$7,500,000,000 Medium Term Note Programme
(ultimately backed by trust property in the South Gyle Receivables Trust held by South Gyle Receivables Trustee Limited)
Arran Funding (UK) Plc
issuing entity
The Royal Bank of Scotland plc
sponsor, originator and servicer
National Westminster Bank Plc
originator
RBS Cards Securitisation Funding Limited
depositor and loan note issuing entity
Arran Funding (UK) Plc, as issuing entity, has entered into a medium term note programme and has prepared this base prospectus to describe it. Under the programme, notes may be issued from time to time denominated in US dollars, sterling or euro. Notes will be issued in series, each with two or three classes of notes as specified in the relevant final terms. Each class may comprise one or more sub-classes with each sub-class having the same maturity date and differing in, among other things, the currency and interest rate of the relevant sub-class. The maximum aggregate principal amount of notes outstanding under the programme at any time may not exceed $7,500,000,000 (or its equivalent in other currencies).
The offer of a series of notes will be made through this base prospectus and a prospectus supplement containing a set of final terms that will set forth the terms and conditions of the respective notes and the names of the dealers participating in the offering. In compliance with the Financial Services and Markets Act 2000 ("FSMA"), this base prospectus may not be used to offer any notes more than 12 months after the date of this base prospectus. Application has been made for notes issued under the programme during the first 12 months following the date of this base prospectus to be admitted to listing on the Official List of the Financial Services Authority in its capacity as the UK Listing Authority (the "UKLA") and to trading on the regulated market of the London Stock Exchange plc (the "London Stock Exchange"). The regulated market of the London Stock Exchange is a regulated market for the purposes of the Markets in Financial Instruments Directive 2004/39/EC (the "regulated market of the London Stock Exchange"). In the case of notes listed on the regulated market of the London Stock Exchange, a copy of the prospectus supplement containing the final terms will be delivered to the regulated market of the London Stock Exchange on or before the date of issue of those notes.
The ultimate source of payment on the notes will be collections on consumer credit card accounts originated in the United Kingdom by The Royal Bank of Scotland plc and by its subsidiary National Westminster Bank Plc, both acting through The Royal Bank of Scotland plc's Retail Markets Division – Cards Business, or by RBS Advanta and transferred to The Royal Bank of Scotland plc.
No notes may be issued under the programme which have a minimum denomination of less than €50,000 (or such amount as shall at least be equal to its equivalent in sterling or US dollars as at the date of issue of those notes specified in the relevant final terms) in the case of any notes which are to be admitted to trading on a regulated market within the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under Directive 2003/71/EC (the "prospectus directive").
In the case of each class or sub-class of notes denominated in US dollars or euro, a separate currency swap transaction will be entered into by the issuing entity to convert the sterling amounts received into US dollar or euro amounts for payments to that class or sub-class.
Please review and consider the risk factors beginning on page 20 in this base prospectus carefully before you purchase any notes. You should read this base prospectus and the applicable final terms carefully before you invest. A note is not a deposit and neither the notes nor the underlying receivables are insured or guaranteed by The Royal Bank of Scotland plc, National Westminster Bank Plc, RBS Cards Securitisation Funding Limited, The Bank of New York Mellon or by any United Kingdom or United States governmental agency. The notes offered under this base prospectus will be obligations of the issuing entity only. The issuing entity will only have a limited pool of assets to satisfy its obligations under the notes. The notes will not be obligations of The Royal Bank of Scotland plc, National Westminster Bank Plc, RBS Cards Securitisation Funding Limited, The Bank of New York Mellon or any of their affiliates.
Unless otherwise specified in the relevant final terms, the notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States or to, or for the account of, "US persons" (within the meaning of Regulation S of the Securities Act ("Regulation S")) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Unless otherwise specified in the relevant final terms, the notes may only be offered, sold or delivered outside the United States to persons who are not US persons in offshore transactions in reliance on Regulation S. None of the United States Securities and Exchange Commission, any state securities commission or any other United States regulatory authority has approved or disapproved the notes or determined that this base prospectus is truthful or complete. Any representation to the contrary is a criminal offence.
Arranger
The Royal Bank of Scotland
Dealer
The Royal Bank of Scotland
CONTENTS Page IMPORTANT NOTICES ... 1 SUPPLEMENTARY PROSPECTUS... 2 RESPONSIBILITY STATEMENT ... 3 PROSPECTUS OVERVIEW... 4
Structural Diagram of the Securitisation Programme ... 4
Programme Structural Overview ... 5
Receivables Master Trust ... 5
Issuance of New Series of Loan Notes and Notes ... 5
OVERVIEW OF THE ARRAN FUNDING (UK) MEDIUM TERM NOTE PROGRAMME ... 8
Initial Programme Amount ... 8
Issuance in Series... 8
Final terms... 8
THE PARTIES ... 9
Sponsor... 9
Dealer... 9
The Issuing Entity ... 9
The Note Trustee, Principal Paying Agent, Registrar and Agent Bank... 9
The Security Trustee... 9
The Depositor, Loan Note Issuing Entity and Investor Beneficiary ... 9
The Royal Bank of Scotland plc ... 10
National Westminster Bank Plc ... 10
The Originators ... 10
The Servicer... 10
The Trust Cash Manager... 10
The Receivables Trustee ... 10
THE RECEIVABLES ... 11
THE RECEIVABLES TRUST... 12
The Investor Interest ... 12
Swap Counterparty ... 12
TRANSACTION FEES ... 14
THE NOTES – OVERVIEW ... 15
Listing ... 15
Clearing Systems ... 15
Status, Security and Priority of Payments of the Notes... 15
Form of Notes... 15
Currencies ... 16
Issue Price ... 16
Maturities ... 16
Scheduled Redemption... 16
Mandatory Early Redemption and Priority of Payments ... 16
Optional Early Redemption ... 16
Denominations ... 17
Negative Covenants ... 17
Credit Enhancement... 17
Taxation ... 17
Governing Law ... 18
Enforcement of Notes in Global Form... 18
Ratings... 18
Selling Restrictions... 18
TAX AND ERISA CONSIDERATIONS ... 19
United Kingdom Tax Status ... 19
Jersey Tax Status ... 19
Certain ERISA Considerations for Investors ... 19
RISK FACTORS ... 20
US DOLLAR/STERLING EXCHANGE RATE ... 37
THE ISSUING ENTITY... 38
