THE ROYAL BANK OF SCOTLAND
N.V.
Securities Due June 28, 2011
Linked to the Trader Vic IndexTM Excess
Return
|
Issuer:
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The Royal
Bank of Scotland N.V.
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Launch
Date:
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June 23,
2010
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Lead
Agent:
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RBS
Securities Inc.
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Pricing
Date:
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June 23,
2010
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Issue
Price:
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100%
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Settlement
Date:
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June 28,
2010
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CUSIP:
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78009KKA9
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Determination
Date:
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June 22,
20111
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ISIN:
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US78009KKA96
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Maturity
Date:
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June 28,
2011
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1
Subject to certain adjustments as described under “Description of
Securities” in this Pricing
Supplement
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Status
and Guarantee:
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Unsecured,
unsubordinated obligations of the Issuer and fully and unconditionally
guaranteed by the Issuer’s parent company, RBS Holdings
N.V.
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Description
of Offering:
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Securities
due June 28, 2011, Linked to the Performance of the Trader Vic IndexTM
Excess Return (the “Securities”)
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Underlying
Index:
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The Trader
Vic IndexTM
Excess Return (Bloomberg ticker: TVICER
<Index>) (the “Underlying Index”)
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Coupon:
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None. The
Securities do not pay interest.
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Payment
at Maturity:
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The payment
at maturity for each Security is based on the performance of the
Underlying Index. The cash payment at maturity for each $1,000 principal
amount of Securities is calculated as follows:
Any payment
at maturity is subject to the creditworthiness of The Royal Bank of
Scotland N.V. and RBS Holdings N.V., as guarantor.
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Final
Index Value:
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The Closing
Level of the Underlying Index on the Determination Date, subject to
certain adjustments as described under “Description of Securities” in this
Pricing Supplement.
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Initial
Index Value:
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4,867.05.
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Adjustment
Factor:
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where “Days”
are the number of calendar days from but not including the Pricing Date,
to but not including the Determination Date. Where the Pricing
Date occurs on June 23, 2010, if the Determination Date occurs on June 22,
2011, the Adjustment Factor will be approximately 0.99 (assuming there are
363 calendar days in this period).
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Trustee:
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Wilmington
Trust Company
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Securities
Administrator:
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Citibank,
N.A.
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Denomination:
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$1,000
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Settlement:
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DTC, Book
Entry, Transferable
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Selling
Restriction:
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Sales in the
European Union must comply with the Prospectus
Directive
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Price
to Public
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Agent’s Commission2
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Proceeds
to Issuer
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Per
Security
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$1,000
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$0
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$1,000
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Total
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$350,000
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$0
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$350,000
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2
For additional information see “Plan of Distribution (Conflicts of
Interest)” in this Pricing
Supplement.
|
The Securities are
not bank deposits and are not insured or guaranteed by the Federal Deposit
Insurance Corporation, the Deposit Insurance Fund or any other governmental
agency, nor are they obligations of, or guaranteed, by a bank.
Investing in the Securities involves
a number of risks. See “Risk Factors” beginning on page S-2 of the
accompanying Prospectus Supplement, “Risk Factors” beginning on page US-1 of the
accompanying Underlying Supplement No. TVI-1 and “Risk Factors” beginning on page
11 of this Pricing Supplement. The Securities and Exchange Commission and state
securities regulators have not approved or disapproved these Securities, or
determined if this Pricing Supplement or the accompanying Underlying Supplement
No. TVI-1, Prospectus Supplement or Prospectus are truthful or complete. Any
representation to the contrary is a criminal offense.
The agents are not
obligated to purchase the Securities but have agreed to use reasonable efforts
to solicit offers to purchase the Securities. To the extent the full
aggregate face amount of the Securities being offered by this Pricing Supplement
is not purchased by investors in the offering, one or more of our affiliates may
agree to purchase a part of the unsold portion, which may constitute up to 15%
of the total aggregate face amount of the Securities, and to hold such
Securities for investment purposes. See “Holdings of the Securities
by Our Affiliates and Future Sales” under the heading “Risk Factors” and “Plan
of Distribution (Conflicts of Interest)” in this Pricing
Supplement. This Pricing Supplement and the accompanying Underlying
Supplement No. TVI-1, Prospectus Supplement and Prospectus may be used by our
affiliates in connection with offers and sales of the Securities in
market-making transactions.
PRICE:
$1,000 PER SECURITY
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THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
TABLE OF
CONTENTS
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Page
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Where You Can
Find More Information
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2
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Summary
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4
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Risk
Factors
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11
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Hypothetical
Return Analysis of the Securities at Maturity
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16
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Historical
Data on the Underlying Index
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18
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Description
of Securities
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19
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United States
Federal Income Taxation
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23
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Use of
Proceeds
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27
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Plan of
Distribution (Conflicts of Interest)
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27
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Certain
Employee Retirement Income Security Act Considerations
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27
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WHERE
YOU CAN FIND MORE INFORMATION
The Royal Bank of
Scotland N.V., or RBS N.V., has filed a registration statement (including a
Prospectus and Prospectus Supplement) with the Securities and Exchange
Commission, or SEC, for the offering to which this Pricing Supplement
relates. Before you invest, you should read the Prospectus and
Prospectus Supplement in that registration statement and other documents,
including the Underlying Supplement, related to this offering that RBS N.V. has
filed with the SEC for more complete information about RBS N.V. and the offering
of the Securities.
You may get these
documents without cost by visiting EDGAR on the SEC website at www.sec.gov.
Alternatively, RBS N.V., any underwriter or any dealer participating in the
offering will arrange to send you the Prospectus and Prospectus Supplement if
you request by calling toll free (866) 747-4332.
You should read
this Pricing Supplement together with the Prospectus dated April 2, 2010, as
supplemented by the Prospectus Supplement dated April 2, 2010 relating to our
RBS NotesSM of
which these Securities are a part, and the more detailed information about the
Underlying Index contained in Underlying Supplement No. TVI-1 dated April 30,
2010. This Pricing
Supplement, together with the documents listed below, contains the terms of the
Securities and supersedes all other prior or contemporaneous oral statements as
well as any other written materials including preliminary or indicative pricing
terms, correspondence, trade ideas, structures for implementation, sample
structures, fact sheets, brochures or other educational materials of
ours. You should carefully consider, among other things, the
matters set forth in “Risk Factors” in this Pricing Supplement and the
Underlying Supplement, as the Securities involve risks not associated with
conventional debt securities. We urge you to consult your investment,
legal, tax, accounting and other advisors before you invest in the
Securities.
You may access
these documents on the SEC website at www.sec.gov as follows (or if such address
has changed, by reviewing our filings for the relevant date on the SEC
website):
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·
|
Underlying
Supplement No. TVI-1 dated April 30,
2010:
|
|
·
|
Prospectus
Supplement dated April 2, 2010:
|
|
·
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Prospectus
dated April 2, 2010:
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Our Central Index
Key, or CIK, on the SEC website is 897878. As used in this Pricing
Supplement, RBS NV, the “Company,” “we,” “us” or “our” refers to The Royal Bank
of Scotland N.V. Holding refers to RBS Holdings N.V.
These
Securities may not be offered or sold (i) to any person/entity listed on
sanctions lists of the European Union, United States or any other applicable
local competent authority; (ii) within the territory of Cuba, Sudan, Iran and
Myanmar; (iii) to residents of Cuba, Sudan, Iran or Myanmar; or (iv) to Cuban
Nationals, wherever located.
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THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
We reserve the
right to withdraw, cancel or modify any offering of the Securities and to reject
orders in whole or in part prior to their issuance.
RBS NotesSM is a
service mark of The Royal Bank of Scotland N.V. Trader Vic IndexTM and
TVITM are
trademarks of Enhanced Alpha Management, L.P. (“EAM”).
EAM created and
owns rights to the methodology that is employed in connection with the Trader
Vic IndexTM. RBS
N.V. has provided a contribution to the Trader Vic IndexTM in a
limited manner. RBS N.V.'s contribution is limited to performing calculations
and data distribution in connection with the Index. EAM does not sponsor,
endorse, sell, or promote this or any investment fund or other vehicle that is
offered by third parties and that seeks to provide an investment return based on
the returns of the Trader Vic IndexTM. A
decision to invest in any such investment fund or other vehicle should not be
made in reliance on any of the statements set forth in this document.
Prospective investors are advised to make an investment in any such fund or
vehicle only after carefully considering the risks associated with investing in
such funds, as detailed in an offering memorandum or similar document that is
prepared by or on behalf of the issuer of the investment fund or vehicle. EAM
has developed, maintained and is the sole party responsible for the methodology
that is employed in connection with the Trader Vic IndexTM.
These Securities
are not sponsored, endorsed, sold or promoted by EAM. EAM makes no
representation, condition or warranty, express or implied, to the owners of the
Securities or any member of the public regarding the advisability of investing
in the strategy manifested in the Trader Vic IndexTM or in
the Securities. EAM's only relationship to RBS N.V. is the licensing of certain
trademarks and trade names of EAM and/or of the Trader Vic IndexTM which
is created, compiled, maintained and owned by EAM without regard to the
Securities. EAM has no obligation to take the needs of the owners of the
Securities into consideration in determining, or composing the Trader Vic
IndexTM. EAM is
not responsible for and has not participated in the determination of the timing
of, prices at, or quantities of the Securities to be issued or in the
determination or calculation of the equation by which the Securities is to be
converted into cash. EAM has no obligation or liability in connection with the
administration, marketing or trading of the Securities.
