require a Special Resolutionof NCI Holders and the approval of the Issuer (as holder of the Convertible Debentures).

Without the consent of NCI Holders or the Issuer (as holder of the Convertible Debentures) Nationalmay, prior to the Conversion Date, amend the Convertible Debentures to provide for the issue ofPreference Shares on the terms described in the third paragraph of Summary of Principal Documents—Terms of the Preference Shares—Redemption.


The Issuer (as holder of the Convertible Debentures) has no right to set-off any amounts owing by it to anyNational Entity against any claims owing to it by any National Entity. The Issuer also has no offsettingrights or claims on any National Entity if a National Entity does not pay a distribution or interest whenscheduled under any Component Instrument.

Governing Law

The Convertible Debenture Deed Poll, the Convertible Debenture Terms and the Convertible Debentureswill be governed by, and construed in accordance with, English law.

Terms of the Preference Shares

General

The Preference Shares ("Preference Shares") will be issued on the occurrence of the Conversion Event,and will be fully paid preference shares in National, denominated in Euro, with a liquidation amount ofE50,000 ("Liquidation Amount"), corresponding to the NCIs being converted into the Preference Sharesthrough the conversion (see Summary of Principal Documents—Terms of the Convertible Debentures—Conversion above). National will bear the cost of any stamp duty on the issue of the Preference Shares.

The Preference Shares will rank pan passu among themselves in all respects and with all Equal RankingInstruments.

"Equal Ranking Instruments" means:

(a) the NIS preference shares;

(b) the ExCap preference shares (if issued);

(c) the 2003 trust preferred preference shares (if issued);

(d) the 2005 trust preferred preference shares (if issued);

(e) each other preference share that National may issue that is expressed to rank equally with theforegoing for returns of capital in a winding-up of National; and

(f) any securities or other instruments that are expressed to rank in a winding-up equally with thosepreference shares.

"NIS" means the income securities issued by National in 1999 comprising fully paid notes issued byNational through National New York Branch stapled to unpaid preference shares issued by National.

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"NIS preference shares" means the preference shares issued by National in connection with the NIS which,if paid up in accordance with the terms of the NIS, will be outstanding in an aggregate liquidation amountof up to A$2.0 billion.

"ExCap preference shares" means the preference shares which may be issued by National in an aggregateliquidation amount of up to US$1.0 billion by National in connection with the ExCaps.

"ExCaps" means the exchangeable capital securities issued by National in 1997, each consisting of a capitalsecurity exchangeable in certain circumstances into ExCap preference shares or ordinary shares ofNational.

"2003 trust preferred securities" means the trust preferred securities issued by National Capital Trust I in2003 which are exchangeable for global depositary receipts, or "GDRs", each evidenced by a globaldepositary share, or "GDS", representing one 2003 trust preferred preference share.

"2003 trust preferred preference shares" means the preference shares which may be issued by National in anaggregate liquidation amount of up to £400 million by National in connection with the 2003 trust preferredsecurities.

"2005 trust preferred securities" means the trust preferred securities issued by National Capital Trust II in2005 which are exchangeable for 2005 trust preferred preference shares.

"2005 trust preferred preference shares" means the preference shares which may be issued by National in anaggregate liquidation amount of up to US$800 million by National in connection with the 2005 trustpreferred securities.

The terms of the Preference Shares will be approved by the directors of National (the "Preference ShareTerms") (see further General Information—Authorisation below).

Dividends

Dividends

The Preference Shares will pay dividends ("Dividends") at a floating rate.

Dividends on any Preference Shares issued will be paid quarterly in arrears on 29 March, 29 June,29 September and 29 December of each year (each a "Dividend Payment Date"). The Dividend PaymentDates will match the Distribution Payment Dates in respect of the NCIs.

The amount of each Dividend will be calculated in accordance with the relevant formula set out in thePreference Share Terms, which will substantially mirror the calculation of the Distributions on the NCIs(see Terms and Conditions of the NCIs—Distributions above). Where the Conversion Event occurs on adate that is not a Dividend Payment Date, the Dividend for the first Dividend Period will be calculatedfrom the Distribution Payment Date in respect of the NCIs immediately preceding the Conversion Date(or, if the Conversion Date occurs before the first scheduled Distribution Payment Date in respect of theNCIs, the issue date in respect of the NCIs).

Payment of a Dividend on the Preference Shares is subject to the directors of National resolving to pay theDividend and the specific condition that no APRA Condition exists. The APRA Conditions in respect ofthe Preference Shares will substantially mirror the APRA Conditions in respect of the NCIs (see Terms andConditions of the NCIs—Interpretation and Definitions—Definitions above).

Dividends will not be cumulative and the holder of a Preference Share (the "Preference Shareholder") willhave no claim for any Dividend not paid, or for any part of any Dividend not paid, pursuant to thelimitations on Dividends discussed above. Failure to pay in full, for any reason, Dividends on the scheduledDividend Payment Date, will trigger distribution restrictions for National (see Summary of PrincipalDocuments—Terms of the Preference Shares—Dividends—Distribution Restrictions below) but it will notconstitute an event of default and it will not entitle the Preference Shareholders to take any other action,including, for example, to require that the Preference Shares be redeemed.

Additional Amounts

National will make all payments of Dividends without deduction or withholding for, or on account of, taxunless that deduction or withholding is required by law. If any deduction is required, National must pay thefull amount required to be deducted to the relevant revenue authority and, subject to certain exceptions(which will substantially mirror the exceptions in the NCI Terms (see Terms and Conditions of the NCIs-

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Payments to NCI Holders—Gross-up above)), an additional amount ("Additional Amount") to PreferenceShareholders so that each Preference Shareholder receives the same amount in respect of that payment asif no such deduction had been made from the payment.

Distribution Restrictions

National's ability to pay distributions will be restricted if:

• National fails to pay in full, on any Dividend Payment Date, the accrued dividends on the PreferenceShares for the relevant Dividend Period; or

• a Conversion Event has occurred as a result of any failure by the Issuer to pay in full the distributionpayable on the NCIs on any Distribution Payment Date;

then, unless approved by the Preference Shareholders by ordinary resolution, National may not:

(a) pay any interest, dividends or similar distributions on any other capital instruments of National whichrank for dividends equal with, or junior to, the Preference Shares; or

(b) redeem, buy-back or reduce capital on any other capital instruments of National which rank for returnof capital in a winding up, equal with, or junior to, the Preference Shares,

subject to certain limited exceptions (which will substantially mirror the exceptions to the distributionrestriction in the NCI Terms (see Terms and Conditions of the NCIs—Distributions—Exceptions torestrictions above)).

The distribution restrictions will remain in force until National has paid in full:

(a) consecutive dividends on the Preference Shares on each Dividend Payment Date during the 12 monthperiod following the non-payment of the Dividend; or

(b) with APRiVs prior written approval, an optional dividend equal to the unpaid amount of thescheduled dividends, or distributions on the Preference Shares or NCIs, for the period of 12 monthsprior to the date of payment of the optional dividend ("Optional Dividend").

Redemption

A Preference Shareholder has no right to require a redemption or buy-back of, or reduction of capital on,the Preference Shares.