Directors and Secretary... 38
Management's Discussion and Analysis of Financial Condition ... 39
Litigation... 40
Financial Position... 40
Use of Proceeds... 40
Series expense loan drawings... 40
THE DEPOSITOR AND LOAN NOTE ISSUING ENTITY ... 41
Directors and Secretary... 41
Administration Agreement ... 42
Management's Discussion and Analysis of Financial Condition ... 42
Litigation... 43
Financial Position... 43
Series loan note issuing entity expense loan drawings ... 43
THE ADMINISTRATOR... 44
THE RECEIVABLES TRUSTEE... 45
Directors and Secretary... 45
Management and Activities ... 46
THE NOTE TRUSTEE AND SECURITY TRUSTEE ... 48
THE ORIGINATORS ... 49 Regional Markets ... 49 Global Markets... 50 RBS Insurance ... 51 Group Manufacturing ... 51 The Centre... 51
Tesco Personal Finance ... 51
Board changes... 51
Madoff Investment Securities ... 51
Recent Events ... 51
Credit Guarantee Scheme ... 52
Capital Raising... 52
NatWest ... 52
Use of Securitisation as a Source of Funding... 52
AFFILIATIONS AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ... 54
THE CREDIT CARD PORTFOLIO... 55
Credit Card Usage in the United Kingdom ... 55
Cards Business ... 55
Account Use and Maintenance ... 57
Processing ... 57
Payment Protection Insurance ... 59
Delinquency and Loss Experience... 59
Maturity Assumptions ... 60
Receivables Yield Considerations ... 61
THE RECEIVABLES ... 62
Transfer of Receivables to the Receivables Trustee ... 62
Redesignation and Removal of Accounts... 64
Discount Option Receivables ... 65
Special Fees ... 66
Interchange ... 66
Annual Fees ... 66
Reductions in Receivables, Early Collections and Credit Adjustments ... 66
Representations ... 67
Amendments to Credit Card Agreements and Credit Card Guidelines... 70
Overview of Securitised Portfolio ... 70
THE RECEIVABLES TRUST... 71
General Legal Structure ... 71
Enhancement Provider... 71
Acquisitions ... 71
The Receivables Trust's Property ... 73
General Entitlement of Beneficiaries to Receivables Trust Property ... 75
Application of Collections ... 77
Acquiring Additional Entitlements to Receivables Trust Property and Payments for Receivables.... 79
Non-Petition Undertaking... 79
Trust Pay-out Events... 80
Termination of the Receivables Trust... 81
Amendments to the Receivables Trust Deed and Trust Cash Management Agreement... 81
Disposals ... 81
Trustee Payment Amount ... 82
SERVICING OF RECEIVABLES AND TRUST CASH MANAGEMENT ... 83
General – Servicing ... 83
Servicer Compensation ... 84
Servicer's Representations, Warranties and Covenants... 84
Termination of Appointment of Servicer ... 86
General – Trust Cash Management... 88
Trust Cash Manager Compensation ... 89
General ... 92
Beneficial Entitlement of the Loan Note Issuing Entity to Receivables Trust Property... 92
Beneficial Entitlement of Loan Note Issuing Entity to Finance Charge Collections... 93
Calculation and Distribution of Finance Charge Collections and Acquired Interchange to the Loan Note Issuing Entity ... 96
Class A Investor Interest ... 98
Class B Investor Interest ... 101
Class C Investor Interest ... 103
Distributions of Principal Collections to the Loan Note Issuing Entity ... 104
Revolving Period ... 105
Controlled Accumulation Period... 105
Regulated Amortisation Period... 106
Rapid Amortisation Period... 107
Calculation of Principal Collections to be Distributed to the Loan Note Issuing Entity in Respect of Each Series ... 107
Postponement of Controlled Accumulation Period ... 112
Unavailable Principal Collections ... 112
Shared Principal Collections... 113
Defaulted Receivables; Investor Charge-offs ... 113
Available Spread... 115
Aggregate Investor Indemnity Amount ... 117
Principal Funding Account ... 118
Reserve Account... 118
Spread Account ... 120
Series Collection Account... 121
Trustee Payment Amount ... 121
Qualified Institutions... 122
Series Pay-out Events... 122
THE SECURITY TRUST DEED ... 126
Constitution of Loan Notes ... 126
Covenants of the Loan Note Issuing Entity ... 126
Enforcement and Priority of Payments ... 127
Trust Indenture Act Compliance... 127
Appointment, Powers, Responsibilities and Liability of the Security Trustee ... 127
THE LOAN NOTES... 129
Limited Recourse... 129
Security... 130
CASHFLOWS OF THE LOAN NOTE ISSUING ENTITY ... 131
Interest and Payments... 132
Loan Note Events of Default ... 132
Jersey bank account operating agreement ... 134
THE TRUST DEED AND TRUST DEED SUPPLEMENTS ... 135
General ... 135
Constitution of the notes... 135
Covenants, representations and warranties of the issuing entity ... 135
Note security ... 135
The notes... 136
Recourse ... 136
Appointment, powers, responsibilities and liability of the note trustee ... 136
The US Trust Indenture Act ... 137
CASHFLOWS OF THE ISSUING ENTITY... 138
Amounts transferred by the loan note issuing entity relating to the issuing entity distribution account ... 138
Monthly payments... 138
Annual, quarterly or monthly payments ... 141
Interest and payments... 141
Interest payment dates ... 141
Withholding or deduction ... 142
Scheduled redemption of a series ... 142
Mandatory redemption of a series ... 142
Optional early redemption in full of a series... 142
Bank account operating agreement ... 142
THE NOTES AND THE GLOBAL NOTES... 144
The clearing systems... 144
Payment ... 145
DTC... 145
TERMS AND CONDITIONS OF THE NOTES ... 148
DESCRIPTION OF THE SWAP AGREEMENTS ... 183
General ... 183
In relation to currency swap agreements only ... 183
Early termination ... 183
Taxation ... 184
Rating downgrade or withdrawal ... 185
General ... 185
MATERIAL LEGAL ASPECTS OF THE RECEIVABLES... 186
Consumer Credit Act 1974 (as amended) ... 186
Enforcement of improperly executed or modified credit card agreements ... 186
Liability for supplier's misrepresentation or breach of contract... 186
Transfer of Benefit of Receivables ... 187
MATERIAL UNITED KINGDOM TAX CONSEQUENCES... 189
UK withholding tax ... 189
Provision of information ... 189
EU Directive on the taxation of savings income ... 189
Other rules relating to United Kingdom withholding tax ... 190
MATERIAL JERSEY TAX CONSEQUENCES ... 191
General ... 191
Income tax ... 191
Taxation of the receivables trust ... 191
Withholding tax ... 191
Jersey and the European Union Directive on the Taxation of Savings Income ... 192
Other taxes... 192
United States ... 194
United Kingdom ... 194
General ... 195
RATINGS OF THE NOTES ... 196
LEGAL MATTERS... 197
GOVERNING LAW... 198
REPORTS TO NOTEHOLDERS ... 199
LISTING AND GENERAL INFORMATION... 200
INDEX OF APPENDICES... 203
APPENDIX A LOAN NOTE ISSUING ENTITY'S FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2007 ... 204
APPENDIX B LOAN NOTE ISSUING ENTITY'S FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2006 ... 205
APPENDIX C FORM OF FINAL TERMS ... 206
IMPORTANT NOTICES
This document constitutes a 'base prospectus' for the purposes of article 5.4 of the prospectus directive for the purposes of giving information with regard to the issuing entity which is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the issuing entity.