EAM SHALL OBTAIN
INFORMATION FOR INCLUSION IN OR FOR USE IN THE CALCULATION OF THE TRADER VIC
INDEXTM FROM
SOURCES THAT EAM CONSIDERS RELIABLE, BUT EAM ACCEPTS NO RESPONSIBILITY FOR, AND
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS OR INTERRUPTIONS THEREIN. EAM
DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE TRADER VIC
INDEXTM OR ANY
DATA INCLUDED THEREIN. EAM MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE
RESULTS TO BE OBTAINED BY ANY PERSON OR ENTITY FROM THE USE OF THE TRADER VIC
INDEXTM OR ANY
DATA INCLUDED THEREIN. EAM MAKES NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY
DISCLAIMS ALL CONDITIONS AND WARRANTIES IMPLIED BY STATUTE, GENERAL LAW OR
CUSTOM WITH RESPECT TO THE TRADER VIC INDEXTM OR ANY
DATA INCLUDED THEREIN EXCEPT ANY IMPLIED CONDITION OR WARRANTY THE EXCLUSION OF
WHICH WOULD CONTRAVENE ANY STATUTE OR CAUSE ANY PART OF THIS CLAUSE TO BE
VOID.
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THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
SUMMARY
The
following summary does not contain all the information that may be important to
you. You should read this summary together with the more detailed
information that is contained in the accompanying Underlying Supplement No.
TVI-1, Prospectus and Prospectus Supplement. You should carefully
consider, among other things, the matters set forth in “Risk Factors” beginning
on page US-1 of the accompanying Underlying Supplement No. TVI-1 and in “Risk
Factors” beginning on page 11 of this Pricing Supplement. In
addition, we urge you to consult with your investment, legal, accounting, tax
and other advisors with respect to any investment in the
Securities.
What
are the Securities?
The Securities are
issued by us, The Royal Bank of Scotland N.V., and are fully and unconditionally
guaranteed by our parent company, RBS Holdings N.V. The Securities are our
non-principal protected senior unsecured notes. The Securities are linked to the
performance of the Trader Vic IndexTM Excess
Return, which we refer to as the Underlying Index. The Securities will mature on
June 28, 2011. Unlike ordinary
debt securities, the Securities do not pay interest.
The payment at
maturity of the Securities is determined based on the performance of the
Underlying Index, subject to an Adjustment Factor, as described below. If the closing level of the
Underlying Index increases from the Initial Index Value, which is determined on
the Pricing Date, so that it is higher on the Determination Date, you will
receive at maturity the principal amount of $1,000 per Security times the return
on the Underlying Index, times the Adjustment Factor. The Adjustment
Factor will reduce the return you receive to less than 100% of the return on the
Underlying Index. If the closing level of the Underlying Index
decreases from the Initial Index Value, so that it is lower on the Determination
Date, you will lose some or all of your initial principal
investment. In addition, even if the closing level of the Underlying
Index on the Determination Date is slightly higher than the Initial Index Value,
you may lose some of your initial principal investment if that increase is not
sufficient to offset the effect of the Adjustment Factor. Although
there is no cap on the return of your investment in the Securities, the
Adjustment Factor will always operate to reduce any payment you receive at
maturity so that it will always be less than 100% of any gain and more than 100%
of any loss on the Underlying Index.
Any payment on the
Securities is subject to the creditworthiness (ability to pay) of The Royal Bank
of Scotland N.V. as issuer and RBS Holdings N.V. as guarantor.
What
will I receive at maturity of the Securities?
At maturity you
will receive, for each $1,000 principal amount of Securities, a cash payment
calculated as follows:
where,
|
•
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the Initial
Index Value will equal the closing level of the Underlying Index on the
Pricing Date;
|
|
•
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the Final
Index Value will equal the closing level of the Underlying Index on the
Determination Date; and
|
|
•
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the
Adjustment Factor will equal: ![](p4b.jpg)
|
where “Days” are the number
of calendar days from but not including the Pricing Date of the Securities, to
but not including the Determination Date.
Where the Pricing
Date occurs on June 23, 2010, if the Determination Date occurs on June 22, 2011,
the Adjustment Factor will be approximately 0.99 (assuming that there are 363
calendar days during that period).
Will
I receive interest payments on the Securities?
No. You
will not receive interest payments on the Securities.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Will
I get my principal back at maturity?
The Securities are
not principal protected, so you are not guaranteed to receive any return of
principal at maturity. If the
closing level of the Underlying Index on the Determination Date is below or the
same as the Initial Index Value, you will lose some or all of your initial
principal investment and you could lose up to 100% of your initial principal
investment. In addition, even if the closing level of the Underlying
Index on the Determination Date is slightly higher than the Initial Index Value,
you may lose some of your initial principal investment if that increase is not
sufficient to offset the Adjustment Factor.
Any payment at
maturity is subject to our creditworthiness (ability to pay) as the issuer of
the Securities and the creditworthiness of RBS Holdings N.V., as the guarantor
of our obligations under the Securities.
If you sell the
Securities prior to maturity, you will receive the market price for the
Securities, which could be zero. There may be little or no secondary market for
the Securities. Accordingly, you should be willing to hold your securities until
maturity.
Can
you give me examples of the payment at maturity?
Example 1: If, for
example, the Initial Index Value is 5,000, the Final Index Value is 7,500 and
the Securities have a maturity of 1 year (assuming there are 363 calendar days
from but not including the Pricing Date, to but not including the Determination
Date), then the payment at maturity (rounded to two decimal places) would be
calculated as follows:
or
or
$1,000 x 1.485 =
$1,485.00
Where, the
Adjustment Factor is calculated as:
, where Days equals 363
or
In this
hypothetical example, the closing level of the Underlying Index on the
Determination Date increased from the Initial Index Value by 50%, which is an
amount greater than the effect of the Adjustment Factor. Therefore, the payment
at maturity will be the principal amount of $1,000 times the return on the
Underlying Index times the Adjustment Factor. In this hypothetical example,
while the return on the Underlying Index was 50.00%, you would have received, at
maturity, a payment of $1,485.00 (rounded to two decimal places)
for each $1,000 principal amount of Securities, which represents a return
of approximately 48.5% over the term of the Securities. You would
have received less than the return on the Underlying Index due to the effect of
the Adjustment Factor. Although there is no cap on the return of your investment
in the Securities, the payment you will receive at maturity will always be less
than 100% of the return on the Underlying Index due to the Adjustment
Factor.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Example 2: If, for
example, the Initial Index Value is 5,000, the Final Index Value is 5,050 and
the Securities have a maturity of 1 year (assuming there are 363 calendar days
from but not including the Pricing Date, to but not including the Determination
Date), then the payment at maturity (rounded to two decimal places) would be
calculated as follows:
or
or
$1,000 x .9999 =
$999.90
where, the
Adjustment Factor is calculated as:
, where Days equals 363
or
In this
hypothetical example, the closing level of the Underlying Index on the
Determination Date increased from the Initial Index Value by 1%, which was not a
sufficient increase to offset the effect of the Adjustment Factor. Therefore,
the payment at maturity will be the principal amount of $1,000 times the return
on the Underlying Index times the Adjustment Factor. In this hypothetical
example, while the return on the Underlying Index was 1%, you would have
received at maturity a payment of $999.90 (rounded to two decimal
places) for each $1,000 principal
amount of Securities, which represents a loss of approximately -0.01% over the
term of the Securities. Even though the Underlying Index appreciated
above the Initial Index Value, you would have lost a portion of your initial
principal investment due to the effect of the Adjustment Factor.
Example 3: If, for
example, the Initial Index Value is 5,000, the Final Index Value is 3,000 and
the Securities have a maturity of 1 year (assuming there are 363 calendar days
from but not including the Pricing Date, to but not including the Determination
Date), then the payment at maturity (rounded to two decimal places) would be
calculated as
follows:
or
$1,000 x .594 =
$594.00
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THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
where, the
Adjustment Factor is calculated as:
, where Days equals 363
or
In this
hypothetical example, the closing level of the Underlying Index on the
Determination Date decreased from the Initial Index Value by 40% but, due to the
Adjustment Factor you would have lost approximately -40.60%. Therefore, in this
hypothetical example, you would receive at maturity an amount less than your
initial principal investment, for a total payment of $594.00 (rounded to two decimal
places) for each $1,000 principal amount of Securities. If the closing level of the
Underlying Index decreases substantially from the Initial Index Value to the
Final Index Value, you could lose up to 100% of your initial principal
investment.
Is
there a limit on how much I can earn over the term of the
Securities?
No. If the
Securities are held to maturity, the total amount payable at maturity per
Security is not capped.
What
is the minimum required purchase?
You may purchase Securities in minimum
denominations of $1,000 or in integral multiples thereof.
Is
there a secondary market for Securities?
The Securities will
not be listed on any securities exchange. Accordingly, there may be little or no
secondary market for the Securities and, as such, information regarding
independent market pricing for the Securities may be extremely limited. You
should be willing to hold your Securities until the Maturity Date.
Although it is not
required to do so, we have been informed by our affiliate that when this
offering is complete, it intends to make purchases and sales of the Securities
from time to time in off-exchange transactions. If our affiliate does make such
a market in the Securities, it may stop doing so at any time.
In connection with
any secondary market activity in the Securities, our affiliate may post
indicative prices for the Securities on a designated website or via Bloomberg.
However, our affiliate is not required to post such indicative prices and may
stop doing so at any time. Investors are advised that any prices
shown on any website or Bloomberg page are indicative prices only and, as such,
there can be no assurance that any trade could be executed at such
prices. Investors should contact their brokerage firm for further
information.
In addition, the
issue price of the Securities includes the cost of hedging our obligations under
the Securities. The cost of hedging includes the profit component that our
affiliate has charged in consideration for assuming the risks inherent in
managing the hedging of the transactions. The fact that the issue price of the
Securities includes these hedging costs is expected to adversely affect the
secondary market prices of the Securities. See “Risk Factors—The Inclusion the
Cost of Hedging in the Issue Price Is Likely to Adversely Affect Secondary
Market Prices” and “Use of Proceeds” in this Pricing Supplement.
What
are the U.S. federal income tax consequences of owning the
Securities?
We intend to treat
the Securities for all tax purposes as single financial contracts with respect
to the Underlying Index that requires the investor to pay us at inception an
amount equal to the purchase price of the Securities and that entitles the
investor to receive at maturity an amount in cash based upon the performance of
the Underlying Index. Under the terms of the Securities, we and every investor
in the Securities agree, in the absence of an administrative determination
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THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
or judicial ruling
to the contrary, to treat the Securities as described in the preceding sentence.