Subject to APRNs prior written approval, National has the option to redeem, buy-back or reduce capital(in such combination as National may determine) on:

• all (but not some) of the Preference Shares on the occurrence of a Preference Share Event (as definedbelow) or the issuance of Preference Shares (provided that the Conversion Event giving rise to theissue of the Preference Shares did not result from National exercising its discretionary right to causethe Conversion Event to occur); or

• some or all of the Preference Shares on the Step-Up Date or any subsequent Dividend Payment Date.

Pursuant to the Convertible Debenture Terms (as described in Summary of Principal Documents—Terms ofthe Convertible Debentures—Amendment and Modification) National may, prior to the issue of thePreference Shares, elect that it issue Preference Shares on terms that it does not have the option to redeemthose Preference Shares (but without limiting its rights to buy-back or reduce capital on such PreferenceShares, in such combination as it may determine and otherwise on the same terms as the Preference Sharesdescribed in Summary of Principal Documents—Terms of the Preference Shares below).

A Preference Share Event ("Preference Share Event"), occurs in circumstances where an AcquisitionEvent, a Regulatory Event or a Tax Event occurs.

For these purposes, "Acquisition Event" and "Regulatory Event" will have a substantially similar definitionto those defined above in the Definitions of the Terms and Conditions of the NCIs (see Terms andConditions of the NCIs—Interpretation and Definitions—Definitions above).

"Tax Event" means that, on or after the Issue Date of the NCIs, National receives an opinion from areputable legal counsel or other tax adviser in Australia, the United States, the United Kingdom or New

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Zealand or any other jurisdiction (each a "Relevant Jurisdiction"), experienced in such matters that thereis more than an insubstantial risk that, as a result of a 'Fax Law Change:

(a) there is a requirement to gross-up any Dividend on the Preference Shares; or

(b) National would be exposed to more than a de minimis amount of other taxes, assessments or othergovernmental charges in connection with the Preference Shares.

"Tax Law Change" will have a substantially identical definition to that set out under the Terms andConditions of NC's Interpretation and Definitions—Definitions above.

The Redemption Price payable on each Preference Share redeemed will equal the Redemption Price thatwould have been payable on the redemption of the corresponding NCI (see Terms and Conditions of theNCIs—Redemption--Redemption Price above).


Voting

Generally, the Preference Shareholders will not be entitled to vote at a general meeting of National.However, they may vote together with holders of ordinary shares in National:

• on any resolution to wind up National, or during the winding up of National;

• on any resolution to reduce National's share capital (except a reduction of capital in accordance withthe Preference Share Terms);

• on any resolution to approve the terms of a buy-back agreement (except a buy-back in accordancewith the Preference Share Terms);

• on any resolution that National dispose of all of its business, property and undertaking; and

• during a Special Voting Period (as defined below), with respect to all matters on which the holders ofordinary shares are entitled to vote, other than on a resolution to approve a Redemption.

They may also vote as a class on any resolution to vary the rights attaching to Preference Shares.

In any such case Preference Shareholders will have one vote per Preference Share.

"Special Voting Period" means the period from (and including):

(a) any Dividend Payment Date on which National does not pay in full the Dividends calculated in respectof the Preference Shares for the immediately preceding Dividend Period; or

(b) the 22nd Business Day after the Conversion Event occurs if the Conversion Event occurred as a resultof non-payment of a Distribution on the NCIs unless prior to such date National has paid in full anOptional Dividend,

in each case to (but not including) the first Dividend Payment Date after that date on which National haspaid an Optional Dividend in accordance with the provisions of Preference Share Terms or has paid in fullthe Dividends scheduled to be payable on the Preference Shares during a period of 12 consecutivecalendar months.

The Preference Share Terms provide that a Preference Shareholder has no right to apply for National to bewound up, or placed in administration, or to cause a receiver, or a receiver and manager, to be appointedin respect of National merely on the grounds that National does not pay a Dividend when scheduled underthe Preference Shares.

Restrictions on Ownership and Transfer

The acquisition of shares in Australian public companies listed on the Australian Stock Exchange ("ASX")is regulated by detailed and comprehensive legislation and the rules of the ASX. Legislation also affectsthe offer of shares for sale in certain circumstances.

One of the most common manners in which a controlling shareholding is acquired in an Australian listedcompany is by a takeover bid. The form and content of the bid documentation is regulated by law.Australian takeover law purports to have extra-territorial force. Australian law may therefore apply to atransaction outside Australia with respect to a non-Australian company if the transaction affects thecontrol of voting power in an Australian publicly listed company.

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Australian law also regulates the acquisition of shares in Australian corporations by foreign persons underthe Foreign Acquisitions and Takeovers Act 1975 ("Takeovers Act"). The Takeovers Act empowers theAustralian Treasurer to prohibit a proposed acquisition of shares in an Australian corporation where theresult of the acquisition will be that a foreign person (together with its associates) would have an interest ofnot less than 15% of the issued shares of a corporation, or two or more foreign persons (together with theirassociates) would in aggregate have an interest in 40% of the issued shares of the corporation that has totalassets valued at A$50,000,000 or more, such as National. In addition, the Takeovers Act requires foreignpersons who propose to make such acquisitions to first notify the Australian Treasurer of their intention todo so. Failure to notify the Treasurer of a proposed acquisition is an offence under the Takeovers Act.Where such an acquisition has already occurred without notice having been given, the Australian Treasurerhas the power to order a person that acquired the shares to dispose of them. The concepts of acquisition,interest, associate and foreign person are very widely defined in the Takeovers Act and investors shouldseek their own advice on the application of the Takeovers Act to them.

Australian law also regulates acquisitions of shares in Australian companies which would have the effect,or be likely to have the effect, of substantially lessening competition in a market in Australia, or in a stateor territory thereof, under the Trade Practices Act 1974. Investors should seek their own advice on theapplication of the Trade Practices Act 1974.

There are also restrictions placed upon shareholdings in Australian banks generally under the Financial(Shareholdings) Act 1998 (the "FSSA"). Under the FSSA, the Australian Treasurer's prior approval isrequired before any person may acquire shares in an authorised deposit-taking institution, of whichNational is one, in Australia where the acquisition would take that person's stake in that institution tomore than 15% (see Description of National—Major Shareholders above). A person's stake relates to thedirect control interest of that person or its associates in the shares of a company. The concepts of "stake","direct control interests", "voting power", "associates" and "shares" are broadly defined in the FSSA andinvestors should seek their own advice on the application of the FSSA.

Takeover and Substantial Shareholder Provisions

Generally, the Corporations Act prohibits a person from acquiring a "relevant interest" in the votingshares in a listed company (such as National) if that person's or someone else's "voting power" in thecompany increases from 20%, or from a starting point that is above 20% and below 90%, unless thoseshares are acquired in a manner specifically permitted under an exception. The exceptions in theCorporations Act are limited and include, for example, an acquisition previously consented to by theshareholders of the company, or an acquisition made under a court-approved scheme. Generally, theconcept of a voting share does not include certain types of preference shares with limited voting rights.However, because Preference Shareholders have been conferred a right to vote following the failure to paya Dividend (see Summary of Principal Documents—Terms of the Preference Shares—Voting and OtherRights—Voting above), the Preference Shares will be treated as voting shares under the Corporations Act.Therefore any person considering the acquisition of the NCIs should consider the effect on their orsomeone else's "voting power" which will arise upon the issue to them of Preference Shares following theConversion Event and should seek appropriate advice in the context of the regulatory thresholdssummarized under this section.