The notes will be obligations of the issuing entity only. They will not be obligations or responsibilities of, nor will they be guaranteed by, any other party, including The Bank of New York Mellon, RBS Cards Securitisation Funding Limited, The Royal Bank of Scotland plc and/or National Westminster Bank Plc in any of its capacities, or any of their affiliates or advisers, successors or assigns.
No request has been made for a certificate permitting public offers of the notes in other member states of the European Union.
In connection with the issue of any series of notes, the dealer or dealers (if any) named as the stabilising manager(s) (or persons acting on behalf of any stabilising manager(s)) in the applicable final terms may over allot notes or effect transactions with a view to supporting the market price of the notes at a level higher than that which might otherwise prevail. However, there is no assurance that the stabilising manager(s) (or persons acting on behalf of the stabilising manager(s)) will undertake such stabilisation action. Any stabilisation action may begin at any time after the adequate public disclosure of the final terms of the offer of the relevant series of notes and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the relevant series of notes and 60 days after the date of the allotment of the relevant series of notes. Any stabilisation action or over-allotment must be concluded by the relevant stabilising manager(s) or persons acting on behalf of any stabilising manager(s) in accordance with all applicable laws and rules.
We include cross-references to captions in this base prospectus where you can find further related discussions. The following table of contents provides the pages on which these captions are located. You can find an index beginning on page 232 in this document under the caption "Index of Terms In The
SUPPLEMENTARY PROSPECTUS
The issuing entity has undertaken, in connection with the admission of the notes to listing on the Official List of the UKLA and the admission to trading on the regulated market of the London Stock Exchange, that if there shall occur any adverse change in the business or financial position of the issuing entity or any change in the information set out under "Terms and Conditions of the Notes", that is material in the context of issuance of notes under the programme pursuant to Section 87G of the FSMA, then the issuing entity will prepare or procure the preparation of an amendment or supplement to this base prospectus for use in connection with any subsequent issue by the issuing entity of notes to be listed on the regulated market of the London Stock Exchange which shall constitute a supplementary prospectus as required by the UKLA and Section 87G of the FSMA or, as the case may be, publish a new base prospectus.
When delivered in connection with an offer of notes which, pursuant to the final terms describing such notes, are being offered in the United States, this base prospectus must be accompanied by a set of final terms pursuant to which the series of notes referred to therein will be offered. Such final terms are contained in a prospectus supplement and constitute, with respect to the series of notes offered thereby, the "relevant final terms" or the "applicable final terms" referred to herein.
The issuing entity will, at the specified offices of the paying agents, provide, free of charge, upon oral or written request, a copy of this base prospectus. Written or telephone requests for this base prospectus should be directed to the specified office of any paying agent.
RESPONSIBILITY STATEMENT
The issuing entity accepts responsibility for the information contained in this base prospectus. The issuing entity declares that, having taken all reasonable care to ensure that such is the case, the information contained in this base prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect the import of such information.
The information relating to RBS Cards Securitisation Funding Limited and South Gyle Receivables Trustee Limited has been accurately reproduced from information provided by RBS Cards Securitisation Funding Limited and South Gyle Receivables Trustee Limited, respectively. So far as the issuing entity is aware and/or is able to ascertain from information provided by each of RBS Cards Securitisation Funding Limited and South Gyle Receivables Trustee Limited, no facts have been omitted which would render the reproduced information misleading.
The information relating to The Royal Bank of Scotland plc, National Westminster Bank Plc and their affiliates has been accurately reproduced from information provided by The Royal Bank of Scotland plc. So far as the issuing entity is aware and/or is able to ascertain from information provided by The Royal Bank of Scotland plc, no facts have been omitted which would render the reproduced information misleading.
PROSPECTUS OVERVIEW Structural Diagram of the Securitisation Programme
The loan note issuing entity has funded prior acquisitions of its undivided beneficial interest in the receivables trust by issuing limited recourse loan notes to, among others, Arran Funding Limited. The loan note issuing entity may fund future acquisitions of its undivided beneficial interest in the receivables trust by issuing limited recourse loan notes to Arran Funding Limited, Arran Funding (UK) Plc or other investors. See "Issuance of New Series of Loan Notes and Notes".
This base prospectus has been prepared by Arran Funding (UK) Plc to describe notes issued by it and does not describe notes issued by Arran Funding Limited.
RBS
(sponsor, originator, trust cash manager
and servicer) NATWEST (originator) SOUTH GYLE RECEIVABLES TRUSTEE LIMITED (receivables trustee) RBS CARDS SECURITISATION FUNDING LIMITED
(depositor and loan note issuing entity)
ARRAN FUNDING LIMITED ARRAN FUNDING (UK) PLC (issuing entity) noteholders NOTEHOLDERS
Note: each originator is also the beneficiary of an originator interest in the receivables trust.
Stage (1): sale
Stage (2): receivables trust deed and trust cash management agreement
Stage (3): series supplements
Stage (4): security trust deed
Stage (5): multiple segregated series of secured limited recourse loan notes
SWAP COUNTERPARTY
(if any)
Stage (6): multiple series of secured limited recourse notes each backed by a segregated loan note
SWAP COUNTERPARTY
Programme Structural Overview
The following is a brief overview description of the Arran Funding (UK) Medium Term Note Programme, of which your notes will form a part.
In this base prospectus, we will refer to The Royal Bank of Scotland plc as "RBS", to National Westminster Bank Plc as "NatWest", to RBS, in its capacity as sponsor of the programme as the "sponsor" and to both of them, in their capacities as originators of the receivables, as the "originators". "We" means Arran Funding (UK) Plc, RBS Cards Securitisation Funding Limited and South Gyle Receivables Trustee Limited. Where we refer to these companies separately, we will identify them specifically. The servicer of the receivables (the "servicer") is the Retail Markets Division – Cards Business of RBS. The cash managers of the receivables trust (the "trust cash manager") are jointly the Retail Markets Division – Cards Business and the Global Banking & Markets division of RBS. We will refer to South Gyle Receivables Trustee Limited as the "receivables trustee", to Arran Funding (UK) Plc as the "issuing entity", to the Retail Markets Division – Cards Business of RBS as "Cards Business" and the Global Banking & Markets division of RBS as "GBM".
Receivables Master Trust
From time to time, one or both originators may transfer to the receivables trustee all of their respective present and future beneficial interests in receivables in designated revolving credit card accounts originated or purchased by each of RBS and NatWest in the United Kingdom. As regards receivables that are governed by English law, such transfers are constituted by way of assignment under the terms of the receivables securitisation agreement. As regards receivables that are governed by Scots law, such transfers are constituted by way of Scottish declarations of trust. Only the receivables will be so transferred. The accounts will be retained by RBS and NatWest, respectively.