If the Securities are so treated, you will recognize capital gain or loss upon
the sale, repurchase or maturity of your Securities in an amount equal to the
difference between the amount you receive at such time and your adjusted tax
basis in the Securities.
No statutory,
judicial or administrative authority directly addresses the characterization of
the Securities or instruments similar to the Securities for U.S. federal income
tax purposes. As a result, the U.S. federal income tax consequences of your
investment in the Securities are uncertain, and it is possible that the Internal
Revenue Service (“IRS”) may assert an alternative treatment. It is also possible
that future U.S. legislation, regulations or other IRS guidance would require
you to accrue income on the Securities on a current basis at ordinary income
rates (as opposed to capital gains rates) or to treat the Securities in another
manner that significantly differs from the agreed-to treatment noted above, and
that any such guidance could have retroactive effect. Because of this uncertainty, we urge
you to consult your own tax advisor as to the tax consequences of your
investment in the Securities.
For a more complete
discussion of the U.S. federal income tax consequences of your investment in the
Securities, see “U.S. Federal Income Tax Summary” below.
What
is the Underlying Index, and where can I find out more about the Underlying
Index?
The Underlying
Index is a managed futures index designed to provide investors with portfolio
diversification and to potentially benefit from both rising and declining price
trends of the Underlying Index components. Currently comprised of 24
futures contracts across physical commodities, global currencies and U.S.
interest rates, the Underlying Index is designed to capture rising and falling
price trends by taking both long and short positions. The Underlying
Index components are grouped into 17 sectors; each sector, except the energy
sector, is represented on either a “long” or “short” basis, depending on recent
price trends of that sector. The energy sector is represented on
either a “long” or “flat” basis. A flat position means that no
portion of the Underlying Index is deemed to be allocated to the energy sector,
as described in the section “The Trader Vic IndexTM—Index
Components and Sectors” in the accompanying Underlying Supplement No.
TVI-1. The
Underlying Index has a base currency in U.S. dollars and is unleveraged in that
for every USD reflected in the Underlying Index, the Underlying Index measures
futures positions with a total notional amount of one U.S. dollar.
For more
information on the Underlying Index, see the accompanying Underlying Supplement
No. TVI-1.
Tell
me more about The Royal Bank of Scotland N.V. and RBS Holdings N.V.
The Royal Bank of
Scotland N.V. is the new name of ABN AMRO Bank N.V.
RBS Holdings N.V.
is the new name of ABN AMRO Holding N.V.
On February 6, 2010, ABN AMRO Bank N.V.
changed its name to The Royal Bank of Scotland N.V. and on April 1, 2010 ABN AMRO
Holding N.V. changed its name to
RBS Holdings N.V.
The name changes are not changes of the legal entities that will issue and guarantee, respectively,
the Securities referred to
herein, and the name
changes do not affect any
of the terms of the Securities. The Securities will continue to be
issued by The Royal Bank of
Scotland N.V. and to be fully and unconditionally guaranteed by
The Royal Bank of Scotland N.V.’s parent company, RBS Holdings N.V.
While the name “ABN AMRO Bank N.V.”
is used by a separate legal
entity, which is owned by the State of the
Netherlands (the “Dutch
State”), neither the separate legal entity named ABN AMRO Bank N.V. nor the
Dutch State will, in any way, guarantee or otherwise support the obligations
under the Securities.
The Royal Bank of Scotland N.V. and RBS Holdings N.V. are both affiliates of The Royal Bank of Scotland plc and
The Royal Bank of Scotland Group plc; however, none of The Royal Bank of Scotland
plc, The Royal Bank of Scotland Group plc or
the UK government, in any way, guarantees or otherwise supports the obligations under the
Securities.
For additional
information, see “The Royal Bank of Scotland N.V. and RBS Holdings N.V.” in the
accompanying prospectus dated April 2, 2010.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
What
is the relationship between The Royal Bank of Scotland N.V., RBS Holdings N.V.
and RBS Securities Inc.?
RBS Securities
Inc., which we refer to as RBSSI, is an affiliate of The Royal Bank of Scotland
N.V. and RBS Holdings N.V. RBSSI will act as agent for this
offering. RBSSI will conduct this offering in compliance with the
requirements of NASD Rule 2720 of the Financial Industry Regulatory Authority,
which is commonly referred to as FINRA, regarding a FINRA member firm’s
distribution of the securities of an affiliate. See “Plan of
Distribution (Conflicts of Interest)” in this Pricing Supplement.
Who
will determine the payment at maturity?
We will act as
calculation agent for Wilmington Trust Company, the trustee for the
Securities. As calculation agent, we will determine, among other
things, the Initial Index Value, the Final Index Value, the Adjustment Factor
and the payment, if any, at maturity.
When
is the Closing Level Determined?
The level of the
Underlying Index is calculated and published by the Index Calculation Agent on
every Business Day and is updated continuously as the prices of the
underlying components change, so there is no formal closing time for the
Underlying Index. Accordingly, the Closing Level of the Underlying
Index will be the level of the Underlying Index at 9:00 p.m., New York City time
on any Business Day when the Closing Level must be
determined.
Who
invests in the Securities?
The Securities are
not suitable for all investors. The Securities may be a suitable
investment for you if:
|
•
|
You seek an
investment with a return linkedto the performance of the
Underlying Index.
|
|
•
|
You believe
the closing level of the
Underlying Index will increase by an amount sufficient to offset
the Adjustment Factor and to provide you with a satisfactory return on
your investment during the term of the
Securities.
|
|
•
|
You are
willing to accept the risk of fluctuations in the level of the Underlying
Index.
|
|
•
|
You do not
seek current income from this
investment.
|
The Securities may
not be a suitable investment for you if:
|
•
|
You are not
willing to be exposed to fluctuations in the level of the Underlying
Index.
|
|
•
|
You seek a
guaranteed return of principal.
|
|
•
|
You believe
the closing level of the Underlying Index will
decrease or will not increase by an amount sufficient to offset the
Adjustment Factor during the term of the
Securities.
|
|
•
|
You prefer
the lower risk and therefore accept the potentially lower returns of fixed
income investments with comparable maturities and credit
ratings.
|
|
•
|
You seek
current income from your
investment.
|
You should
carefully consider whether the Securities are suited to your particular
circumstances before you decide to purchase them. In addition, we
urge you to consult with your investment, legal, accounting, tax and other
advisors with respect to any investment in the Securities.
What
are some of the risks in owning the Securities?
Investing in the
Securities involves a number of risks. We have described the most
significant risks relating to the Securities under the heading “Risk Factors” in
this Pricing Supplement and “Risk Factors” in the accompanying Underlying
Supplement which you should read before making an investment in the
Securities.
Some selected risk
considerations include:
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Credit
Risk. Because you are purchasing a security from us, you are
assuming our credit risk. In addition, because the Securities are
fully and unconditionally guaranteed by RBS Holdings N.V., you are assuming the
credit risk of RBS Holdings N.V. in the event that we fail to make the payment
required by the terms of the Securities. This means that if RBS N.V.
and RBS Holdings N.V. fail, become insolvent or are otherwise unable to pay
their obligations under the Securities, you could lose some or all of your
initial principal investment. Any obligations or Securities sold,
offered, or recommended are not deposits of RBS N.V. and are not endorsed or
guaranteed by any bank or thrift, nor are they insured by the Federal Deposit
Insurance Corporation, the Deposit Insurance Fund or any other governmental
agency.
Principal
Risk. The Securities are not ordinary debt securities: they
are not principal protected. In addition, if the closing level of the
Underlying Index decreases or does not change from the Pricing Date to the
Determination Date, you will lose some or all of your initial principal
investment. Even if the closing level of the Underlying Index
increases slightly from the Initial Index Value to the Final Index Value, you
may lose some of your initial principal investment if that increase is not
sufficient to offset the Adjustment Factor. Accordingly, you may lose some or all
of your initial principal investment in the Securities.
Liquidity Risk. The
Securities will not be listed on any securities
exchange. Accordingly, there may be little or no secondary market for
the Securities and information regarding independent market pricing of the
Securities may be very limited or non-existent. The value of the Securities in
the secondary market, if any, will be subject to many unpredictable factors,
including then prevailing market conditions.
It is important to note that many
factors will contribute to the secondary market value of the Securities, and you
may not receive your full principal back if the Securities are sold prior to
maturity. Such factors include, but are not limited to, time
to maturity, the level of the Underlying Index, volatility of the Underlying
Index and interest rates.
In addition, the
price, if any, at which our affiliate or another party is willing to purchase
Securities in secondary market transactions will likely be lower than the issue
price, since the issue price included, and secondary market prices are likely to
exclude, commissions, discounts or mark-ups paid with respect to the Securities,
as well as the cost of hedging our obligations under the
Securities.
What
if I have more questions?
You should read
“Description of Notes” in the accompanying Prospectus Supplement for a detailed
description of the terms of the Securities and the accompanying Underlying
Supplement No. TVI-1 for a detailed description of the Underlying
Index. The Royal Bank of Scotland N.V. has filed a registration
statement (including a Prospectus and Prospectus Supplement) with the SEC for
the offering to which this communication relates. Before you invest,
you should read the Prospectus and Prospectus Supplement in that registration
statement and other documents The Royal Bank of Scotland N.V. has filed with the
SEC for more complete information about The Royal Bank of Scotland N.V. and the
offering of the Securities. You may get these documents for free by
visiting EDGAR on the SEC web site at www.sec.gov. Alternatively, The
Royal Bank of Scotland N.V., any underwriter or any dealer participating in the
offering will arrange to send you the Underlying Supplement, Prospectus and
Prospectus Supplement if you request them by calling toll free (866)
747-4332.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
RISK
FACTORS
You
should carefully consider the risks of the Securities to which this Pricing
Supplement relates and whether these Securities are suited to your particular
circumstances before deciding to purchase them. For a discussion of
certain general risks associated with your investment in the Securities, please
refer to the section entitled “Risk Factors” beginning on page US-1 of the
accompanying Underlying Supplement and the section entitled “Risk Factors”
beginning on page S-2 of the accompanying Prospectus Supplement. It
is important that prior to investing in these Securities you read the
accompanying Underlying Supplement No. TVI-1 related to the Underlying Index and
the accompanying Prospectus and Prospectus Supplement to understand the actual
terms of and the risks associated with the Securities. In addition,
we urge you to consult with your investment, legal, accounting, tax and other
advisors with respect to any investment in the Securities.