The concepts of "relevant interest", and "associates" and "acquire" are very broadly defined and investorsshould seek their own advice on the application of the Corporations Act. In very general terms:

• a person's voting power ("voting power") equals the total number of votes attached to the votingshares in which the person and their associates have a relevant interest ("relevant interest") (which isbasically where they hold, or have or control the exercise, of the right or power to vote or dispose ofthe shares), expressed as a percentage of all the voting shares in the company, but there are additionalinclusions and certain exceptions;

• a person acquires ("acquires") shares in a company if, as a direct or indirect result of a transaction inrelation to securities of any body corporate, that person acquires a relevant interest in those sharesand, as a result of extensive tracing provisions concerning relevant interest, a person may be taken tohave acquired National's shares for example as a result of the purchase of securities in another bodycorporate if that body corporate holds, or acquires, a relevant interest in National's shares; and

• an associate ("associate") (the "second person") of the primary person is widely defined in Division 2of Part 1.2 of the Corporations Act and includes, among others, a body corporate the primary person

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controls, a body corporate that controls the primary person, or a body corporate that is controlled byan entity that controls the primary person as well as persons acting, or agreeing or proposing to agreeto act in concert in relation to the listed company's affairs.

The Corporations Act also obliges persons who begin to have, or cease to have a substantial holding in alisted company (being a relevant interest of that person, or their associates, in 5% or more of the votingshares of the company), or whose substantial holding moved at least 1%, to give notice to the company andto the ASX of their substantial shareholdings and such movements.


The Preference Share Terms and the rights attaching to the Preference Shares may be amended ormodified with the sanction of a Special Resolution passed at a meeting of the Preference Shareholders.

The Preference Share Terms can also be amended or modified with the prior written approval of APRA (ifrequired) but without the consent of Preference Shareholders in certain circumstances (which substantiallymirror the circumstances in which the NCI Terms may be amended or modified without the consent ofNCI Holders (see Description of the Issuer—Issuer LLC Agreement—Amendment and Modification above)).

The rights attaching to the Preference Shares will not be deemed to be varied by the creation or issue ofany further preference shares ranking equal with, junior to, or senior to, the Preference Shares and thecreation of such preference shares will be expressly permitted by the Preference Share Terms.

Liquidation

In the event of the dissolution, liquidation, termination or winding up of National, whether voluntary orinvoluntary, the Preference Shares will rank:

• senior to the claims of the ordinary shares of National and pan passu with the claims of the holders ofthe classes of preference shares of National with the same ranking identifying number as provided inNational's constitution; and

• junior to all depositors and other creditors, other than creditors whose claims are expressed to rankpan passu with the Preference Shares.


A Preference Shareholder has no right to set off any amounts owing by it to National against any claimsowing to it by National. The Preference Shareholder also has no offsetting rights or claims on National ifNational does not pay a Dividend when scheduled under the Preference Shares.

Governing Law

The Preference Share Terms and the Preference Shares will be governed by, and construed in accordancewith, the laws of the State of Victoria.

Terms of the Deed of Covenant

General

In order to give effect to the terms of the NCIs, National, National LLC 1 and the Issuer have entered intoa deed of covenant (the "Deed of Covenant") under which the parties have agreed to give certainundertakings on the terms set out in the Deed of Covenant.

Undertakings by National

National undertakes to the Issuer and National LLC 1 (each a "Relevant Party") (among other things) to:

• to meet the expenses of each Relevant Party;

• pay, subject to the tests and conditions set out in the Subordinated Debenture Terms (see Summary ofPrincipal Documents—Terms of the Subordinated Debentures—Interest above), each other RelevantParty for any Additional Amounts it is required to pay in accordance with the terms of the relevantComponent Instrument;

• indemnify each Relevant Party for any liabilities incurred in relation to the Capital Instrument;

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• comply with National's obligations with respect to distribution restrictions in the case of non-paymenton the NCIs (see Terms and Conditions of the NCIs—Distributions—Restrictions in the case ofnon-payment above);

• provide a copy of certain notices given under the Convertible Debentures to each Relevant Party;

• comply with all other things which are specified in the Component Instruments to be done or not doneby National; and

• to do all other things which are necessary to be done by National to enable the Relevant Party tocomply with its obligations under the Component Instruments to which it is a party.

National's role under the Deed of Covenant

Notwithstanding the provisions described above:

• National's obligations to the Relevant Parties in connection with the Deed of Covenant are not andshould not be construed as a guarantee by National of any obligations of a Relevant Party in relationto any Component Instrument or that any payment scheduled to be made under a ComponentInstrument will be made; and

• the Deed of Covenant does not confer on any NCI Holder a right to take action against any NationalEntity to enforce payment of any amounts payable by that entity under the Deed of Covenant or toclaim damages for breach of any obligation under the Deed of Covenant.

Governing Law

The Deed of Covenant will be governed by, and construed in accordance with, English law.

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USE OF PROCEEDS

The proceeds of issue of the NCIs will be used by the Issuer to purchase the LLC Notes and theConvertible Debentures from the Initial Subscriber. Prior to that, the Initial Subscriber will havesubscribed for the LLC Notes and the Convertible Debentures and will have received from National HeadOffice the Assignment Payment.

National LLC 1 will use the proceeds from the sale of the LLC Notes to subscribe for the SubordinatedDebentures issued by National New York Branch. The proceeds of issue of the Subordinated Debentureswill be used by National New York Branch for its general business purposes including the lending of theproceeds to branches or entities within the National Group or the acquisition of debt securities issued byentities within the National Group.

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TAXATION

This section summarises the principal United States and Australian taxation consequences and certain EUtaxation consequences arising from the acquisition, holding and disposal of NCIs by NCI Holders who holdtheir NCIs on capital account for tax purposes.

The summary is based on tax law and practice in force as at the date of this Prospectus, unless otherwiseindicated. It is of a general nature only and is neither exhaustive nor definitive and it does not purport to be acomplete analysis of all of the tax considerations relating to the NCIs or the Preference Shares (if issued). Thesummary does not apply to NCI Holders who hold NCIs on revenue account, as trading stock or as part of asecurities trading business and may not apply to certain other classes of persons. It is not intended to be adviceand should not be relied upon as such.

Prospective holders of NCIs should seek independent taxation advice having regard to their own particularcircumstances before making a decision to invest in NCIs.

Certain United States Federal Income Tax Consequences to Non-U.S. Holders

This section summarises the material U.S. federal income tax consequences of the acquisition, ownershipand disposition of the National Capital Instruments (NCIs) by a non-U.S. holder (as defined below). Itapplies to an NCI Holder only if the NCI Holder acquires the NCIs in this offering and holds the NCIs ascapital assets for tax purposes.

This section is based on the Internal Revenue Code of 1986, as amended (the "Code"), its legislativehistory, existing and proposed regulations, published rulings and court decisions, all as currently in effect.These laws are subject to change, possibly on a retroactive basis. This section does not address any aspectsof state, local, foreign or other tax laws.

To ensure compliance with IRS Circular 230 disclosure requirements imposed by the IRS, the Issuerinforms each NCI Holder that (i) any U.S. tax advice contained in this communication (including anyattachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penaltiesunder the Internal Revenue Code and (ii) any such tax advice is written in connection with the promotion ormarketing of the matters addressed.