In 2000, RBS and its indirect wholly-owned subsidiary RBS Advanta, which we will refer to as "RBSA" effected three transfers by way of assignment and Scottish declaration of trust of the present and future beneficial interest in receivables in designated revolving credit card accounts originated in the United Kingdom by, respectively, RBS and RBSA. We refer to the transfers that occurred in 2000 as aforesaid as the "2000 transfers" and we refer to the 2000 transfers and each assignment and Scottish declaration of trust that has occurred, or that will occur, after the 2000 transfers, as the "transfers" with each being a "transfer" and the term "transferred" shall be construed accordingly in that context. The credit card portfolio of RBSA was transferred to RBS on 1 January 2004, at the same time as the transfer of the originator interest of RBSA in the receivables trust (as defined below) to RBS. NatWest acceded to the receivables trust (as defined below) pursuant to a deed of accession (the "NatWest deed of accession") on 27 October 2005. RBS and NatWest made an offer of receivables to the receivables trustee on 27 October 2005 and, when the offer was accepted, NatWest received an originator interest in its capacity as an originator beneficiary (as defined below) in the receivables trust. The originators may, but are not obliged to, assign to the receivables trustee their present and future beneficial interest in receivables arising on further credit card accounts originated or purchased by RBS and NatWest in the United Kingdom.
The receivables trustee will hold the receivables on trust for RBS and NatWest, as originator beneficiaries, and for a special purpose vehicle subsidiary of RBS called RBS Cards Securitisation Funding Limited, as investor beneficiary (as defined below). In this base prospectus, we will refer to this trust as the "receivables trust". When we describe their entitlement to property in the receivables trust, we will refer to RBS, NatWest and any future originator beneficiary as the "originator beneficiaries" and each an "originator beneficiary". We will refer to RBS Cards Securitisation Funding Limited as the "loan note issuing entity" and the "investor beneficiary" in this base prospectus.
"receivables" means finance charge receivables and principal receivables arising on accounts held within the receivables trust.
Issuance of New Series of Loan Notes and Notes
The loan note issuing entity has funded prior acquisitions, and may fund future acquisitions, of its undivided beneficial interest in the receivables trust by issuing limited recourse loan notes. We will refer to these limited recourse loan notes as the "loan notes". The loan note issuing entity may have future
issuances of loan notes listed on the Channel Islands Stock Exchange or such other stock exchange as the loan note issuing entity may choose.
In 2000, the loan note issuing entity issued the series 00-A, 00-B and 00-C loan notes (to which we will refer, collectively, as the "2000 loan notes"). The 2000 loan notes were sold by the loan note issuing entity to Arran One Limited and Arran Two Limited and the proceeds of those sales were used by the loan note issuing entity to fund its purchase of its undivided beneficial interest in the receivables trust. See "The Depositor and Loan Note Issuing Entity". The 2000 loan notes have now all been redeemed. On 15 December 2005, the loan note issuing entity issued the series 2005-A and 2005-B loan notes (to which we will refer, collectively, as the "2005 loan notes"). The 2005 loan notes were sold by the loan note issuing entity to Arran Funding Limited and the proceeds of those sales were used by the loan note issuing entity to increase its beneficial interest in the receivables trust. The series 2005-A loan note was redeemed on 15 December 2008. As at the date of this base prospectus, the series 2005-B loan note remains outstanding.
On 1 February 2007, the loan note issuing entity issued the series 2007-A loan note (to which we will refer as the "2007 loan note"). The 2007 loan note was sold by the loan note issuing entity to Arran Funding Limited and the proceeds of this sale were used by the loan note issuing entity to increase its beneficial interest in the receivables trust. As at the date of this base prospectus, the 2007 loan note remains outstanding.
In connection with each issuance of a series of notes by the issuing entity under the programme, the loan note issuing entity will acquire or increase its undivided beneficial interest in the receivables trust using the proceeds of the issuance of a corresponding loan note to the issuing entity. The limited recourse nature of each loan note will ensure that the loan note issuing entity is only ever liable to the issuing entity as the purchaser of any loan note for payments in an amount equal to payments received by the loan note issuing entity from the receivables trustee in respect of that loan note. Each loan note will be segregated from each previously issued loan note and will not provide any cross-collateralisation. Each increase in the loan note issuing entity's undivided beneficial interest in the receivables trust will be evidenced by a corresponding annotation to the investor certificate, which sets out the size of the loan note issuing entity's beneficial interest. See "The Receivables – Assignment of the Receivables to the
Receivables Trustee" and "The Receivables Trust – Acquisitions".
The initial principal amount of a loan note is the amount that is stated in the loan note supplement for such loan note to be payable to the holder of such loan note. It will be denominated in sterling. Such amount will be set out in the final terms of the series which such loan note supports.
The outstanding principal amount of a loan note is the initial principal amount of that loan note, as described in the relevant loan note supplement for such loan note and the relevant final terms, less principal payments made to the holder of that loan note.
The issuing entity will finance its subscription for each loan note by issuing under the programme a separate series of notes that will be sold to investors from time to time (after swapping the proceeds of the notes in any currency other than sterling into sterling, if applicable).
Each series of notes to be issued by the issuing entity will be secured in favour of a note trustee for the benefit of the secured creditors of the relevant series. The secured asset for a whole series of notes is the corresponding single loan note. The security for a series of notes will not be cross-collateralised with the security for another series of notes. The secured creditors of each relevant series will include, among others, the note trustee for itself and acting on behalf of the noteholders of such series. The issuance of any new series of notes will not require the approval of the noteholders of any outstanding series and such noteholders will not be entitled to receive any prior notice of such new issuance.
From time to time the loan note issuing entity may use the proceeds of further loan notes to increase further the size of its undivided beneficial interest in the receivables trust. Alternatively, the loan note issuing entity may repay principal on a loan note or there may be charge-offs on receivables in the receivables trust (as described further below), thereby reducing the size of its undivided beneficial interest in the receivables trust. The receivables trustee will annotate the investor certificate to show the correct size of the loan note issuing entity's undivided beneficial entitlement each time the loan note issuing entity increases the size of its beneficial entitlement or receives payments of principal amounts from the
receivables trust. By owning its undivided beneficial interest in the receivables trust, the loan note issuing entity will be entitled to receive payments from the receivables trustee by way of distribution in respect of interest, principal and certain other fees paid by cardholders on designated revolving credit card accounts. The size of the loan note issuing entity's share of the collections from the cardholders will be in proportion to the size of its undivided beneficial interest in the receivables trust.
OVERVIEW OF THE ARRAN FUNDING (UK) MEDIUM TERM NOTE PROGRAMME
The following overview does not purport to be complete and is qualified in its entirety by the remainder of this base prospectus and, with respect to a particular series, the relevant final terms contained in a prospectus supplement.
Initial Programme Amount
Up to $7,500,000,000 (or its equivalent in other currencies) aggregate principal amount of notes outstanding at any one time.