The
Securities Are Not Ordinary Senior Notes; the Securities Do Not Pay Interest and
There Is No Guaranteed Return of Principal
The terms of the
Securities differ from those of ordinary debt securities in that we will not pay
you interest on the Securities and you could lose some or all of your initial
principal investment at maturity. The return that you will receive at
maturity will be primarily based on any increase or decrease in the level of the
Underlying Index. If
the closing level of the Underlying Index decreases or does not change from the
Initial Index Value to the Final Index Value, you will lose some or all of your
initial principal investment, and you could lose up to 100% of your initial
principal investment. In addition, even if the closing level of the
Underlying Index increases slightly from the Initial Index Value to the Final
Index Value, you may lose some of your initial principal investment if that
increase is not sufficient to offset the Adjustment Factor. In either
case, the amount of cash paid to you at maturity will be less than the principal
amount of your Securities and you assume the risk that you could lose some or
all of your initial principal investment.
Furthermore, even
if the return on the Underlying Index is positive, the return you receive on the
Securities may be less than the return you would have received had you invested
your entire principal amount in a conventional debt security with the same
maturity issued by us or a comparable issuer. You cannot predict the
future performance of the Underlying Index based on its historical
performance.
The Return that You Will Receive Will
Always Be Less Than 100% of the Return on the Underlying Index Due to the Adjustment
Factor
The Adjustment
Factor is a fee formula based on the number of calendar days from but not
including the Pricing Date, to but not including the Determination Date of your
Securities. Since the Adjustment Factor reduces the amount of your
return at maturity, the payment you will receive at maturity will always be less
than 100% of the return on the Underlying Index. As a result, the
level of the Underlying Index must increase by an amount sufficient to offset
the Adjustment Factor in order for you to receive at least the principal amount
of your investment at maturity. See “Description of
Securities—Adjustment Factor.”
Our
Credit Risk and the Credit Risk of RBS Holdings N.V., and our and its Credit
Ratings and Credit Spreads May Adversely Affect the Market Value of the
Securities
You are dependent
on our ability to pay all amounts due on the Securities, and therefore you are
subject to our credit risk and to changes in the market’s view of our
creditworthiness. In addition, because the Securities are
unconditionally guaranteed by our parent company, RBS Holdings N.V., you are
also dependent on the credit risk of RBS Holdings N.V. in the event that we fail
to make any payment or delivery required by the terms of the
Securities. Any actual or anticipated decline in our or RBS Holdings
N.V.’s credit ratings or increase in our or its credit spreads charged by the
market for taking credit risk is likely to adversely affect the value of the
Securities.
Our credit ratings
are an assessment, by each rating agency, of our ability to pay our obligations,
including those under the Securities. Credit ratings are subject to revision,
suspension or withdrawal at any time by the assigning rating organization in its
sole discretion. However, because the return on the Securities is
dependent upon factors in addition to our ability to pay our obligations under
the Securities, an improvement in our credit ratings will not necessarily
increase the market value of the Securities and will not reduce market risk and
other investment risks related to the Securities. Credit ratings (i)
do not reflect market risk, which is the risk that the level of the Underlying
Index may fall, resulting in a
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
loss of some or all
of your initial principal investment, (ii) do not address the price, if any, at
which the Securities may be resold prior to maturity (which may be substantially
less than the issue price of the Securities), and (iii) are not recommendations
to buy, sell or hold the Securities. See “Risk Factors — The Market Price of the
Securities Will Be Influenced by Many Unpredictable Factors.”
Although
We Are a Bank, the Securities Are Not Bank Deposits and Are Not Insured or
Guaranteed by the Federal Deposit Insurance Corporation, The Deposit Insurance
Fund or Any Other Government Agency
The Securities are
our obligations but are not bank deposits. In the event of our
insolvency, the Securities will rank equally with our other unsecured,
unsubordinated obligations and will not have the benefit of any insurance or
guarantee of the Federal Deposit Insurance Corporation, The Deposit Insurance
Fund or any other governmental agency.
The
Securities Will Not Be Listed on Any Securities Exchange; Secondary Trading May
Be Limited
You should be
willing to hold your Securities until the Maturity Date. The Securities will not
be listed on any securities exchange. Accordingly, there may be little or no
secondary market for the Securities and information regarding independent market
pricing for the Securities may be very limited or non-existent. Even if there is
a secondary market, it may not provide enough liquidity to allow you to trade or
sell the Securities easily. Upon completion of the offering, our affiliate has
informed us that it intends to purchase and sell the Securities from time to
time in off-exchange transactions, but it is not required to do
so. If our affiliate does make such a market in the Securities, it
may stop doing so at any time.
In addition, if the
total principal amount of the Securities being offered is not purchased by
investors in the offering, one or more of our affiliates has agreed to purchase
the unsold portion. Our affiliate or affiliates intend to hold the Securities
for investment purposes, which may affect the supply of Securities available for
secondary trading and therefore adversely affect the price of the Securities in
any secondary trading. If a substantial portion of any Securities held by our
affiliates were to be offered for sale following this offering, the market price
of the Securities could fall, especially if secondary trading in the Securities
is limited or illiquid.
The
Market Price of the Securities Will Be Influenced by Many Unpredictable
Factors
The market price of
the Securities may move up and down between the date you purchase them and the
Determination Date when the calculation agent determines the amount to be paid
to you on the Maturity Date.
Several factors,
many of which are beyond our control, will influence the market price of the
Securities, including:
|
·
|
the level of
the Underlying Index, which can fluctuate
significantly;
|
|
·
|
the
volatility (frequency and magnitude of changes) in the level of the
Underlying Index;
|
|
·
|
the market
prices of the exchange-traded futures contracts on the components of the
Underlying Index;
|
|
·
|
interest and
yield rates in the market;
|
|
·
|
geopolitical
conditions and economic, financial, political, regulatory, geographical,
agricultural, or judicial events that affect the futures contracts
comprising the Underlying Index, or markets generally, and which may
affect the level of the Underlying
Index;
|
|
·
|
the time
remaining to the maturity of the
Securities;
|
|
·
|
the
creditworthiness of The Royal Bank of Scotland N.V. as issuer of the
Securities and RBS Holdings N.V. as the guarantor of our obligations under
the Securities. Any person who purchases the Securities is
relying upon the creditworthiness of The Royal Bank of Scotland
N.V. and RBS Holdings N.V. and has no rights against any other
person. The Securities constitute the general, unsecured and
unsubordinated contractual obligations of The Royal Bank of Scotland N.V.
and RBS Holdings N.V.
|
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
These factors
interrelate in complex ways, and the effect of one factor on the market value of
your Securities may offset or enhance the effect of another factor.
Some or all of
these factors will influence the price that you will receive if you sell your
Securities prior to maturity in the secondary market, if any. If you
sell your Securities prior to maturity, the price at which you are able to sell
your Securities may be at a discount, which could be substantial, from the
principal amount. For example, there may be a discount on the
Securities if at the time of sale the level of the Underlying Index is at or
below the initial index level. Even if the level of the Underlying
Index is greater than the initial index level, there may be a discount on the
Securities based on the time remaining to the maturity of the
Securities. Thus, if
you sell your Securities before maturity, you may not receive back your entire
principal amount.
Some or all of
these factors will influence the return, if any, that you receive upon maturity
of the Securities. We cannot predict the future performance of the
Underlying Index based on its historical performance. The performance
of the Underlying Index over the term of the Securities, as well as the amounts
payable on the Securities, may bear little relation to the historical levels of
the Underlying Index set forth in this Pricing Supplement. Neither we, RBS Holdings N.V. or any
of our or its affiliates can guarantee that the level of the Underlying Index
will increase so that you may receive at maturity at least the principal amount
of the Securities.
As an investor in
the Securities, you assume the risk that as a result of the performance of the
Underlying Index you may not receive any return on your initial principal
investment in the Securities or that you may lose some or all of your initial
principal investment in the Securities.
The
Inclusion of the Cost of Hedging in the Issue Price Is Likely to Adversely
Affect Secondary Market Prices
Assuming no change
in market conditions or any other relevant factors, the price, if any, at which
the selling agents are willing to purchase Securities in secondary market
transactions will likely be lower than the issue price, since the issue price
included, and secondary market prices are likely to exclude, the profit
component included in the cost of hedging our obligations under the
Securities. In addition, any such prices may differ from values
determined by pricing models used by the selling agents, as a result of dealer
discounts, mark-ups or other transaction costs.
The
Payment, If Any, You Receive at Maturity Depends on the Final Index Value on the
Determination Date Only
We determine the
payment at maturity based on the difference between the Initial Index Value on
the Pricing Date and the Final Index Value on the Determination
Date. As a result the payment, if any, at maturity depends on the
level of the Underlying Index on the Determination Date regardless of whether
the level of the Underlying Index at the Maturity Date or at other times during
the term of the Securities, including dates near the Determination Date, was
higher than the Final Index Value. This difference could be
particularly large if there is a significant increase in the level of the
Underlying Index after the Determination Date, if there is a significant
decrease in the level of the Underlying Index around the time of the
Determination Date or if there is significant volatility in the level of the
Underlying Index during the term of the Securities (especially on dates near the
Determination Date). For example, since the Determination Date is
near the end of the term of the Securities, if the level of the Underlying Index
increases or remains relatively constant during the initial term of the
Securities and then decreases below the initial index level, then the final
index level may be significantly less than if it was calculated on an earlier
date. Under these circumstances, you may receive a lower payment at
maturity than you would have received if you had invested directly in the
components of the Underlying Index.