A NCI Holder is a "non-U.S. holder" if the NCI Holder is a beneficial owner of NCIs and is not: (i) acitizen or resident of the United States for U.S. federal income tax purposes, (ii) a corporation or apartnership (including an entity treated as a corporation or a partnership for U.S. federal income taxpurposes) created or organized in or under the laws of the United States, any state thereof or the Districtof Columbia, (iii) an estate whose income is subject to U.S. federal income tax regardless of its source, or(iv) a trust if (a) a court within the United States is able to exercise primary supervision over theadministration of the trust and one or more U.S. persons have the authority to control all substantialdecisions of the trust or (b) it has a valid election in effect under applicable Treasury regulations to betreated as a U.S. person.

Special rules may apply to certain non-U.S. holders, such as "controlled foreign corporations," "passiveforeign investment companies," foreign partnerships, foreign estates or foreign trusts having a beneficiarythat is a U.S. person, corporations that accumulate earnings to avoid U.S. federal income tax, persons thatactually or constructively own 10% or more of the voting stock of National, and persons that are subject tospecial treatment under the Code. These persons should consult their own tax advisors to determine theU.S. federal, state, local and other tax consequences that may be relevant to them.

Classification of Subordinated Debentures and the NCIs

Although there is no statutory, judicial or administrative authority that directly addresses the US federalincome tax treatment of an issuance of securities similar to the Subordinated Debentures and the NCIs,the Subordinated Debentures and the NCIs should be treated as equity of National for US federal incometax purposes. National, National LLC 1, the Issuer and the holders of the NCIs (by acquiring NCIs in thisoffering) will agree to treat the Subordinated Debentures and the NCIs as equity of National for suchpurposes and the discussion below assumes that the Subordinated Debentures and NCIs will be so treated.

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US federal income tax and withholding tax on NCIs

Subject to the discussion of backup withholding below, a non-U.S. holder will not be subject to U.S. federalincome tax, including withholding tax, on any income in respect of the NCIs, or on any gain realised by thenon-U.S. holder on the sale or exchange of NCIs unless (i) such income or gain is effectively connectedwith the conduct of a trade or business by the non-U.S. holder in the United States or (ii) in the case ofgain realised by an individual non-U.S. holder, the non-U.S. holder is present in the United States for183 days or more in the taxable year and certain other conditions are met.

Information reporting and backup withholding may apply to payments made on and proceeds from the saleof the NCIs unless the non-U.S. holder complies with applicable certification procedures to establish that itis not a U.S. person for U.S. federal income tax purposes.

Certain Australian Tax Consequences

General

The discussion below outlines certain Australian taxation consequences of the acquisition, ownership anddisposition of a beneficial interest in NCIs and Preference Shares (if issued upon the occurrence of aConversion Event). The discussion is based upon laws, regulations, rulings and judicial decisions now ineffect and is subject to future change. This discussion is intended only as a descriptive summary and doesnot purport to be a complete technical analysis or to list all potential Australian tax consequences. It is notintended to be advice and should not be relied upon as such.

This summary assumes that the holder of a beneficial interest in NCIs and Preference Shares (whereissued) (a) will not be a "resident" of Australia for Australian income tax purposes; and (b) will not holdthe beneficial interest in NCIs or Preference Shares as part of a business carried on by that holder at orthrough a permanent establishment in Australia ("Non-resident Holder").

Persons considering the purchase of a beneficial interest in NCIs should consult their own tax advisorsconcerning the application of Australia's tax laws to their particular situations as well as any consequencesof the acquisition, ownership and disposition of a beneficial interest in NCIs or the Preference Sharesunder the laws of any other taxing jurisdiction.

NCIs

Status of the Issuer

The Issuer, a limited liability company formed under the laws of Delaware in the United States, will not betreated as a resident of Australia for Australian income tax purposes.

Distributions on NCIs

Non-resident Holders will only be subject to Australian income tax on so much of their income as has anAustralian source. Distributions on the NCIs would be regarded as having a foreign source. Accordingly,Distributions on the NCIs will not be subject to Australian income tax in the hands of Non-residentHolders, either by withholding or otherwise.

Disposal; redemption or conversion of NCIs

Under current law, non-residents may be subject to Australian capital gains tax on the disposal of certaintypes of assets having the necessary connection with Australia. A beneficial interest in NCIs would nothave the necessary connection with Australia. Accordingly, Non-resident Holders should not be subject toAustralian capital gains tax on the disposal, redemption or conversion of a beneficial interest in NCIs.

Preference Shares

Dividends paid on the Preference Shares

Dividends paid by National on the Preference Shares may be either franked or unfranked. Broadly, to theextent to which those dividends are paid out of profits which have been subject to Australian corporateincome tax, they will be franked dividends. Fully franked dividends paid to a Non-resident Holder will beexempt from Australian dividend withholding tax. Unfranked or partially franked dividends will be subjectto Australian dividend withholding tax at a rate of 30% to the extent to which the dividend is unfranked,

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unless a double tax agreement between Australia and the particular country in which the Non-residentHolder resides reduces that rate.

Disposal of Preference Shares

Under current law, Non-resident Holders should not be subject to Australian capital gains tax on a disposalof a beneficial interest in Preference Shares provided, at the time of disposal, they, together with theirassociates, have not beneficially owned at least 10% or more by value of the ordinary shares in National atany time during the preceding five years.

Recently released Tax Laws Amendment (2006 Measures No. 4) Bill 2006 proposes to amend Australia'stax legislation, such that Australian capital gains tax will no longer have application to non-residents inrespect of assets such as the Preference Shares (that are not held through an Australian permanentestablishment) under any circumstances. The amendments are proposed to take effect for disposalsoccurring on or after the date the Bill receives Royal Assent.

GST and stamp duty

No GST or stamp duty should apply to the issue, disposal, redemption or conversion of a beneficialinterest in NCIs or Preference Shares (as applicable).

EU Savings Tax Directive

Under EC Council Directive 2003/48/EC on the taxation of savings income, each Member State isrequired, from 1 July 2005, to provide to the tax authorities of another Member State details of paymentsof interest or other similar income paid by a person within its jurisdiction to, or collected by such a personfor, an individual resident in that other Member State; however, for a transitional period, Austria, Belgiumand Luxembourg may instead apply a withholding system in relation to such payments, deducting tax atrates rising over time to 35%. The transitional period is to terminate at the end of the first full fiscal yearfollowing agreement by certain non-EU countries to the exchange of information relating to suchpayments.

Also with effect from 1 July 2005, a number of non-EU countries, and certain dependent or associatedterritories of certain Member States, have agreed to adopt similar measures (either provision ofinformation or transitional withholding) in relation to payments made by a person within its jurisdiction to,or collected by such a person for, an individual resident in a Member State. In addition, the Member Stateshave entered into provision of information or transitional withholding arrangements with certain of thosedependent or associated territories in relation to payments made by a person in a Member State to, orcollected by such a person for, an individual resident in one of those territories.

