CPS

Set out below is a summary of the key terms of CPS. This information should be read in conjunction with the Terms of Issue.

Issuer	St.George Bank Limited (ABN 92 055 513 070).
Security	Converting Preference Shares (CPS). CPS are non-cumulative unsecured converting preference shares in the capital of St.George.
Number	Three million two hundred and fifty thousand CPS to raise $325 million.
Face Value	$100 per CPS.
Term	CPS are preference shares, which means they are perpetual. However, CPS are designed to mandatorily convert into Ordinary Shares on 20 August 2012 provided that both of the Mandatory Conversion Conditions are satisfied.
Floating rate franked	Dividends are preferred, non-cumulative, based on a floating rate and expected to be fully franked. Dividends are scheduled to be paid quarterly in arrears – subject to the Payment Tests.
Dividend Rate	The Dividend Rate for each quarterly Dividend will be calculated using the following formula: Dividend Rate = (Bank Bill Swap Rate + Margin) x (1- Tax Rate) where: Bank Bill Swap Rate is the Bank Bill Swap Rate applying on the first Business Day of the relevant Dividend Period; Margin is 1.20% per annum – the Margin was determined under the Bookbuild; and Tax Rate is the Australian corporate tax rate applicable to St.George’s franking account as at the Allotment Date – 30% (expressed as a decimal in the formula, 0.30).
Dividend Payment Dates	In each year that CPS are on issue, Dividends are scheduled to be paid in arrears on 20 February, 20 May, 20 August and 20 November. The first Dividend Payment Date is 20 February 2007. The last Dividend Payment Date is the date on which CPS are Exchanged. If any of these dates are not Business Days, then payment will be made on the next Business Day.
Franking	St.George expects Dividends to be fully franked. If a Dividend is unfranked or partially franked, then the Dividend will be increased to fully compensate for the unfranked component. If the Australian corporate tax rate that applies to St.George’s franking account differs from the Tax Rate on a Dividend Payment Date, then the Dividend will be adjusted downwards or upwards accordingly.
Dividend Payment Tests	For a Dividend to be paid, the Payment Tests must be satisfied. They can be summarised as: the Directors declaring a Dividend to be payable; St.George having sufficient profits available to pay the Dividend; St.George being able to pay the Dividend without St.George or the Group (on a Level 2 basis) breaching APRA’s capital adequacy guidelines; the amount of the Dividend not exceeding St.George’s Distributable Profits; and in the case of an Optional Dividend, APRA giving its prior written approval.
Dividend stopper if Dividends are not paid	If 20 Business Days after a Dividend Payment Date St.George has not declared a Dividend or paid a declared Dividend in full, then a dividend stopper applies. This means that St.George must get the approval of a special resolution of Holders before it can: pay any dividend or distribution on any Equal Ranking Capital Securities (including SPS, SAINTS and DCS) or on any Junior Ranking Capital Securities (including Ordinary Shares); or make any return of capital on any Junior Ranking Capital Securities. However, St.George can do these things without Holder approval if (among other things) St.George first either pays 12 months Dividends in full or pays any unpaid Dividends from the last 12 months (an Optional Dividend).
Mandatory Conversion	St.George must convert all CPS on issue at the Mandatory Conversion Date into Ordinary Shares. Holders will receive $101.01 worth (based on the volume weighted average price (VWAP) during the 20 Business Days before Mandatory Conversion) of Ordinary Shares per CPS on Mandatory Conversion.
Mandatory Conversion Date	The Mandatory Conversion Date will be 20 August 2012 provided that both of the Mandatory Conversion Conditions are satisfied.
Mandatory Conversion Date may be later	If either of the Mandatory Conversion Conditions are not satisfied on 20 August 2012, then the Mandatory Conversion Date will be the next Dividend Payment Date on which they are both satisfied.
Mandatory Conversion Conditions	The two Mandatory Conversion Conditions relate to the Ordinary Share price at two different times. The dates and conditions are: on the 25th Business Day before a possible Mandatory Conversion Date the VWAP of Ordinary Shares (adjusted for the Conversion Discount) must be at least $19.61 (60% of the Issue Share Price); and during the 20 Business Days before a possible Mandatory Conversion Date the VWAP of Ordinary Shares (adjusted for the Conversion Discount) must be at least $16.35 (50% of the Issue Share Price). The Mandatory Conversion Conditions provide protection to Holders from receiving less than $101.01 worth of Ordinary Shares per CPS on Mandatory Conversion.¹ For those calculations, the Issue Share Price is $32.69 (the VWAP of Ordinary Shares during the 20 Business Days immediately preceding, but not including, the Allotment Date).
Impact of Mandatory Conversion Conditions	The Maximum Conversion Number will never apply to limit the number of Ordinary Shares Holders receive on Mandatory Conversion. If the Conversion Number is greater than the Maximum Conversion Number on a potential Mandatory Conversion Date, then the Mandatory Conversion Conditions will prevent Mandatory Conversion occurring.
Exchange by St.George	St.George may choose Exchange of all (but not some only) of CPS on issue after a Tax Event or a Regulatory Event. St.George must choose Exchange of all (but not some only) of CPS on issue after an Acquisition Event. In either case, St.George may choose (subject to APRA giving its approval) to: convert each CPS into a number of Ordinary Shares equal to the Conversion Number; redeem, buy back or cancel CPS for the Face Value of $100 each; or undertake a combination of the above. If a Tax Event, Regulatory Event or Acquisition Event occurs and conversion is chosen by St.George, then the Maximum Conversion Number can act as a limit on the number of Ordinary Shares a Holder can receive on conversion. However, St.George must not choose conversion as the method of Exchange if the VWAP of Ordinary Shares on the second Business Day before the proposed date of dispatch of the Exchange Notice (adjusted for the Conversion Discount) is less than $19.61 (60% of the Issue Share Price).
Exchange by Holders	Holders have no right to request Exchange.
Conversion Number	If St.George does convert CPS under Mandatory Conversion or in the event of a Tax Event, Regulatory Event of Acquisition Event, then the Conversion Number that determines the rate at which each CPS will convert into Ordinary Shares will be calculated by dividing: the Face Value of $100 per CPS; by the VWAP of Ordinary Shares during the 20 Business Days immediately preceding, but not including, the Exchange Date – with that VWAP reduced by the 1.0% Conversion Discount.
Maximum Conversion Number	The Maximum Conversion Number has been calculated as: Face Value ($100) 50% x Issue Share Price Since the Issue Share Price is $32.69, the Maximum Conversion Number is 6.1181 Ordinary Shares.
Ranking on winding up	CPS are not deposit liabilities of St.George. CPS rank for payment on a winding up of St.George ahead of Ordinary Shares, effectively equal with Equal Ranking Capital Securities (including SPS, SAINTS and DCS), but behind all depositors and creditors of St.George St.George reserves the right in the future to issue further CPS, or other preference shares or Capital Securities ranking ahead of, equally with or behind CPS. That ranking may be in respect of dividends, a return of capital on winding up, or otherwise.
Participation	CPS do not carry a right to participate in issues of securities or capital reconstructions of St.George
Voting rights	CPS do not carry a right to vote at general meetings of St.George, except in limited circumstances prescribed by ASX Listing Rules. See clause 5 of the Terms of Issue in Appendix A of the Prospectus.
Quotation	CPS are quoted on ASX under the code SGBPD.