Issuance in Series
Notes issued under the programme will be issued in series. Each series will comprise two or three classes of notes (as specified in the relevant final terms) issued on a single issue date. Each class of notes within a series may be comprised of sub-classes, each denominated in any of sterling, US dollars or euro. The notes of the same class or sub-class within a given series will all be subject to identical terms and conditions in all respects. These sub-classes within a class of notes will rank pari passu among themselves and rateably without priority or preference among themselves. The notes of each series will not necessarily be subject to identical terms in all respects. Differences may include interest rates, interest calculations, the date of expected maturity and final maturity.
Final terms
Each series will be the subject of a set of final terms which, for the purposes of that series only, supplements the terms and conditions of the notes in this base prospectus, and must be read in conjunction with this base prospectus. The terms and conditions applicable to any particular series of notes are the terms and conditions of the notes as supplemented, amended and/or replaced by the relevant final terms.
THE PARTIES Sponsor
The Royal Bank of Scotland plc, acting through its Global Banking & Markets division. Dealer
The Royal Bank of Scotland plc, acting through its Global Banking & Markets division and any other dealer appointed from time to time by the issuing entity either generally in respect to the programme or in relation to a particular series or class of notes in accordance with the terms of the dealer agreement (see "Plan of Distribution").
The Issuing Entity
Arran Funding (UK) Plc is a public limited liability company incorporated in England and Wales. Its registered office is at Eighth Floor, 68 King William Street, London EC4N 7DZ. Its telephone number is + 44 (0)20 7469 8000.
The issuing entity is a special purpose vehicle described below under "The Issuing Entity". The purpose of the issuing entity is to issue, from time to time, notes under the programme as described below under "The Notes", which represent its asset-backed debt obligations. On each respective closing date under the programme on which a series is issued, the issuing entity will utilise the proceeds of issue of the issued series of notes to acquire an additional loan note issued by the loan note issuing entity. The issuing entity will not engage in any activities which are not related to the issue of the notes (see "The Loan Notes", "The Issuing Entity" and "Use of Proceeds").
The Note Trustee, Principal Paying Agent, Registrar and Agent Bank
The note trustee is The Bank of New York Mellon, acting through its London branch. The Bank of New York Mellon has served as trustee in numerous asset-backed securitisation transactions and programmes involving pools of credit card receivables. The Bank of New York Mellon is also the principal paying agent and agent bank. The note trustee will act as trustee for the noteholders of each series under the trust deed (and each relevant trust deed supplement), as described below under "The Trust Deed" and "The
Notes and The Global Notes". The note trustee will also hold the security for the notes of each series
under the terms of the trust deed (and the relevant trust deed supplement), as described below under "Terms and Conditions of the Notes". The principal paying agent will make payments on the notes of each series. The agent bank will calculate the interest rate on the notes of each class or sub-class. The registrar and transfer agent is The Bank of New York (Luxembourg) S.A. The registrar will maintain the register of notes and is responsible for the transfers of the notes between noteholders. The Bank of New York Mellon's address in London is One Canada Square, London E14 5AL and its address in New York is 101 Barclay Street, Floor 21 West, New York, New York 10286. Its telephone number in London is + 44 (0)20 7570 1784 and its telephone number in New York is +1 212 495 1784. The Bank of New York (Luxembourg) S.A.'s address is Aerogolf Center, 1A, Hoehenhof, L-1736 Senningerberg, Luxembourg and its telephone number is + 352 34 20 90 56 30.
The Security Trustee
The security trustee in relation to the loan note issuing entity is The Bank of New York Mellon, acting through its London branch, whose principal place of business is at One Canada Square, London E14 5AL, England (the "security trustee"). The security trustee acts as trustee for the holder of each series loan note (including the issuing entity) under a security trust deed (and the relevant loan note supplement), which we will refer to in this base prospectus as the "security trust deed".
The Depositor, Loan Note Issuing Entity and Investor Beneficiary
RBS Cards Securitisation Funding Limited, the loan note issuing entity and depositor, is a private limited liability company incorporated in Jersey, Channel Islands. Its registered office is located at Royal Bank House, 71 Bath Street, St. Helier, Jersey JE4 8PJ, Channel Islands. Its telephone number is + 44 (0)1534 285 279. The loan note issuing entity is a wholly-owned subsidiary of RBS.
The loan note issuing entity was incorporated on 2 February 2000 to issue loan notes from time to time in respect of which it becomes an investor beneficiary of the receivables trust.
The loan note issuing entity does not have any employees. The loan note issuing entity has entered into an agreement dated 27 March 2000 with The Royal Bank of Scotland International Limited, a wholly-owned subsidiary of RBS incorporated and resident in Jersey, under which The Royal Bank of Scotland International Limited has agreed to provide administrative services to the loan note issuing entity.
The Royal Bank of Scotland plc
The Royal Bank of Scotland plc is a public limited company incorporated in Scotland. Its registered office is located at 36 St Andrew Square, Edinburgh EH2 2YB, Scotland. It is regulated in the United Kingdom by the Financial Services Authority. Its telephone number is + 44 (0)131 556 8555.
National Westminster Bank Plc
National Westminster Bank Plc is a public limited company incorporated in England and Wales. Its registered office is located at 135 Bishopsgate, London EC2M 3UR. It is a wholly-owned subsidiary of RBS. It is regulated in the United Kingdom by the Financial Services Authority as part of the RBS group of companies. Its telephone number is + 44 (0)20 7085 5000.
The Originators
RBS and NatWest, both acting through Cards Business, originate, and may from time to time purchase, portfolios of revolving credit card accounts. RBS and NatWest have transferred receivables to the receivables trustee prior to the date of this base prospectus and each of RBS and NatWest may in the future transfer additional receivables to the receivables trustee.
The Servicer
RBS, acting through Cards Business, services the receivables in the receivables trust. Except in exceptional circumstances, RBS may not resign as servicer, but its appointment may be terminated and a successor servicer appointed in the event of a default by the servicer. In the future, additional originators, if any, may act as co-servicers.
The Trust Cash Manager
RBS, acting through both Cards Business and GBM, acts as trust cash manager of the receivables trustee in connection with the programme.
The Receivables Trustee
South Gyle Receivables Trustee Limited, the receivables trustee, is a private limited liability company, which was incorporated in Jersey, Channel Islands on 2 February 2000. Its registered office is located at 22 Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands. Its telephone number is +44 (0)1534 609000. The receivables trustee does not have any employees. The shares of the receivables trustee are held by two nominees for a professional trust company – not affiliated to RBS – on trust for charitable purposes. After the receivables trustee has paid all amounts due in respect of each beneficial interest in the receivables trust and met all of its costs and expenses, any profits will be paid as dividends to the professional trust company which will pay them on to charities in Jersey selected at its discretion. The payments on your notes will not be affected by this arrangement.
THE RECEIVABLES
The receivables consist of amounts charged by cardholders, who are individuals, to designated MasterCard®* and VISA®* revolving credit card accounts of the originators originated or acquired in the United Kingdom for the acquisition of merchandise, services and cash advances. The receivables also include the periodic finance charges and fees charged to the credit card accounts.