The
Payment You Receive at Maturity May Not Reflect the Performance of the
Underlying Index
If
on the Determination Date, any of the underlying futures contracts
comprising the Underlying Index closes up or down the limit on the
Relevant Exchange, the calculation agent will adjust the closing level of the
Underlying Index on such date to reflect the closing price of the relevant
futures contract on the first succeeding day on which the relevant futures
contract does not close up or down the limit on the Relevant
Exchange. If the calculation agent recalculates the closing level of
the Underlying Index in this manner, the payment that you receive at maturity or
upon early redemption will not precisely reflect the published performance of
the Underlying Index. See “Description of Securities — Final Index
Value.”
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Information
Regarding the Underlying Index
As an investor in
the Securities, you should make your own investigation into the Underlying
Index. Neither we, RBS Holdings N.V. or any of our or its affiliates
have any affiliation with the sponsor of the Underlying Index and are not
responsible for its public disclosure of information, whether contained in SEC
filings or otherwise.
Hedging
and Trading Activities by Us or Our Affiliates Could Affect Prices of Your
Securities
We and our
affiliates may carry out activities that minimize our risks related to the
Securities. In particular, on or prior to the date of this Pricing
Supplement, we, through our affiliates, may have hedged our anticipated exposure
in connection with the Securities by taking positions in the components (or
futures contracts on the components) that comprise the Underlying Index, options
or futures on the Underlying Index or in other instruments that we deemed
appropriate in connection with such hedging. Our trading activities,
however, could potentially alter the value of the Underlying Index and,
therefore, the value of the Securities.
We or our
affiliates are likely to modify our hedge position throughout the term of the
Securities by purchasing and selling the components (or options or futures
contracts on the components) that comprise the Underlying Index, options or
futures on the Underlying Index or other instruments that we deem
appropriate. We cannot give any assurance that our hedging or trading
activities will not affect the value of the Underlying Index. It is
also possible that we or one of more of our affiliates could receive substantial
returns from these hedging activities while the value of the Securities may
decline.
We or one or more
of our affiliates may also engage in trading the components (or options or
futures contracts on the components) that comprise the Underlying Index, or
options or futures on the Underlying Index on a regular basis as part of our or
their general broker-dealer activities and other businesses, for proprietary
accounts, for other accounts under management or to facilitate transactions for
customers, including through block transactions. Any of these
activities could adversely affect the level of the Underlying Index and,
therefore, the value of the Securities.
We or one or more
of our affiliates may also issue or underwrite other securities or financial or
derivative instruments with returns linked or related to changes in the level of
the Underlying Index or the components that comprise the Underlying
Index. By introducing competing products into the marketplace in this
manner, we or one or more of our affiliates could adversely affect the value of
the Securities.
There
Are Potential Conflicts of Interest between Security Holders and the Calculation
Agent
We will serve as
the calculation agent. We will, among other things, decide the amount
of the return paid out to you on the Securities at maturity. For a
fuller description of the calculation agent’s role, see “Description of
Securities — Calculation Agent.” For example, the calculation agent
may have to determine whether a market disruption event affecting the Underlying
Index has occurred or is continuing on a day when the calculation agent will
determine its level. This determination may, in turn, depend on the
calculation agent’s judgment whether the event has materially interfered with
our ability to unwind our hedge positions. In addition, the
calculation agent may have to make additional calculations if the Underlying
Index is discontinued, suspended, modified or otherwise
terminated. The calculation agent will exercise its judgment when
performing its functions. Since these determinations by the
calculation agent may affect the market value of the Securities, the calculation
agent may have a conflict of interest if it needs to make any such
decision.
Moreover, the issue
price of the Securities includes certain costs of hedging our obligations under
the Securities. Our affiliates through which we hedge our obligations
under the Securities expect to make a profit. Since hedging our
obligations entail risk and may be influenced by market forces beyond our
affiliates’ control, such hedging may result in a profit that is more or less
than initially projected.
Holdings
of the Securities by Our Affiliates and Future Sales
Certain of our
affiliates may purchase for investment a portion of the Securities that has not
been purchased by investors, which initially they intend to hold for investment
purposes. As a result, upon completion of this offering, our
affiliates may own up to 15% of the aggregate principal amount of the
Securities. Circumstances may occur in which our interests or those
of our affiliates could be in conflict with your interests. For
example, our affiliates may attempt to sell the Securities that they had been
holding for investment purposes at the same time that you attempt to sell your
Securities, which could depress the price, if any, at which you can sell your
Securities. Moreover, the liquidity of the
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
market for the
Securities, if any, could be substantially reduced as a result of our affiliates
holding the Securities. See “— The Securities Will Not Be Listed on
Any Securities Exchange; Secondary Trading May Be Limited.” In
addition, our affiliates could have substantial influence over any matter
subject to consent of the security holders.
The
U.S. Federal Income Tax Consequences of the Securities are Uncertain, and may be
Adverse to a Holder of the Securities.
The U.S. federal
income tax treatment of the Securities is uncertain and the IRS could assert
that the Securities should be taxed in a manner that is different than described
in this Pricing Supplement. As discussed further below, on December
7, 2007, the Internal Revenue Service issued a notice indicating that it and the
Treasury Department are actively considering whether, among other issues, you
should be required to accrue interest over the term of an instrument such as the
Securities even though you will not receive any payments with respect to the
Securities until maturity and whether all or part of the gain you may recognize
upon sale or maturity of an instrument such as the Securities could be treated
as ordinary income. The outcome of this process is uncertain and
could apply on a retroactive basis. In addition, one member of the
House of Representatives introduced a bill that, if enacted, may require holders
of Securities purchased after the bill is enacted to accrue interest income over
the term of the Securities despite the fact that there will be no interest
payments over the term of the Securities. It is not possible to
predict whether this bill or a similar bill will be enacted in the future and
whether any such bill would affect the tax treatment of your
Securities. For a discussion of the U.S. federal income tax treatment
applicable to your Securities as well as potential alternative characterizations
for your Securities, see the discussion under “U.S. Federal Income Tax Summary”
below.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
HYPOTHETICAL
RETURN ANALYSIS OF THE SECURITIES AT MATURITY
The following table
illustrates potential return scenarios on a Security that is held to maturity by
an investor who purchases the Securities on the settlement date. These examples
are based on various assumptions, including hypothetical levels of the
Underlying Index, set forth below. We cannot, however, predict the level
of the Underlying Index on the Determination Date or at any other time in the
future. Therefore, the table set forth below is for illustrative
purposes only and the returns set forth may not be the actual returns applicable
to a holder of the Securities. Moreover, the level of the Underlying
Index may not increase or decrease over the term of the Securities in accordance
with any of the hypothetical examples below, and the size and frequency of any
fluctuations in the level of the Underlying Index over the term of the
Securities, which we refer to as the volatility of the Underlying Index, may be
significantly different than the volatility implied by any of these
examples.
Assumptions
Initial
Index Value:
|
4,867.05
|
Term
of the Securities:
|
1
year
|
Principal
Amount per Security:
|
$1,000
|
Initial
Index Value
|
Hypothetical
Final Index Value
|
Principal
Amount
of Securities
|
%
Change from the Hypothetical
Initial
Index Value to the Hypothetical Final Index Value
|
Hypothetical
Adjustment Factor
|
Hypothetical
Total
Return
|
($) (b)
(c)
|
(%)(d)
|
4,867.050
|
9,734.100
|
1,000
|
100%
|
0.99
|
$1,980.00
|
98.00%
|
4,867.050
|
9,247.395
|
1,000
|
90%
|
0.99
|
$1,881.00
|
88.10%
|
4,867.050
|
8,760.690
|
1,000
|
80%
|
0.99
|
$1,782.00
|
78.20%
|
4,867.050
|
8,273.985
|
1,000
|
70%
|
0.99
|
$1,683.00
|
68.30%
|
4,867.050
|
7,787.280
|
1,000
|
60%
|
0.99
|
$1,584.00
|
58.40%
|
4,867.050
|
7,300.575
|
1,000
|
50%
|
0.99
|
$1,485.00
|
48.50%
|
4,867.050
|
6,813.870
|
1,000
|
40%
|
0.99
|
$1,386.00
|
38.60%
|
4,867.050
|
6,327.165
|
1,000
|
30%
|
0.99
|
$1,287.00
|
28.70%
|
4,867.050
|
5,840.460
|
1,000
|
20%
|
0.99
|
$1,188.00
|
18.80%
|
4,867.050
|
5,353.755
|
1,000
|
10%
|
0.99
|
$1,089.00
|
8.90%
|
4,867.050
|
4,867.050
|
1,000
|
0%
|
0.99
|
$990.00
|
-1.00%
|
4,867.050
|
4,380.345
|
1,000
|
-10%
|
0.99
|
$891.00
|
-10.90%
|
4,867.050
|
3,893.640
|
1,000
|
-20%
|
0.99
|
$792.00
|
-20.80%
|
4,867.050
|
3,406.935
|
1,000
|
-30%
|
0.99
|
$693.00
|
-30.70%
|
4,867.050
|
2,920.230
|
1,000
|
-40%
|
0.99
|
$594.00
|
-40.60%
|
4,867.050
|
2,433.525
|
1,000
|
-50%
|
0.99
|
$495.00
|
-50.50%
|
4,867.050
|
1,946.820
|
1,000
|
-60%
|
0.99
|
$396.00
|
-60.40%
|
4,867.050
|
1,460.115
|
1,000
|
-70%
|
0.99
|
$297.00
|
-70.30%
|
4,867.050
|
973.410
|
1,000
|
-80%
|
0.99
|
$198.00
|
-80.20%
|
4,867.050
|
486.705
|
1,000
|
-90%
|
0.99
|
$99.00
|
-90.10%
|
4,867.050
|
0.000
|
1,000
|
-100%
|
0.99
|
$0.00
|
-100.00%
|
Please
see footnotes on the next page.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
(a)
|
![](p17a.jpg) |
where “Days” are
the number of calendar days from but not including the Pricing Date, to but not
including the Determination Date. Where the Pricing Date occurs on
June 23, 2010, if the Determination Date occurs on June 22, 2011, the Adjustment
Factor will be approximately 0.99 (assuming there are 363 calendar days in this
period).