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SUBSCRIPTION AND SALE

Subscription, Assignment and Sale of the Relevant Instruments

Pursuant to a subscription, sale and assignment agreement (the "Subscription, Sale and AssignmentAgreement") between Deutsche Bank AG, acting through its London Branch (the "Initial Subscriber"),National Head Office, National New York Branch, National LLC 1 and the Issuer to be dated on or about28 September 2006:

(a) National LLC 1 will agree to issue to the Initial Subscriber, and the Initial Subscriber will agree tosubscribe for, the LLC Notes in an aggregate principal amount of £400,000,000 for the price of 100%of their principal amount;

(b) National Head Office will agree to pay the Initial Subscriber an amount of £400,000,000 (the"Assignment Payment") in consideration of receiving the benefit of the assignment of the LLC Notesupon the Conversion Event or a redemption of the NCIs, as described under Summary of PrincipalDocuments—Terms of the LLC Notes—Assignment above;

(c) National Head Office will agree to issue to the Initial Subscriber, and the Initial Subscriber will agreeto subscribe for, the Convertible Debentures in an aggregate principal amount of €400,000,000 for theprice of 100% of their principal amount;

(d) National New York Branch will agree to issue to National LLC 1, and National LLC 1 will agree tosubscribe for, the Subordinated Debentures in an aggregate principal amount of €400,000,000 for theprice of 100% of their principal amount; and

(e) the Initial Subscriber will agree to sell to the Issuer, and the Issuer will agree to purchase, the LLCNotes and the Convertible Debentures for an aggregate price of €400,000,000.

The cash payments described above may be subject to net settlement arrangements.

Subscription and Sale of the NCIs

Pursuant to a subscription agreement (the "NCI Subscription Agreement") between Deutsche Bank AG("Deutsche" and a "Joint Lead Manager"), J.P. Morgan Securities Ltd., ("JP Morgan" and together withDeutsche, the "Joint Lead Managers"), the Issuer and National dated 27 September 2006, Deutsche andJP Morgan have jointly and severally agreed to subscribe for NCIs at a price of 100 per cent. of theirLiquidation Amount on the terms and conditions set out in the NCI Subscription Agreement.

The NCI Subscription Agreement is subject to a number of conditions and may be terminated by the JointLead Managers in certain circumstances prior to payment for the NCIs to the Issuer. National has agreedto indemnify the Joint Lead Managers against certain liabilities in connection with the issue of the NCIsand the Joint Lead Managers will be reimbursed for certain of their expenses in connection with the issueand sale of the NCIs.

The Joint Lead Managers will be paid fees determined as an agreed percentage of the issue price of theNCIs.

Selling Restrictions

Australia

No prospectus, Product Disclosure Statement or other disclosure document (as defined in theCorporations Act) in relation to the NCIs or the Preference Shares has been lodged with the AustralianSecurities and Investments Commission ("ASIC"). Each Joint Lead Manager has represented and agreedthat it:

(a) has not made or invited, and will not make or invite, an offer of any NCIs or the Preference Shares forissue or sale in Australia (including an offer or invitation which is received by a person in Australia);and

(b) has not distributed or published, and will not distribute or publish, any draft, preliminary or definitiveoffering or information memorandum, advertisement or other offering material relating to the NCIsor the Preference Shares in Australia,

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unless (i) the minimum aggregate consideration payable by each offeree or invitee is at least A$500,000 (orits equivalent in other currencies, but disregarding moneys lent by the offeror or its associates) or the offeror invitation otherwise does not require disclosure to investors in accordance with Part 6D.2 of theCorporations Act and is not an offer to a "retail client" under Chapter 7 of the Corporations Act, and(ii) such action complies with all applicable laws and directives and does not require any document to belodged with ASIC.

United Kingdom

Each Joint Lead Manager has represented and agreed that:

(a) it has only communicated or caused to be communicated and will only communicate or cause to becommunicated any invitation or inducement to engage in investment activity (within the meaning ofSection 21 of the Financial Services and Markets Act 2000 ("FSMA")) received by it in connectionwith the issue or sale of any NCIs or Preference Shares (if issued) in circumstances in whichSection 21(1) of the FSMA does not apply to the Issuer and National; and

(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anythingdone by it in relation to the NCIs and the Preference Shares in, from or otherwise involving theUnited Kingdom.

United States

Each Joint Lead Manager understands that the NCIs and Preference Shares have not been and will not beregistered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be offeredor sold within the United States or to, or for the account or benefit of, U.S. persons (as defined inRegulation S under the Securities Act) except in accordance with Regulation S under the Securities Act orpursuant to an exemption from the registration requirements of the Securities Act.

Each Joint Lead Manager has represented and agreed that it has offered and sold any NCIs or PreferenceShares and will offer and sell any NCIs or Preference Shares (a) as part of its distribution at any time and(b) otherwise until 40 days after the completion of the distribution of such tranche as determined andcertified by the Joint Lead Manager (or other person performing a similar function), only in accordancewith Rule 903 of Regulation S under the Securities Act. Accordingly, none of the Joint Lead Managers,their respective affiliates or any persons acting on its or their behalf have engaged or will engage in anydirected selling efforts with respect to the NCIs or Preference Shares, and each Joint Lead Manager, itsaffiliates and any person acting on their behalf have complied and will comply with the offering restrictionrequirements of Regulation S.

Each Joint Lead Manager has agreed that, at or prior to confirmation of a sale of the NCIs or PreferenceShares, it will have sent to each distributor, dealer or person receiving a selling concession, fee or otherremuneration that purchases the NCIs or Preference Shares from it or through it during the restrictedperiod a confirmation or notice to substantially the following effect:

"The [NCIs/Preference Shares] covered hereby have not been registered under the United StatesSecurities Act of 1933 ("Securities Act") and may not be offered or sold within the United States or toor for the account or benefit of U.S. persons (a) as part of their distribution at any time and(b) otherwise until forty days after the completion of the distribution of the [NCIs/Preference Shares]as determined and certified by the Joint Lead Manager (or other person performing a similarfunction), except in either case in accordance with Regulation S under the Securities Act. Terms usedabove have the meaning given to them by the Securities Act or Regulation S thereunder."

Terms used in the above paragraph have the meanings given to them by Regulation S under the SecuritiesAct.

Hong Kong

Each Joint Lead Manager has represented and agreed that:

(a) it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any NCIsor Preference Shares other than (a) to "professional investors" as defined in the Securities andFutures Ordinance (Cap.571) of Hong Kong and any rules made under that Ordinance; or (b) in othercircumstances which do not result in the document being a "prospectus" as defined in the Companies

78

Ordinance (Cap32) of Hong Kong or which do not constitute an offer to the public within themeaning of that Ordinance; and

(b) it has not issued or had in its possession for the purposes of issue, and will not issue or have in itspossession for the purposes of issue, whether in Hong Kong or elsewhere, any advertisement,invitation or document relating to the NCIs or Preference Shares, which is directed at, or the contentsof which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do sounder the securities laws of Hong Kong) other than with respect to NCIs or Preference Shares whichare or are intended to be disposed of only to persons outside Hong Kong or only to "professionalinvestors" as defined in the Securities and Futures Ordinance and any rules made under thatOrdinance.