Only receivables that meet specified conditions will be added to the securitised portfolio. Those conditions include that the receivable be payable in sterling (or, in the case of receivables from accounts in other permitted jurisdictions, the currency of that jurisdiction), not be classified by the originator as counterfeit, cancelled, fraudulent, lost or stolen, and not be a defaulted receivable, and that the cardholder be an individual whose most recent billing address is located in England, Wales, Scotland or Northern Ireland or a permitted additional jurisdiction.
As of 31 October 2008, the aggregate face value of the receivables in the securitised portfolio was £4,374,395,043.02. The final terms in respect of each series of notes will contain more detailed information regarding the composition of the securitised portfolio at the time of the offering of such series.
Subject to a maximum permitted number, the originators have the right to transfer additional future and existing receivables in respect of additional accounts provided that certain preconditions are satisfied or the rating agencies affirm the current ratings assigned to any outstanding notes (see "The Receivables –
Transfer of Receivables to the Receivables Trust"). Receivables will be immediately removed from the
receivables trust once the relevant account of these receivables is redesignated as a defaulted account, a cancelled account or a zero balance account. Receivables may also be removed if, together with other conditions, the rating agencies affirm the current ratings assigned to any outstanding notes (see "The
Receivables – Redesignation and Removal of Accounts").
*
THE RECEIVABLES TRUST
The receivables trust was established on 27 March 2000 under the terms of the receivables trust deed and trust cash management agreement dated 27 March 2000 (we will refer to this agreement as the "receivables trust deed and trust cash management agreement"), under which the originator beneficiaries and the investor beneficiary have an undivided interest in the trust property equal to the proportion of their contributions to the receivables trust.
The receivables trustee was established to acquire credit card receivables from RBS and RBSA, pursuant to the 2000 transfers, and any additional originators (such as NatWest) and to hold those receivables and the related collections on trust for the beneficiaries under the terms of the receivables trust set out in the receivables trust deed and trust cash management agreement and to make payments to the beneficiaries in accordance with the terms of that agreement as supplemented from time to time. Further transfers of receivables to the receivables trust may occur from time to time. The receivables trustee has previously accepted offers of credit card receivables from RBS and RBSA in an initial transaction on 27 March 2000 and in subsequent transfers on 30 June 2000, 10 September 2001, 26 November 2001, 8 January 2002, 1 February 2002 (two transfers on that date), 31 May 2002 and 25 June 2003. The receivables trustee has previously accepted offers of credit card receivables from RBS and NatWest on 27 October 2005, 31 October 2006 and 1 April 2008. Before the first offer from NatWest was accepted, NatWest acceded to the receivables trust as originator beneficiary with an originator interest in the receivables trust. The receivables trustee may from time to time adjust the relative sizes of the undivided beneficial interests in the receivables trust. The receivables trustee may not engage in any unrelated activities.
The Investor Interest
As is further described under "The Receivables Trust – Acquisitions", the loan note issuing entity will pay the proceeds of the issue of each loan note to the receivables trustee to increase its undivided beneficial interest in the receivables trust. We will refer to that undivided beneficial interest as the "aggregate investor interest". The aggregate investor interest is evidenced by an investor certificate which will be annotated to evidence each increase in the aggregate investor interest.
The loan note issuing entity will make payments of principal and interest on each loan note using distributions made to it by the receivables trustee with respect to that part of the aggregate investor interest which is referable to that loan note. We call the part of the aggregate investor interest, for the purposes of calculating these amounts for a series, a "series investor interest".
The receivables trustee will be entitled to use the amount contributed by the loan note issuing entity – together with monies contributed to it by the other beneficiaries of the receivables trust – in the ways set out in the receivables trust deed and trust cash management agreement, which include accepting offers by the originators to transfer to the receivables trustee the present and future receivables generated by credit card accounts of the originators, making further payments in respect of future receivables on existing accounts which have been assigned to the receivables trustee by the originators, and distributing any remaining available cash to the originator beneficiaries in accordance with their beneficial entitlement to the undivided trust property.
The receivables trustee has used the previous trust contributions made by the loan note issuing entity together with contributions made by the originator beneficiaries to accept the offers made by the originators described above.
The aggregate investor interest will entitle the loan note issuing entity to receive at specified times payment of a designated proportion of collections of the credit card receivables and interchange assigned by the originators to the receivables trustee in respect of each series investor interest. The loan note issuing entity will use those collections to pay amounts due on the corresponding series loan note.
Swap Counterparty
The notes within a series to be issued by the issuing entity from time to time may be denominated in different currencies and have a fixed or floating rate of interest (as specified in the relevant final terms). The issuing entity may, in relation to certain classes and sub-classes of notes, enter into an ISDA master agreement and related schedules and confirmations (each, referred to herein as a "swap agreement") with a swap counterparty (referred to herein as the "swap counterparty"). Each set of final terms will provide
details of any swap agreement in respect of a particular class or sub-class of notes including the name of the swap counterparty (see "Description of the Swap Agreements").
TRANSACTION FEES
The following table summarises certain fees payable out of cashflows from the receivables trust.
Recipient Fee Priority in cashflow Frequency
Servicing Fee... 0.75% of adjusted investor interest of each series
Proportionately to each class of notes
Each distribution date
Trust Cash
Management Fee ...
£6,000 per annum per series in issuance or as otherwise set out in the relevant final terms
Proportionately to each class of notes
Each distribution date
Interest on Expense Loan Facility ...
As set forth in the relevant final terms
Subordinated to class A and (if relevant) class B monthly distribution amounts
Each payment date
Interest on Loan Note Issuing Entity Expense Loan Facility (if any)....
As set forth in the relevant final terms
Subordinated to class A and (if relevant) class B monthly distribution amounts
THE NOTES – OVERVIEW Listing
Each series may be admitted to the Official List of the UKLA and admitted to trading on the regulated market of the London Stock Exchange and/or admitted to listing, trading and/or quotation by any other listing authority, stock exchange, regulated market, and/or quotation system as may be agreed between the issuing entity, the arranger and the relevant dealer(s) and specified in the relevant final terms.
Clearing Systems
The clearing systems are the Depository Trust Company ("DTC"), Euroclear Bank S.A./N.V. ("Euroclear") (1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium) and/or Clearstream Banking,
société anonyme ("Clearstream") (L-2967 Luxembourg, Luxembourg) and/or, in relation to any series,
any other clearing system as may be specified in the relevant final terms. Status, Security and Priority of Payments of the Notes
Each series will be constituted by a trust deed supplement between, among others, the issuing entity and the note trustee (referred to herein as the "trust deed supplement"). Within a series, notes of each class will rank pari passu among themselves and rateably without preference or priority among themselves. Each class of notes within a series may be comprised of sub-classes, each denominated in any of sterling, US dollars or euro. The sub-classes within a class of notes will rank pari passu among themselves and rateably without priority or preference among themselves. As security for the payment of all monies payable in respect of a series, the issuing entity will, pursuant to the trust deed and the relevant trust deed supplement executed in relation to that series, create a first fixed security interest over, amongst other things, its rights to receive payments under the relevant loan note (see "Terms and conditions of the
Notes", "The Loan Notes" and "The Trust Deed and the Trust Deed Supplements"). The note trustee will
be the registered holder of each loan note in order to perfect properly the first fixed security interest in respect of each loan note, which is the main asset of the issuing entity backing the relevant series (see "The Loan Notes").