(b)
|
At maturity
you will receive, for each $1,000 principal amount of Securities, a cash
payment calculated as follows:
|
where,
|
•
|
the Initial
Index Value will equal the closing level of the Underlying Index on the
Pricing Date;
|
|
•
|
the Final
Index Value will equal the closing level of the Underlying Index on the
Determination Date; and
|
|
•
|
the
Adjustment Factor will equal approximately 0.99, as calculated per
footnote (a) above.
|
(c)
|
The
hypothetical total return
presented is exclusive of any tax consequences of owning the Securities.
You should consult your tax advisor regarding whether owning the
Securities is appropriate for your tax situation. See the sections titled
“Risk Factors” and “United States Federal Income Taxation” in this Pricing
Supplement.
|
(d)
|
Represents
the hypothetical
percentage total return on each
Security.
|
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Historical
Data on the Underlying Index
The following graph
sets forth the month-end closing values of the Underlying Index for each month
from July 1990 through June 2010. The Underlying Index was launched in
June 2009, and accordingly, there is no actual historical data on the Underlying
Index prior to that time. The following graph sets forth the hypothetical
monthly historical performance of the Underlying Index in the period from July
1990 to June 2009 and the actual monthly historical performance of the
Underlying Index in the period from June 2009 through June 23, 2010. The
hypothetical historical information has been prepared based on certain
assumptions, including the pro-forma composition of the Underlying Index, and
has otherwise been produced according to the current Underlying Index
methodology described in the accompanying Underlying Supplement No.TVI-1. An
index committee, a committee that formulates and enacts all assessments and
decisions regarding the calculation, composition and management of the
Underlying Index, has significant discretion over the composition and
calculation of the Underlying Index methodology, which is subject to change at
any time. There can therefore be no assurance that the hypothetical
historical information accurately reflects the performance of the Underlying
Index had the Underlying Index been actually published and calculated during the
relevant period.
This historical
data on the Underlying Index is not necessarily indicative of the future
performance of the Underlying Index. Any historical upward or
downward trend in the value of the Underlying Index during any period set forth
below is not an indication that the Underlying Index is more or less likely to
increase or decrease at any time during the term of the
Securities. It is not possible to predict the level of the Underlying
Index at any time during the term of the Securities based on the historical
levels of the Underlying Index.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
DESCRIPTION
OF SECURITIES
Capitalized terms
not defined herein have the meanings given to such terms in the accompanying
Prospectus Supplement. The term “Security” refers to each $1,000
principal amount of our Securities due June 28, 2011 Linked to the Trader Vic
IndexTM Excess
Return, which are fully and unconditionally guaranteed by RBS Holdings
N.V.
Principal
Amount:
|
$350,000
|
|
|
Settlement
Date
|
June 28,
2010
|
|
|
Issue
Price
|
100%
|
|
|
Maturity
Date
|
June 28,
2011; provided that if such day is not a Business Day, then the Maturity
Date will be the next following business day.
|
|
|
Business
Day
|
Means an
“Index Business Day” as defined in the Underlying Supplement TVI-1 dated
April 30, 2010.
|
|
|
Specified
Currency
|
U.S.
Dollars
|
|
|
CUSIP
|
78009KKA9
|
|
|
Denominations
|
The
Securities may be purchased in denominations of $1,000, which we refer to
as the face amount, and integral multiples thereof.
|
|
|
Form of
Securities
|
The
Securities will be represented by a single registered global security,
deposited with the Depository Trust Company.
|
|
|
Guarantee
|
The payment
obligations of The Royal Bank of Scotland N.V. under the Securities, when
and as they shall become due and payable, whether at maturity or upon
acceleration, are fully and unconditionally guaranteed by RBS Holdings
N.V.
|
|
|
Interest
Rate
|
None. The
Securities do not pay interest.
|
|
|
Payment at
Maturity
|
The payment
at maturity for each Security is based on the performance of the
Underlying Index. The cash payment at maturity is calculated as
follows:
Any payment
at maturity is subject to the creditworthiness of The Royal Bank of
Scotland N.V. and RBS Holdings N.V., as guarantor.
|
|
|
Adjustment
Factor
|
, where “Days” are the number of calendar days from but not
including the Pricing Date, to but not including the Determination
Date.
|
|
|
Initial Index
Value
|
4,867.05, the
Closing Level of the Underlying Index on the Pricing Date as calculated by
the Calculation Agent and published on the HP screen on
Bloomberg.
|
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Final Index
Value
|
The closing
level of the Underlying Index on the Determination Date as calculated by
the Calculation Agent and published on the HP screen on Bloomberg, subject
to the terms and provisions which we describe in “Description of
Securities — Discontinuance of the Underlying Index; Alteration of Method
of Calculation.”
If on the
Determination Date any of the underlying futures contracts comprising the
Underlying Index closes up or down the applicable limit on the Relevant
Exchange, the calculation agent will adjust the closing level of the
Underlying Index on such date to reflect the closing price of the relevant
futures contract on the first succeeding day on which the relevant futures
contract does not close up or down the limit on the Relevant
Exchange. However, if no such day occurs within three Business
Days, the calculation agent will use the closing price of each relevant
contract on the third scheduled Business Day prior to the originally
scheduled Determination Date.
|
|
|
Closing
Level
|
The level of
the Underlying Index at 9:00 p.m., New York City time on any Business Day
when the Closing Level must be determined, as published on the HP screen
on Bloomberg on the next succeeding Business Day.
|
|
|
Determination
Date
|
June 22,
2011.
If the
scheduled Determination Date is not a Business Day, or if a Market
Disruption Event has occurred on such Business Day, the Determination Date
will be postponed to the last date on which the settlement price of a
Disrupted Contract (as defined below) is determined, as described below,
and the calculation agent will calculate the closing level for that
Determination Date utilizing, for those futures contracts included in the
Underlying Index that do not suffer a Market Disruption Event or a
non-Business Day on the originally scheduled Determination Date, the final
settlement prices, and for those futures contracts included in the
Underlying Index that experience a Market Disruption Event or a
non-Business Day on the originally scheduled Determination Date (the
“Disrupted Contracts”), the settlement prices on the first Business Day on
which a Market Disruption Event is not existing with respect to such
futures contracts. If, however, a Market Disruption Event with
respect to one or more Disrupted Contracts included in the Underlying
Index is continuing on the third Business Day following the originally
scheduled Determination Date, the calculation agent will determine, on
such third Business Day, in its discretion, an estimated fair value price
for the Disrupted Contracts after considering any available electronic or
after hours trading prices, related over-the-counter or other non-exchange
based prices, implied prices that may be derived from other exchange
traded instruments, and estimated fair values based on fundamental market
information.
See “Risk
Factors” for a discussion of certain conflicts of interest which may arise
with respect to the calculation agent.
|
|
|
Relevant
Exchange
|
With respect
to a futures contract included in the Underlying Index, the Relevant
Exchange means the primary market or exchange on which that contract
trades.
|
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Trustee
|
Wilmington
Trust Company
|
|
|
Securities
Administrator
|
Citibank,
N.A.
|
|
|
Market
Disruption Event
|
Market
Disruption Event has the meaning set forth in Underlying Supplement No.
TVI-1.
|
|
|
Discontinuance
of the Underlying Index; Alteration of Method of
Calculation
|
If Enhanced
Alpha Management, L.P. or any successor sponsor of the Underlying Index
(the “Index Sponsor”) discontinues publication of the Underlying Index and
the Index Sponsor or another entity publishes a successor or substitute
index that the calculation agent determines, in its sole discretion, to be
comparable to the discontinued Underlying Index (such index being referred
to herein as a “Successor Index”), then the Final Index Value will be
determined by reference to the value of such Successor Index at the close
of trading on the applicable Determination Date.
Upon any
selection by the calculation agent of a Successor Index, the calculation
agent will cause written notice thereof to be furnished to us, the
Trustee, the Securities Administrator and the Depository Trust Company as
the holder of the Securities within three business days of such
selection.
If the Index
Sponsor discontinues publication of the Underlying Index prior to, and
such discontinuance is continuing on, the Determination Date, and the
calculation agent determines that no Successor Index is available with
respect to the Underlying Index at such time, then the calculation agent
will determine the Final Index Value. Such Final Index Value
will be computed by the calculation agent in accordance with the formula
for and method of calculating the Underlying Index last in effect prior to
such discontinuance, using the closing level (or, if trading in the
relevant futures contracts has been materially suspended or materially
limited, its good faith estimate of the closing price that would have
prevailed but for such suspension or limitation) on the Determination Date
of each component most recently comprising the Underlying
Index. Notwithstanding these alternative arrangements,
discontinuance of the publication of the Underlying Index may adversely
affect the value of the Securities.
|
|
|
|
If at any
time the method of calculating the Underlying Index or a Successor Index,
or the level thereof, is changed in a material respect, or if the
Underlying Index or a Successor Index is in any other way modified so that
such index does not, in the opinion of the calculation agent, fairly
represent the value of the Underlying Index or such Successor Index had
such changes or modifications not been made, then the calculation agent
will, at the close of business in New York City on the Determination Date,
make such calculations and adjustments to the terms of the Securities as,
in the good faith judgment of the calculation agent, may be necessary in
order to arrive at a level of an index comparable to the Underlying Index
or Successor Index, as the case may be, as if such changes or
modifications had not been made, and on the applicable Determination Date
make each relevant calculation with reference to the Underlying Index or
Successor Index, as adjusted. Accordingly, if the method of
calculating the Underlying Index or a Successor Index is modified so that
the level of such index is a fraction of what it would have been if it had
not been modified (e.g., due to a split in the index), then the
calculation agent will adjust such
|
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
|
index in
order to arrive at a level of the Underlying Index or Successor Index as
if it had not been modified (e.g., as if such split had not
occurred).
|
Alternate
Calculation in case
of an Event
of Default
|
In case an
Event of Default with respect to the Securities shall have occurred and be
continuing, the amount declared due and payable for each Security upon any
acceleration of the Securities shall be determined by The Royal Bank of
Scotland N.V., as calculation agent, as though the Final Index Value for
the Underlying Index as of the applicable Determination Date were the
Final Index Value on the date of acceleration, and the Adjustment Factor
shall be determined based upon the number of calendar days between the
Pricing Date and that date of acceleration. See “Description of
Debt Securities — Events of Default” in the Prospectus.