Singapore

This Prospectus has not been registered as a prospectus with the Monetary Authority of Singapore (the"MAS") under the Securities and Futures Act, Chapter 289 of Singapore (the "Securities and FuturesAct"). Accordingly, each Joint Lead Manager has agreed that the NCIs and the Preference Shares have notbeen offered or sold and will not be offered or sold or made the subject of an invitation for subscription orpurchase nor will this Prospectus or any other document or material in connection with the offer or sale orinvitation for subscription or purchase of any NCIs or Preference Shares be circulated or distributed,whether directly or indirectly, to any person in Singapore other than (a) to an institutional investorpursuant to Section 274 of the Securities and Futures Act, (b) to a relevant person, or any person pursuantto Section 275(1A) of the Securities and Futures Act, and in accordance with the conditions specified inSection 275 of the Securities and Futures Act or (c) pursuant to, and in accordance with, the conditions of,any other applicable provision of the Securities and Futures Act.

Each of the following relevant persons specified in Section 275 of the Securities and Futures Act, which hassubscribed or purchased NCIs or Preference Shares, namely a person who is:

(a) a corporation (which is not an accredited investor) the sole business of which is to hold investmentsand the entire share capital of which is owned by one or more individuals, each of whom is anaccredited investor; or

(b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments andeach beneficiary is an accredited investor,

should note that shares, debentures and units of shares and debentures of that corporation or thebeneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporationor that trust has acquired the NCIs or Preference Shares under Section 275 of the Securities and FuturesAct except:

(i) to an institutional investor under Section 274 of the Securities and Futures Act or to a relevantperson, or any person pursuant to Section 275(1A) of the Securities and Futures Act, and inaccordance with the conditions, specified in Section 275 of the Securities and Futures Act;

(ii) where no consideration is given for the transfer; or

(iii) by operation of law.

Japan

The NCIs and the Preference Shares have not been and will not be registered under the Securities andExchange Law of Japan, as amended (the "Securities and Exchange Law") and each Joint Lead Managerhas represented and agreed that it has not, directly or indirectly, offered or sold and will not offer or sell,any NCIs or Preference Shares, directly or indirectly, in Japan or to, or for the benefit of, any resident ofJapan (which term as used herein means any person having his place of domicile or residence in Japan, anycorporation or other legal entity organised under the laws of Japan except for its branches or other officeslocated outside Japan and, with respect to any corporation or other legal entity organised under a lawother than Japanese law, its branches and offices located in Japan), or to others for reoffering or resale,directly or indirectly, in Japan or to, or for the benefit of, a resident of Japan, except pursuant to anexemption from the registration requirements of, and otherwise in compliance with, the Securities andExchange Law and any other applicable laws, regulations and governmental guidelines of Japan.

79

Republic of Italy

The offering of the NCIs and/or Preference Shares has not been registered pursuant to the Italiansecurities legislation and, accordingly, each Joint Lead Manager has represented and agreed that it has notoffered or sold, and will not offer or sell, any NCIs and/or Preference Shares in the Republic of Italy in asolicitation to the public, and that sales of the NCIs and/or Preference Shares in the Republic of Italy shallbe effected in accordance with all Italian securities, tax and exchange control and other applicable laws andregulations.

Each of the Joint Lead Managers has represented and agreed that it will not offer, sell or deliver any NCIsand/or Preference Shares or distribute copies of this Prospectus or any other document relating to theNCIs and/or Preference Shares in the Republic of Italy except:

(1) to "Professional Investors", as defined in Article 31.2 of CONSOB Regulation No. 11522 of2 July 1998 as amended ("Regulation No. 11522"), pursuant to Article 30.2 and 100 of LegislativeDecree No. 58 of 24 February 1998 as amended ("Decree No. 58"), or

(2) in any other circumstances where an expressed exemption to comply with the solicitation restrictionsprovided by Decree No. 58 or Regulation No. 11971 of 14 May 1999, as amended, applies,

provided, however, that any such offer, sale or delivery of the NCIs and/or Preference Shares ordistribution of copies of this Prospectus or any other document relating to the NCIs and/or PreferenceShares in the Republic of Italy must be:

(a) made by investment firms, banks or financial intermediaries permitted to conduct such activitiesin the Republic of Italy in accordance with Legislative Decree No. 385 of 1 September 1993, asamended ("Decree No. 385"), Decree No. 58, CONSOB Regulation No. 11522 and any otherapplicable laws and regulations;

(b) in compliance with Article 129 of Decree No. 385 and the implementing instructions of the Bankof Italy ("Istruzioni di Vigilanza della Banca d'Italia"), pursuant to which the issue, offer, sale,trading or placement of securities in Italy is subject to a prior notification to the Bank of Italy,unless an exemption, depending, inter alia, on the aggregate amount and the characteristics ofthe NCIs and/or Preference Shares issued, offered, sold, traded or placed in the Republic of Italy,applies; and

(c) in compliance with any other applicable notification requirement or limitation which may beimposed by CONSOB or the Bank of Italy.

France

Each of the Joint Lead Managers and Responsible Persons has represented and agreed that it has notoffered or sold and will not offer or sell, directly or indirectly, NCIs or Preference Shares to the public inFrance, and has not distributed or caused to be distributed and will not distribute or cause to be distributedto the public in France, this Prospectus or any other offering material relating to the NCIs or PreferenceShares, and that such offers, sales and distributions have been and will be made in France only to(a) providers of investment services relating to portfolio management for the account of third parties,and/or (b) qualified investors (investisseurs qualifies), all as defined in, and in accordance with, articlesL.411-1, L.411-2 and D.411-1 to D.411-3 of the French Code monitaire et financier, but excludingindividuals referred to in articles D.411-1 II, 2°.

General

No representation is made that any action has been taken in any country or jurisdiction by the ResponsiblePersons that would permit an offering of any NCIs or Preference Shares, or possession or distribution ofthe Prospectus in relation thereto, in any country or jurisdiction where action for that purpose is required.

Each Joint Lead Manager has agreed to comply to the best of its knowledge and belief with all applicablelaws and regulations in each country or jurisdiction in or from which it purchases, offers, sells or deliversany NCIs or Preference Shares or has in its possession or distributes offering material in relation thereto,in all cases at its own expense, and no Responsible Person shall have responsibility therefore.

No Responsible Person represents that any NCIs or Preference Shares may at any time lawfully be sold incompliance with any applicable law or directive or any applicable registration or other requirements in any

80

jurisdiction, or pursuant to any exemption available thereunder, or assumes any responsibility forfacilitating such sale.

Persons into whose hands the Prospectus comes are required by to comply with any applicable law anddirective in each jurisdiction in which they purchase, offer, sell or deliver NCIs or Preference Shares orhave in their possession or distribute or publish the Prospectus or other offering material and to obtain anyauthorisation required by them for the purchase, offer, sale or delivery by them of any NCIs or PreferenceShares under any applicable law or directive in force in any jurisdiction to which they are subject or inwhich they make such purchases, offers, sales or deliveries, in all cases at their own expense, and neitherthe Responsible Persons nor any Joint Lead Manager has responsibility for such matters.

In these selling restrictions, "directive" includes a treaty, official directive, request, regulation, guideline orpolicy (whether or not having the force of law) with which responsible participants in the relevant marketgenerally comply.

Selling restrictions for the Relevant Instruments

The Initial Subscriber represents and agrees that it has not offered or sold any NCIs, LLC Notes,Convertible Debentures or Subordinated Debentures (each a "Relevant Instrument") and will not offer orsell any Relevant Instrument except in accordance with the specific subscriptions and sales set out underSubscription and Sale—Subscription, Assignment and Sale of the Relevant Instruments above.