For details of the priority of payments with respect to amounts available to the issuing entity, both prior to and post enforcement of the security see "Cashflows of the issuing entity" and "Terms and Conditions of
the Notes".
Amounts available to the issuing entity for payment of, among other things, interest and repayment of principal on a series will be derived from amounts received by the issuing entity from the loan note issuing entity as payments of interest and principal on the corresponding loan note (see "The Loan
Notes").
Such payments will, if paid in full, be sufficient for the issuing entity to meet the amounts required (a) to pay the fees, costs and expenses of the issuing entity and the note trustee as herein described, (b) to make any necessary payments to the swap counterparty, if any, as specified in the relevant final terms, (c) to make payments of interest on the notes as specified in this base prospectus and the relevant final terms, (d) to make payments of principal on the notes on the relevant distribution date or dates as specified in this base prospectus and relevant final terms, (e) to pay certain amounts representing earnings of the issuing entity in the conduct of its business, and (f) to make other payments required to be made by the issuing entity from time to time as herein described or as further described in the relevant final terms. We will refer to the 15th day in each month or, if such day is not a business day, the next business day, or any other date as may be specified in the relevant final terms as a "distribution date" in this base prospectus. References in this base prospectus, unless specified otherwise, to a "business day" have the meaning given to it in the terms and conditions of the notes (See also "The Receivables Trustee," "The
Loan Notes" and "The Trust Deed and the Trust Deed Supplements").
Form of Notes
The notes will be issued in registered form. The notes of each class or sub-class will be represented by a global note certificate registered in the name of a nominee for The Depository Trust Company or for Clearstream and/or Euroclear and/or, in relation to any series, for any other clearing system as may be
"book-entry note". A holder of notes may exchange those notes for other notes of the same class or sub-class of any authorised denominations and of the same aggregate stated principal amount and tenor. Any holder of a note may present that note for registration of transfer, with the form of transfer properly executed, at the office of the registrar or at the office of any transfer agent that the issuing entity designates. Holders of notes will not be charged any service charge for the exchange or transfer of their notes. Holders of notes that are to be transferred or exchanged will be liable for the payment of any taxes and other governmental charges described in the trust deed or any trust deed supplement before the transfer or exchange is completed. The registrar or transfer agent, as the case may be, will effect a transfer or exchange when it is satisfied with the documents of title and identity of the person making the request.
The issuing entity has appointed The Bank of New York (Luxembourg) S.A. as the registrar for the notes. The issuing entity may also at any time designate additional transfer agents for any series or class or sub-class of notes. The issuing entity may at any time rescind the designation of any transfer agent or approve a change in the location through which any transfer agent acts. However, the issuing entity will be required to maintain a transfer agent in each place of payment for a series or class or sub-class of notes. Currencies
Notes of each class or sub-class will be denominated in US dollars, sterling or euro, as specified in the relevant final terms, and subject to compliance with all applicable legal and/or regulatory and/or central bank requirements.
Issue Price
Notes may be issued at any price as specified in the relevant final terms. Maturities
Notes may be issued with any maturity as specified in the relevant final terms, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements.
Scheduled Redemption
Unless previously purchased and cancelled, each class or sub-class of a particular series will be redeemed on the scheduled redemption date as specified in the relevant final terms of such series to the extent of the amount which has on that day been credited to the relevant class or sub-class distribution ledger in the relevant issuing entity distribution account of such series, in accordance with the provisions of the relevant loan note.
Mandatory Early Redemption and Priority of Payments
Notes of a particular class or sub-class may be redeemed before their stated scheduled redemption date upon the commencement of a rapid amortisation period or (if applicable) a regulated amortisation period (see "Terms and Conditions of the Notes", and "Description of the Swap Agreements") as further specified in this base prospectus and in the relevant final terms.
Optional Early Redemption
Notes of a particular series may be issued as being able to be redeemed on any call date if specified as such in the relevant final terms (see "Terms and Conditions of the Notes"). If specified in the final terms of a series, the issuing entity shall redeem such series in full in accordance with condition 7(c) (Optional
Early Redemption in Full) if the loan note issuing entity has refinanced the loan note which corresponds
to the relevant series through the issuance of a new loan note and used the proceeds received from the issuance of the new loan note to redeem the existing loan note. Prior to giving notice of its intention to redeem the notes of a particular series, the issuing entity is required to provide the note trustee with a certificate signed by two directors of the issuing entity to the effect that it will have the funds, not subject to any interest of any other person, required to redeem the relevant series on such interest payment date as aforesaid and to pay any amounts required to be paid in priority to or pari passu with such series outstanding in accordance with the conditions of the trust deed and relevant trust deed supplement.
Final Redemption
If a series has not been redeemed in full as described in the "Scheduled Redemption" section of the relevant final terms, the series will be finally redeemed at its principal amount outstanding plus accrued interest by the final redemption date as specified in the relevant final terms.
Interest
Interest will be payable in arrear and accrue at a fixed rate or a floating rate (see "Terms and Conditions
of the Notes") and the method of calculating interest will be specified in the relevant final terms for each
series of notes. An interest payment date for each series will be specified in the relevant final terms but may be subject to change upon the commencement of a rapid amortisation period or regulated amortisation period.
References in this base prospectus to an "interest period" shall mean the period commencing on and including an interest payment date or, in the case of a first period for a series, the relevant closing date for such series, and ending on but excluding the next interest payment date or, in the case of the first period, the first interest payment date as specified in the relevant final terms.
Denominations
Notes will be issued in such denominations as may be specified in the relevant final terms, subject to compliance with all applicable legal and/or regulatory and/or central bank requirements. Notes will be issued in minimum denominations of at least €50,000 or such amount as shall be at least equal to its equivalent in any other currency as at the date of issue of those notes as specified in the relevant final terms in the case of any notes which are to be admitted to trading on a regulated market within the European Economic Area or offered to the public in a Member State of the European Economic Area in circumstances which require the publication of a prospectus under the prospectus directive.
Negative Covenants
The notes will have the benefit of negative covenants of the issuing entity as described in condition 5 (see "Terms and Conditions of the Notes – Negative Covenants of the Issuing Entity").
Credit Enhancement
Credit enhancement for a particular series may be provided by a reserve account funded from excess finance charge collections ultimately being paid to the originators by the receivables trustee as additional consideration to the extent not utilised as enhancement. Credit enhancement for a particular series may also be provided (unless specified to the contrary in the relevant final terms) by a spread account funded either initially and/or from excess finance charge collections ultimately being paid to the originators by the receivables trustee as additional consideration to the extent not used as enhancement. The amount of spread available to a relevant series will be described in the relevant final terms for such series (see "Sources of Funds to Pay the Loan Notes – Available Spread and Spread Account").