If the
maturity of the Securities is accelerated because of an Event of Default
as described above, we shall, or shall cause the calculation agent to,
provide written notice to the Trustee at its New York office, and to the
Securities Administrator at its Delaware office, on which notice the
Trustee and the Securities Administrator may conclusively rely, and to DTC
of the aggregate cash amount due with respect to the Securities, if any,
as promptly as possible and in no event later than two business days after
the date of acceleration.
|
|
|
Calculation
Agent
|
The Royal
Bank of Scotland N.V. All determinations made by the
calculation agent will be at the sole discretion of the calculation agent
and will, in the absence of manifest error, be conclusive for all purposes
and binding on you and on us.
|
|
|
Additional
Amounts
|
Subject to
certain exceptions and limitations described in “Description of Debt
Securities — Payment of Additional Amounts” in the accompanying
Prospectus, we will pay such additional amounts to holders of the
Securities as may be necessary in order that the net payment of any amount
payable on the Securities, after withholding for or on account of any
present or future tax, assessment or governmental charge imposed upon or
as a result of such payment by The Netherlands (or any political
subdivision or taxing authority thereof or therein) or the jurisdiction of
residence or incorporation of any successor corporation (other than the
United States), will not be less than the amount provided for in the
Securities to be then due and payable.
|
|
|
Book Entry
Note or Certificated Note
|
Book
Entry
|
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
U.S.
FEDERAL INCOME TAX SUMMARY
The following
summary of the material U.S. federal income tax considerations of the
acquisition, ownership, and disposition of the Securities is not exhaustive of
all possible tax considerations. This summary is based upon the Internal Revenue
Code of 1986, as amended (“Code”), regulations promulgated under the Code by the
U.S. Treasury Department (“Treasury”) (including proposed and temporary
regulations), rulings, current administrative interpretations and official
pronouncements of the IRS, and judicial decisions, all as currently in effect
and all of which are subject to differing interpretations or to change, possibly
with retroactive effect. No assurance can be given that the IRS would not
assert, or that a court would not sustain, a position contrary to any of the tax
consequences described below.
This summary is for
general information only, and does not purport to discuss all aspects of U.S.
federal income taxation that may be important to a particular holder in light of
its investment or tax circumstances or to holders subject to special tax rules,
such as partnerships, subchapter S corporations, or other pass-through entities,
banks, financial institutions, tax-exempt entities, insurance companies,
regulated investment companies, real estate investment trusts, trusts and
estates, dealers in securities or currencies, traders in securities that have
elected to use the mark-to-market method of accounting for their securities,
persons holding the Securities as part of an integrated investment, including a
“straddle,” “hedge,” “constructive sale,” or “conversion transaction,” persons
(other than Non-U.S. Holders, as defined below) whose functional currency for
tax purposes is not the U.S. dollar, persons holding the Securities in a
tax-deferred or tax-advantaged account, and persons subject to the alternative
minimum tax provisions of the Code. This summary does not include any
description of the tax laws of any state or local governments, or of any foreign
government, that may be applicable to a particular holder.
This summary is
directed solely to holders that, except as otherwise specifically noted, will
hold the Securities as capital assets within the meaning of Section 1221 of the
Code, which generally means property held for investment.
You
should consult your own tax advisor concerning the U.S. federal income tax
consequences to you of acquiring, owning, and disposing of the Securities, as
well as any tax consequences arising under the laws of any state, local,
foreign, or other tax jurisdiction and the possible effects of changes in U.S.
federal or other tax laws.
As used in this
Pricing Supplement, the term “U.S. Holder” means a beneficial owner of a
Security that is for U.S. federal income tax purposes:
|
·
|
a citizen or
resident of the U.S.;
|
|
·
|
a corporation
(including an entity treated as a corporation for U.S. federal income tax
purposes) created or organized in or under the laws of the U.S. or of any
state of the U.S. or the District of
Columbia;
|
|
·
|
an estate the
income of which is subject to U.S. federal income taxation regardless of
its source; or
|
|
·
|
any trust if
a court within the U.S. is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the
trust.
|
Notwithstanding the
preceding paragraph, to the extent provided in Treasury regulations, some trusts
in existence on August 20, 1996, and treated as United States persons prior to
that date, that elect to continue to be treated as United States persons also
are U.S. Holders. As used in this Pricing Supplement, the term “Non-U.S. Holder”
means a holder that is not a U.S. Holder.
If an entity or
arrangement treated as a partnership for U.S. federal income tax purposes holds
a Security, the U.S. federal income tax treatment of a partner generally will
depend upon the status of the partner and the activities of the partnership and,
accordingly, this summary does not apply to partnerships. A partner of a
partnership holding a Security should consult its own tax advisor regarding the
U.S. federal income tax consequences to the partner of the acquisition,
ownership, and disposition by the partnership of the Security.
General
Although there is
no statutory, judicial, or administrative authority directly addressing the
characterization of the Securities, we intend to treat the Securities for all
tax purposes as single financial contracts with respect to the Underlying Index
that requires the investor to pay us at inception an amount equal to the
purchase price of the Securities and that
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
entitles the
investor to receive at maturity an amount in cash based upon the performance of
the Underlying Index. Under the terms of the Securities, we and every investor
in the Securities agree, in the absence of an administrative determination or
judicial ruling to the contrary, to treat the Securities as described in the
preceding sentence. This discussion assumes that the Securities constitute
single financial contracts with respect to the Underlying Index for U.S. federal
income tax purposes. If the Securities did not constitute single financial
contracts, the tax consequences described below would be materially
different.
This
characterization of the Securities is not binding on the IRS or the courts. No
statutory, judicial, or administrative authority directly addresses the
characterization of the Securities or any similar instruments for U.S. federal
income tax purposes, and no ruling is being requested from the IRS with respect
to their proper characterization and treatment. Due to the absence of
authorities on point, significant aspects of the U.S. federal income tax
consequences of an investment in the Securities are not certain, and no
assurance can be given that the IRS or any court will agree with the
characterization and tax treatment described in this Pricing Supplement.
Accordingly, you are urged to consult your tax advisor regarding all aspects of
the U.S. federal income tax consequences of an investment in the Securities,
including possible alternative characterizations.
The IRS has
released Notice 2008-2 (“Notice”) seeking comments from the public on the
taxation of financial instruments currently taxed as “prepaid forward
contracts.” This Notice addresses instruments such as the Securities. According
to the Notice, the IRS and Treasury are considering whether a holder of an
instrument such as the Securities should be required to accrue ordinary income
on a current basis, regardless of whether any payments are made prior to
maturity. It is not possible to determine what guidance the IRS and Treasury
will ultimately issue, if any. Any such future guidance may affect the amount,
timing and character of income, gain, or loss in respect of the Securities,
possibly with retroactive effect.
The IRS and
Treasury are also considering additional issues, including whether additional
gain or loss from such instruments should be treated as ordinary or capital,
whether foreign holders of such instruments should be subject to withholding tax
on any deemed income accruals, whether Section 1260 of the Code, concerning
certain “constructive ownership transactions,” generally applies or should
generally apply to such instruments, and whether any of these determinations
depend on the nature of the underlying asset.
In addition,
legislation has been introduced in the U.S. Congress which, if enacted, would
also impact the taxation of the Securities. Under the proposed legislation, a
U.S. Holder that acquires an instrument such as the Securities after the date of
enactment of the legislation would be required to include income in respect of
the Securities on a current basis. It is not possible to predict whether the
legislation will be enacted in its proposed form or whether any other
legislative action may be taken in the future that may adversely affect the
taxation of instruments such as the Securities. Further, it is possible that any
such legislation, if enacted, may apply on a retroactive basis.
We urge you to
consult your own tax advisors concerning the impact and the significance of the
above considerations. We intend to continue treating the Securities for U.S.
federal income tax purposes in the manner described in this Pricing Supplement
unless and until such time as we determine, or the IRS or Treasury determines,
that some other treatment is more appropriate.
Unless otherwise
stated, the following discussion is based on the characterization described
above. The discussion in this section assumes that there is a significant
possibility of a significant loss of principal on an investment in the
Securities.
U.S.
Holders — Income Tax Considerations
Tax
Basis
A U.S. Holder’s tax
basis in the Securities will equal the amount paid by that holder to acquire
them.
Settlement
at Maturity or Sale or Exchange Prior to Maturity
Upon receipt of a
cash payment at maturity or upon a sale or exchange of the Securities prior to
maturity, a U.S. Holder generally will recognize capital gain or loss equal to
the difference between the amount realized and the U.S. Holder’s basis in the
Securities. This capital gain or loss generally will be long-term capital gain
or loss if the U.S. Holder held the Securities for more than one year. The
deductibility of capital losses is subject to limitations.
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
Possible
Alternative Tax Treatments of an Investment in the Securities
Due to the absence
of authorities that directly address the proper tax treatment of the Securities,
prospective investors are urged to consult their tax advisors regarding all
possible alternative tax treatments of an investment in the Securities. In
particular, the IRS could seek to subject the Securities to the Treasury
regulations governing contingent payment debt instruments (the “Contingent
Payment Regulations”). If the IRS were successful in that regard, the timing and
character of income on the Securities would be affected significantly. Among
other things, a U.S. Holder would be required to accrue original issue discount
every year at a “comparable yield” determined at the time of issuance. In
addition, any gain realized by a U.S. Holder at maturity, or upon a sale or
other disposition of the Securities generally would be treated as ordinary
income, and any loss realized at maturity would be treated as ordinary loss to
the extent of the U.S. Holder’s prior accruals of original issue discount, and
as capital loss thereafter.