81

GENERAL INFORMATION

Authorisation

The issue of the NCIs by the Issuer has been duly authorised by a resolution of the LLC Manager dated12 September 2006.

The issue of the LLC Notes by National LLC 1 has been duly authorised by a resolution of the LLCManager dated 12 September 2006.

The issue of the Subordinated Debentures and the Convertible Debentures and the execution of the NCISubordinated Guarantee by National has been duly authorised by a resolution of the Board of Directors ofNational dated 13 June 2006 and by a resolution of a Committee of the Board of Directors of Nationaldated 14 September 2006. However, while the issue of the Preference Shares has been authorised byNational, in order to issue the Preference Shares on the Preference Share Terms it will be necessary forNational at the time of issue to do all required by its constitution and the Corporations Act to issue thoseshares.

Listing and admission to trading

Application has been made to the Commission de surveillance du secteur financier in its capacity ascompetent authority under the Luxembourg act relating to prospectuses for securities (loi relative auxprospectus pour valeurs mobilieres) to approve this Prospectus.

Application has also been made to the Luxembourg Stock Exchange for the NCIs to be admitted to theofficial list and traded on the Regulated Market of the Luxembourg Stock Exchange in accordance withthe Prospectus Directive. It is expected that the NCIs will be admitted to the official list and commencetrading on the Regulated Market of the Luxembourg Stock Exchange on or around 29 September 2006.

EU Directive 2004/109/EC ("Transparency Directive") was passed on 15 December 2004 and came intoforce on 20 January 2005. The Transparency Directive must be implemented by Member States of theEuropean Union by 20 January 2007. If the implementation imposes obligations on the Issuer that areunduly burdensome, the Issuer may decide to de-list the NCIs from the official list and trading on theRegulated Market of the Luxembourg Stock Exchange. If the Issuer elects to do so, it must use itsreasonable endeavours to obtain an alternative listing, quotation or admission to trading for the NCIs onsuch other stock exchange or exchanges or securities market or markets as the Issuer may decide on whichit is then generally accepted in the sphere of international issues of securities to list, quote or admit totrading securities such as the NCIs.

If Preference Shares are issued, National will use its reasonable endeavours either to list them on theLuxembourg Stock Exchange (or on such other stock exchange on which the NCIs may then be listed) orto seek an alternative listing, quotation or admission to trading for the Preference Shares on such otherstock exchange or exchanges or securities market or markets as National may decide on which it is thengenerally accepted in the sphere of international issues of securities to list, quote or admit to tradingsecurities such as the Preference Shares.

Documents Available

Copies of the following documents (together, the "Available Documents") will be available from theregistered office of National:

(a) National's Annual Reports on Form 20-F for the financial years ended 30 September 2004 and 30September 2005 (including the audit report and the consolidated audited financial statements of theNational Group and the non-consolidated audited financial statements of National for the financialyears ended 30 September 2004 and 30 September 2005 respectively);

(b) National's Half Year Consolidated Report on Appendix 4D for the six months ended 31 March 2006(including the consolidated unaudited financial statements of the National Group for the six monthsended 31 March 2006);

(c) the statutory documents of National;

(d) the Subscription, Sale and Assignment Agreement;

(e) the Issuer LLC Agreement (including the NCI Terms);

82

(f) the LLC 1 Agreement (including the terms of the LLC 1 Common Securities);

(g) the LLC Note Deed (including the LLC Note Terms);

(h) the Subordinated Debenture Deed Poll (including the Subordinated Debenture Terms);

(j) the Convertible Debenture Deed Poll (including the Convertible Debenture Terms);

(j) the Preference Share Terms;

(k) the Agency Agreement;

(1) the NCI Subordinated Guarantee; and

(m) the Deed of Covenant.

Requests for such documents should be directed to National at its offices set out in the Directory at the endof this Prospectus. National will not be obliged to provide a copy of any Available Document unless it issatisfied that the person requesting the document is either a current NCI Holder or PreferenceShareholder (if the Preference Shares are issued) or a genuine prospective holder of NCIs or PreferenceShares (if issued).

In addition, copies of the Available Documents will be available from the offices of the LuxembourgPaying Agent set out in the Directory at the end of this Prospectus (subject to the Luxembourg PayingAgent consulting National and National instructing the Luxembourg Paying Agent that it is satisfied thatthe person requesting the document is either a current NCI Holder or Preference Shareholder (if thePreference Shares are issued) or a genuine prospective holder of NCIs or Preference Shares (if issued)).

Copies of the documents incorporated by reference will also be available to view on the website of theLuxembourg Stock Exchange (as at the date of this Prospectus, www.bourselu).

Expenses

The Issuer and National estimate that their total combined expenses related to the admission to trading ofthe NCIs on the Regulated Market of the Luxembourg Stock Exchange are approximately €600.

Clearing Systems

The NCIs have been accepted for clearance through Euroclear and Clearstream, Luxembourg with aCommon Code of 026706955. The International Securities Identification Number (ISIN) for the NCIs isXS0267069556.

The address for Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels andthe address of Clearstream, Luxembourg is Clearstream Banking, 42 Avenue JF Kennedy, L-1855Luxembourg.

Auditors

Issuer

The Issuer's auditors are Ernst & Young, independent auditors whose address is Ernst & Young Building,8 Exhibition Street, Melbourne, Victoria 3000, Australia. The partners of the Issuer's auditors are typicallymembers of the Institute of Chartered Accountants of Australia, but the firm itself is not a member.

National

The auditors of National up to and including the year ended 30 September 2004 were KPMG, independentauditors, who had audited National's accounts, without qualification, in accordance with generallyaccepted auditing standards in Australia for the financial year ended 30 September 2004.

At the Annual General Meeting of National on 31 January 2005, it was resolved to replace KPMG withErnst & Young, independent auditors, who have audited National's accounts, without qualification, inaccordance with generally accepted auditing standards in Australia for the financial year ended 30September 2005.

The auditors of National have no material interest in National.

83

Audit reports in respect of National are signed both in the name of the firm of Ernst & Young or KPMG,as the case may be, and by an individual partner. The partners of each firm are typically members of theInstitute of Chartered Accountants of Australia, but each firm itself is not a member.

The liability of National's auditors in respect of an audit of National may be subject to statutory schemes inAustralian jurisdictions that restrict the recovery of damages from accountants. Such a scheme is currentlyoperative in the state of New South Wales where it limits the recovery of damages from accountants to thelesser of ten times the fees charged for the relevant services and A$20 million. Similar limitations areexpected to become operative in the other states of Australia in the near future after the recent passage ofenabling legislation. The scope of the limitations and their effect on the enforcement of foreign judgmentsin Australia are so far untested.

Persons transacting with the Issuer and National

The Joint Lead Managers, the Initial Subscriber and their respective affiliates may have engaged, and mayin the future engage, in investment banking and/or commercial banking transactions with, and mayperform services to, the Issuer and National and/or their affiliates in the ordinary course of business.