Each series is entitled to (or subject to) varying percentages of principal collections, finance charge collections and losses in respect of receivables. Any loss not covered by enhancements or credit support will be borne in order of subordination of the different classes and sub-classes of notes among themselves, as described in the relevant final terms.
Taxation
In the event of any withholding or deduction for, or on account of, any taxes, duties, assessments or government charges of whatever nature being imposed, levied, collected, withheld or assessed on payments of principal or interest in respect of the notes by the United Kingdom or any other jurisdiction or political subdivision or any authority in or of such jurisdiction having power to tax, the issuing entity or the paying agent shall make such payments after such withholding or deduction and neither the issuing entity nor the paying agent will be required to make any additional payments to holders of the affected series of notes in respect of such withholding or deduction.
Governing Law English law.
Enforcement of Notes in Global Form
In the case of each global note certificate in relation to a class or sub-class, noteholders' rights against the issuing entity will be governed by the trust deed and the relevant trust deed supplement which will be entered into by the issuing entity prior to the issuance of each series.
Ratings
Each class of notes may on issue be assigned a rating by any of Standard & Poor's Rating Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"), Moody's Investors Service, Inc. ("Moody's") or Fitch Ratings Ltd ("Fitch Ratings" and, together with Standard & Poor's and Moody's, the "rating agencies"). The ratings expected to be assigned to each class of notes by the relevant rating agency will be stated in the final terms for that series. A rating is not a recommendation to buy, sell or hold the notes. A rating may be suspended, lowered or withdrawn at any time.
Selling Restrictions
Unless otherwise specified in the relevant final terms, the notes have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States or to, or for the account of, US persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Unless otherwise specified in the relevant final terms, the notes may only be offered, sold or delivered outside the United States to persons who are not US persons in offshore transactions in reliance on Regulation S.
TAX AND ERISA CONSIDERATIONS United Kingdom Tax Status
Provided the notes are and continue to be listed on a "recognised stock exchange" within the meaning of section 1005 of the Income Tax Act 2007 then interest payments thereon may be made without withholding or deduction on account of UK income tax. HMRC guidance indicates that the London Stock Exchange is currently a "recognised stock exchange" for these purposes.
Jersey Tax Status
The issuing entity is not regarded as resident for income tax purposes in Jersey and, consequently, is not liable to be charged to tax under Schedule D under the Income Tax (Jersey) Law 1961, as amended; and it is not expected that the issuing entity will be in receipt of income that would be liable to be charged to tax under any other Schedule under that Law.
The loan note issuing entity is not entitled to make any deduction or withholding for or on account of Jersey income tax from any interest or other payments on any loan note. No holder of a loan note (other than a resident of Jersey) is subject to any tax in Jersey in respect of the acquisition, ownership, sale, exchange or other disposition of such loan note.
The receivables trustee will not be liable for tax in Jersey on the income of the receivables trust.
No stamp duties are payable in Jersey on the acquisition, ownership, exchange, sale or other disposition
inter vivos of the loan notes.
Certain ERISA Considerations for Investors
Unless otherwise stated in the relevant final terms, employee benefit plans subject to Title I of the US Employee Retirement Income Security Act of 1974, as amended ("ERISA") and any "plan" as defined in and subject to the provisions of Section 4975 of the Code (including any entity the assets of which are deemed to constitute the assets of any such employee benefit plan or plan), will not be permitted to purchase or hold notes (or any interest therein).
RISK FACTORS
The following is a summary of the principal risks in connection with the Arran Funding (UK) Medium Term Note Programme and an investment in the notes issued under such programme and is not intended to be exhaustive. You should carefully consider the following principal risk factors and any additional risk factors set out in the applicable final terms before deciding to invest in the notes offered by this base prospectus and the applicable final terms.
You may not be able to sell your notes.
There is currently no secondary market for the notes. The arranger and dealers expect, but are not obliged, to make a market in the notes. If no secondary market develops, you may not be able to sell your notes. We cannot offer any assurance that a secondary market will develop or, if one does develop, that it will continue.
In addition, noteholders should be aware of the prevailing and widely reported global credit market conditions (which continue at the date of this base prospectus), whereby there is a general lack of liquidity in the secondary market for instruments similar to the notes. Such lack of liquidity may result in noteholders suffering losses on the notes in secondary resales even if there is no decline in the performance of the securitised portfolio. The issuing entity cannot predict when these circumstances will change and whether, if and when they do change, there will be a more liquid market for the notes and instruments similar to the notes at that time.
"securitised portfolio" means the pool of receivables that have been transferred to the receivables trustee from time to time as set out in the relevant final terms.
The issuing entity's ability to meet its obligations on your notes depends on receipt of payments due under the relevant loan note.
The ability of the issuing entity to pay the principal of and interest on your notes will depend on the receipt by it of payments due under the relevant loan note issued by the loan note issuing entity.
The issuing entity will be entitled to receive interest payments under the relevant loan note for each series which will be applied (a) to pay the fees, costs and expenses of the issuing entity and the note trustee as herein described, (b) to make any necessary payments to the swap counterparty, if any, as specified in the relevant final terms, (c) to make payments of interest on the notes as specified in this base prospectus and the relevant final terms, (d) to pay certain amounts representing earnings of the issuing entity in the conduct of its business and (e) to make other payments required to be made by the issuing entity from time to time as herein described or as further described in the relevant final terms. Additionally, the issuing entity will be entitled to receive certain principal payments under the relevant loan note which will be applied in redeeming the notes (either directly or indirectly via payments made to and received from swap counterparties).
The notes are limited recourse obligations of the issuing entity. If the issuing entity does not receive sufficient funds under the relevant series loan note, then the payment of interest and/or the repayment of principal on your notes may be delayed or reduced.
The issuing entity's receipt of sufficient funds under the relevant loan note to pay the amounts due and to repay the entire principal amount of the notes will be dependent on, amongst other things: (i) payments actually being made by cardholders (from whom no security has been taken in the support of those payments) and the proceeds of any relevant guarantees or insurance policies in respect of cardholders (to the extent such are capable of assignment), (ii) those payments being collected by the servicer in accordance with the provisions of the receivables trust deed and trust cash management agreement and paid to the receivables trustee, (iii) distributions being made by the receivables trustee to the loan note issuing entity of amounts allocable to the loan note issuing entity in accordance with the receivables trust deed and trust cash management agreement in respect of the relevant loan note, (iv) payment being made by the relevant swap counterparty, if any, in respect of its obligations to the issuing entity under the swap agreements (if any), and (v) payment being made by the loan note issuing entity in respect of its obligations to the issuing entity under the relevant loan note.
Amounts paid to the issuing entity by the loan note issuing entity in respect of each loan note will be used to pay principal and interest on the notes of the corresponding series in accordance with the terms and