Even if the
Contingent Payment Regulations do not apply to the Securities, other alternative
U.S. federal income tax characterizations of the Securities are possible which,
if applied, also could affect the timing and the character of a U.S. Holder’s
income or loss. It is possible, for example, that the Securities could be
treated as a unit consisting of a loan and a forward contract, in which case a
U.S. Holder would be required to accrue interest income or original issue
discount on a current basis. In addition, the IRS could assert that a U.S.
Holder should accrue income equal to the interest rate component of the
Underlying Index on a current basis. Further, it is also possible
that the IRS could assert that a U.S. Holder owns a proportionate interest in
the components of the Underlying Index directly in which case Section 1256 of
the Code could apply. Under Section 1256 of the Code, gain or loss
recognized by a U.S. Holder would be treated as 60% long-term and 40% short-term
gain or loss and a U.S. Holder would be required to mark the components to
market (thereby recognizing gain or loss as if the components had been sold for
their fair market value) at the end of each taxable year.
Proposed Treasury
regulations require the accrual of income on a current basis for contingent
payments made under certain notional principal contracts. The preamble to the
regulations states that the “wait and see” method of accounting does not
properly reflect the economic accrual of income on those contracts, and requires
current accrual of income for some contracts already in existence. While the
proposed regulations do not apply to prepaid forward contracts, the preamble to
the proposed regulations expresses the view that similar timing issues exist in
the case of prepaid forward contracts. If the IRS or Treasury publishes future
guidance requiring current economic accrual for contingent payments on prepaid
forward contracts, it is possible that you could be required to accrue income
over the term of the Securities.
Non-U.S.
Holders — Income Tax Considerations
U.S.
Federal Income and Withholding Tax
A Non-U.S. Holder
will not be subject to U.S. federal income or withholding tax for amounts paid
in respect of the Securities, provided that the Non-U.S. Holder complies with
applicable certification requirements and that the payment is not effectively
connected with the conduct by the Non-U.S. Holder of a U.S. trade or business.
Notwithstanding the foregoing, gain from the sale or exchange of the Securities
or their settlement at maturity may be subject to U.S. federal income tax if
that Non-U.S. Holder is a non-resident alien individual and is present in the
U.S. for 183 days or more during the taxable year of the sale, exchange, or
retirement and certain other conditions are satisfied.
If a Non-U.S.
Holder of the Securities is engaged in the conduct of a trade or business within
the U.S. and if gain realized on the sale, exchange, or settlement of the
Securities, is effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a permanent
establishment maintained by the Non-U.S. Holder in the U.S.), the Non-U.S.
Holder, although exempt from U.S. federal withholding tax, generally will be
subject to U.S. federal income tax on such gain on a net income basis in the
same manner as if it were a U.S. Holder. Such Non-U.S. Holders should read the
material under the heading “—U.S. Holders — Income Tax Considerations,” for a
description of the U.S. federal income tax consequences of acquiring, owning,
and disposing of the Securities. In addition, if such Non-U.S. Holder is a
foreign corporation, it may also be subject to a branch profits tax equal to 30%
(or such lower rate provided by any applicable tax treaty) of a portion of its
earnings and profits for the taxable year that are effectively connected with
its conduct of a trade or business in the U.S., subject to certain
adjustments.
As discussed above,
alternative characterizations of the Securities for U.S. federal income tax
purposes are possible. Should an alternative characterization, by reason of
change or clarification of the law, by regulation or otherwise, cause payments
as to the Securities to become subject to withholding tax, we will withhold tax
at the applicable statutory rate. As discussed above, the IRS has indicated in
the Notice that it is considering whether income in respect of instruments
|
THE ROYAL BANK OF SCOTLAND
N.V.
|
Securities
Linked to the Trader Vic IndexTM
Excess Return
|
|
such as the
Securities should be subject to withholding tax. Prospective Non-U.S. Holders of
the Securities should consult their own tax advisors in this
regard.
Backup
Withholding and Information Reporting
In general, backup
withholding may apply in respect of the amounts paid to a U.S. Holder, unless
such U.S. Holder provides proof of an applicable exemption or a correct taxpayer
identification number, or otherwise complies with applicable requirements of the
backup withholding rules. In addition, information returns will be filed with
the IRS in connection with payments on the Securities as well as in connection
with the proceeds from a sale, exchange, or other disposition of the Securities,
unless the U.S. Holder provides proof of an applicable exemption from the
information reporting rules.
In general, backup
withholding may apply in respect of the amounts paid to a Non-U.S. Holder,
unless such Non-U.S. Holder provides the required certification that it is not a
United States person, or the Non-U.S. Holder otherwise establishes an exemption,
provided that the payor or withholding agent does not have actual knowledge that
the holder is a United States person, or that the conditions of any exemption
are not satisfied. In addition, information returns may be filed with the IRS in
connection with payments on the Securities as well as in connection with the
proceeds from a sale, exchange, or other disposition of the
Securities.
Any amounts
withheld under the backup withholding rules will be allowed as a refund or a
credit against a holder’s U.S. federal income tax liability provided the
required information is furnished to the IRS.
Individual holders
that own “specified foreign financial assets” may be required to include certain
information with respect to such assets with their U.S. federal income tax
return. Holders are urged to consult their own tax advisors regarding such
requirements with respect to the Securities.
Reportable
Transactions
Applicable Treasury
regulations require taxpayers that participate in “reportable transactions” to
disclose their participation to the IRS by attaching Form 8886 to their U.S.
federal tax returns and to retain a copy of all documents and records related to
the transaction. In addition, “material advisors” with respect to such a
transaction may be required to file returns and maintain records, including
lists identifying investors in the transactions, and to furnish those records to
the IRS upon demand. A transaction may be a “reportable transaction” based on
any of several criteria, one or more of which may be present with respect to an
investment in the Securities. Whether an investment in the Securities
constitutes a “reportable transaction” for any investor depends on the
investor’s particular circumstances. The Treasury regulations provide that, in
addition to certain other transactions, a “loss transaction” constitutes a
“reportable transaction.” A “loss transaction” is any transaction resulting in
the taxpayer claiming a loss under Section 165 of the Code, in an amount equal
to or in excess of certain threshold amounts, subject to certain exceptions.
Investors should consult their own tax advisors concerning any possible
disclosure obligation they may have with respect to their investment in the
securities that we are offering and should be aware that, should any “material
advisor” determine that the return filing or investor list maintenance
requirements apply to such a transaction, they would be required to comply with
these requirements.
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THE ROYAL BANK OF SCOTLAND
N.V.
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Securities
Linked to the Trader Vic IndexTM
Excess Return
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USE
OF PROCEEDS
The net proceeds we
receive from the sale of the Securities will be used for general corporate
purposes and, in part, by us or one or more of our affiliates in connection with
hedging our obligations under the Securities. The issue price of the
Securities includes any selling agents’ commissions (as shown on the cover page
of this Pricing Supplement) paid with respect to the Securities and the cost of
hedging our obligations under the Securities. The cost of hedging
includes the projected profit that our affiliates expect to realize in
consideration for assuming the risks inherent in managing the hedging
transactions. Since hedging our obligations entails risk and may be
influenced by market forces beyond our or our affiliates’ control, such hedging
may result in a profit that is more or less than initially projected, or could
result in a loss. See also “Risk Factors — The Inclusion of
Commissions and Cost of Hedging in the Issue Price Is Likely to Adversely Affect
Secondary Market Prices” and “Plan of Distribution (Conflicts of Interest)” in
this Pricing Supplement and “Use of Proceeds” in the accompanying
Prospectus.
PLAN
OF DISTRIBUTION (CONFLICTS OF INTEREST)
We have appointed
RBSSI as agent for any offering of the Securities. RBSSI has agreed
to use reasonable efforts to solicit offers to purchase the
Securities. You can find a general description of the commission
rates payable to the agents under “Plan of Distribution” in the accompanying
Prospectus Supplement.
RBSSI is an
affiliate of ours and RBS Holdings N.V. RBSSI will conduct each
offering of Securities in compliance with the requirements of NASD Rule 2720 of
the Financial Industry Regulatory Authority, Inc., which is commonly referred to
as FINRA, regarding a FINRA member firm’s distribution of securities of an
affiliate. Following the initial distribution of any of these
Securities, RBSSI may offer and sell those Securities in the course of its
business as a broker-dealer. RBSSI may act as principal or agent in
these transactions and will make any sales at varying prices related to
prevailing market prices at the time of sale or otherwise. RBSSI may
use this Pricing Supplement and the accompanying Underlying Supplement,
Prospectus Supplement and Prospectus in connection with any of these
transactions. RBSSI is not obligated to make a market in any of these
Securities and may discontinue any market-making activities at any time without
notice.
RBSSI or an
affiliate of RBSSI may enter into one or more hedging transactions with us in
connection with this offering of Securities. See “Use of Proceeds”
above.
To the extent that
the total aggregate face amount of the Securities being offered by this Pricing
Supplement is not purchased by investors in that offering, one or more of our
affiliates may agree to purchase a portion of the unsold Securities, and to hold
such Securities for investment purposes. See “Risk Factors — Holdings
of the Securities by Our Affiliates and Future Sales.”
CERTAIN
EMPLOYEE RETIREMENT INCOME SECURITY ACT CONSIDERATIONS
Each purchaser of
the Securities and each fiduciary who causes any entity to purchase or hold a
Security shall be deemed to have represented and warranted, on each day such
purchaser holds a Security, that either (i) it is neither a Plan nor a Non-ERISA
Arrangement and it is not purchasing or holding Securities on behalf of or with
the assets of a Plan or a Non-ERISA Arrangement; or (ii) its purchase, holding
and subsequent disposition of such Securities shall not constitute or result in
a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of
the Code or any provision of Similar Law.
For additional ERISA considerations,
see "Benefit Plan Investor Consideration" in the accompanying
Prospectus.