84

INDEX OF DEFINED TERMS

i£

11936 Act 1997 Act

2

2003 trust preferred preference shares 2003 trust preferred securities 2005 trust preferred preference shares 2005 trust preferred securities 2006 Half Year Report

A

A$ ABN Accountholder Accrued Distribution Accumulated LLC Note Interest Accumulated Subordinated Debenture Interest acquires Acquisition Event Additional Amount

AGAAP Agency Agreement Agents AIFRS Alternative Clearing System APRA APRA Capital Event APRA Condition ASIC Assignee Assignment Assignment Date Assignment Payment ASX Australian dollars Australian Treasurer Available Amount Available Documents

B

Banking Act Basel Accord Basel Committee Basel II Business Day

C

Calculation Agent Capital Disqualification Event Capital Instrument Change in Law

11, 42,

4

5252

6767676733

4305447586170

47, 64, 6848, 56, 59,62, 65, 68

3448

91654

10, 4848

48, 58, 61775959597769

433

37, 484, 82

2016161648

9, 4810, 43, 48

4849

85

Clearstream, Luxembourg 1, 49Code 74Competent Authority 1, 13Component Instruments 49Conversion 49Conversion Date 49, 64Conversion Event 40, 49, 64Conversion Notice 49Convertible Debenture Deed Poll 49, 63Convertible Debenture Terms 49, 63Convertible Debentures 49, 63Convertible Debentures Interest 65Co-ordinating Stabilising Manager 4Corporations Act 30, 49

D

Deed of Covenant 11, 49, 71Determination Date 37, 49Deutsche 77directive 81Distributable Profits 49Distribution 36, 49Distribution Payment Date 1, 9, 49Distribution Period 49Distribution Rate 1, 36, 49Distributions 1, 9Dividend Payment Date 67Dividends 67

E

Equal Ranking Instruments 66EUR 4EURIBOR 37, 50Euro 4Euroclear 1, 50Euro-zone 37, 50ExCap preference shares 67ExCaps 67Exchange Date 54Exchange Event 50,54Excluded Interest Amount 59Excluded Interest Amounts 60

F

Face Value 57, 61, 63Financial Reports 33Fitch 1FSMA 78FSSA 33, 70Full Year Reports 33

G

GDRs 67GDS 67Guaranteed Amounts 56

I

IAS Regulation 34IMS 31

86

Initial Margin 50Initial Subscriber 8, 77Investor's Currency 21Issue Date 1, 9, 50Issuer 1, 8, 24, 36, 50Issuer LLC Agreement 12, 24, 36, 50Issuer Management Agreement 24JJoint Lead Managers 77JP Morgan 77L

Level 1 50Level 2 50Level 3 50Liquidation Amount 50, 66LLC 1 Agreement 28LLC 1 Common Securities 28LLC 1 Gross-up Indemnity 59LLC 1 Management Agreement 29LLC Act 24LLC Manager 24, 50LLC Note Deed 50, 57LLC Note Interest 58LLC Note Interest Payment Date 58LLC Note Terms 50, 57LLC Notes 1, 50Luxembourg Paying Agent 9, 50

M

Margin 37, 50MAS 79Member State 4Moody's 1

N

National 1, 2, 8, 50National Capital Holdings 50National Conversion Notice 50National Entity 12, 19, 50National Group 8, 50National Head Office 8, 50National LLC 1 1, 8, 28, 50National New York Branch 8, 50National Sub 8NCI 50NCI Gross-Up Indemnity 11NCI Guarantee Terms 56NCI Holder 50NCI Holders 1, 10NCI Subordinated Guarantee 10, 50NCI Subscription Agreement 77NCI Terms 1, 9, 50NCIs 1, 9NIS 66NIS preference shares 67Non-resident Holder 75

87

0

Optional Distribution Optional Dividend

38, 5068

Ordinary Resolution 51Other Party 2

P.

Par Redemption Amount 51Parties 2Paying Agent 51Paying Agent Jurisdiction Payment Date

42, 5151

pence 4pounds sterling 4Preference Share Preference Share Event

9, 5168

Preference Share Terms Preference Shareholder

51, 6767

Preference Shares Principal Paying Agent Prospectus Directive Prospectus Regulation

1,8,1,

66511334

R

Record Date 51Redemption Redemption Amounts

39, 5151

Redemption Date Redemption Notice

51, 6451

Redemption Price 51Reference Banks Register

37, 5151

Registered 51Registered Definitive NCIs 1, 36, 51Registered Global NCI Registered Global Preference Share

1, 36, 5155

Registrar Regulatory Event Relevant Instrument

51,8,

64,516881

Relevant Issuer 27Relevant Jurisdiction Relevant Party

42, 52, 6971

Responsible Person 2

S

Screen Page 52SEC 34Securities Act Securities and Exchange Law

1, 3, 7879

Securities and Futures Act 79Special Resolution 27Special Voting Period 69Specified Office 52Stabilising Managers 4Standard & Poor's 1Step-Up Date Sterling

1, 524

Stock Exchange 52

88

Structuring Adviser Subordinated Debenture Subordinated Debenture Deed Poll Subordinated Debenture Interest Subordinated Debenture Interest Payment Date Subordinated Debenture Terms Subordinated Debentures Subscription, Sale and Assignment Agreement

T

Takeovers Act TARGET TARGET System Tax Act Tax Event Tax Law Change Tier 1 Capital Tier 1 Capital Ratio Total Capital Adequacy Ratio Transaction Documents Transfer Agent Transparency Directive Treaty Trigger Date

U

U.S. $ Unpaid Distribution Upper Tier 2 Capital US dollars

V

voting power

52,

52,

52,1,

64,53,

8,13,37,

38,

961616161615277

7048485268695353531453825365

453534

70

89

DIRECTORY

ISSUERNational Capital Instruments [Euro] LLC 2

cio National Australia Bank LimitedLevel 28

245 Park AvenueNew York

New York 10167United States of America

REGISTERED OFFICE OF NATIONALLevel 13, 140 William Street

MelbourneVictoria 3000

Australia

JOINT LEAD MANAGERS

Deutsche Bank AG, London Branch

J.P. Morgan Securities Ltd.(Structuring Adviser)

125 London WallWinchester House

London EC2Y 5AJ1 Great Winchester Street

United Kingdom

London EC2N 2DBUnited Kingdom

LISTING AGENTDeutsche Bank

Luxembourg S.A.2 Boulevard Konrad

AdenauerL-1115 Luxembourg

To National as to the laws ofAustralia and England

Mallesons Stephen JaquesLevel 50, Bourke Place

600 Bourke StreetMelbourne

Victoria 3000Australia

PRINCIPAL PAYING AGENTDeutsche Bank AG, London Branch

Winchester House1 Great Winchester Street

London EC2N 2DBUnited Kingdom

LEGAL ADVISERS

To National as to Australiantaxation law

Greenwoods & FreehillsMLC Centre, Martin Place

SydneyNew South Wales 2000

Australia

To the Joint Lead Managers as toEnglish law

Clifford Chance LLP10 Upper Bank Street

Canary WharfLondon E14 5JJUnited Kingdom

AUDITORS

LUXEMBOURGPAYING AGENTDeutsche Bank

Luxembourg S.A.2 Boulevard Konrad

AdenauerL-1115 Luxembourg

To National as to the laws of theUnited States

Sullivan & Cromwell101 Collins Street

MelbourneVictoria 3000

Australia

Ernst & YoungErnst & Young Building

8 Exhibition StreetMelbourne


(auditors for the year ended 30 September 2005,appointed 31 January 2005)

KPMGKPMG House

161 Collins StreetMelbourne


(auditors for the year ended 30 September 2004,resigned 31 January 2005)