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SUMMARY
INFORMATION
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Issuer:
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ABN AMRO Bank N.V. (Senior Long
Term Debt Rating: Moody’s Aa2, S&P
AA-)
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Lead Agent:
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ABN AMRO
Incorporated
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Offerings:
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16.50% (Per Annum), Three Month
Reverse Exchangeable Securities due November 5, 2008 linked to the
Underlying Stock set forth in the table below.
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Interest Payment
Dates:
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Interest on the Securities is payable monthly in
arrears on the 5th day of each month starting on
September 5, 2008 and ending on the Maturity
Date
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Underlying
Stock
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Ticker
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Coupon Rate
Per annum*
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Interest
Rate
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Put Premium
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Knock-in
Level
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CUSIP
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ISIN
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Valero Energy
Corporation
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VLO
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16.50%
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2.69%
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13.81%
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70%
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00083GZC1
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US00083GZC13
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*This Security has a term of three
months, so you will receive a pro rated amount of this per annum rate
based on such three-month period.
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Denomination/Principal:
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$1,000
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Issue Size:
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USD
500,000
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Issue
Price:
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100%
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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 Stock linked to
such Security: i) If the closing price of the Underlying Stock on
the primary U.S. exchange or market for such Underlying Stock has not
fallen below the Knock-In Level on any trading day from but not including
the Pricing Date to and including the Determination Date, we will pay you
the principal amount of each Security
in cash. ii) If the closing price of the Underlying Stock on the primary
U.S. exchange or market for such Underlying Stock has fallen below the
Knock-In Level on any trading day from but not including the Pricing Date
to and including the Determination
Date: a) we will deliver to you a number of shares of the Underlying Stock
equal to the Stock Redemption Amount, in the event that the closing price
of the Underlying Stock on the Determination Date is below the Initial
Price; or b) We will pay you
the principal amount of each Security in cash, in the event that the
closing price of the Underlying Stock on the Determination Date is at or
above the Initial Price. You will receive cash in lieu of fractional
shares. If due to events beyond our reasonable control,
as determined by us in our sole discretion, shares of the Underlying Stock
are not available for delivery at maturity we may pay you, in lieu of the
Stock Redemption Amount, the cash value of the Stock Redemption
Amount, determined by multiplying the
Stock Redemption Amount by the Closing Price of the Underlying Stock on
the Determination Date.
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Initial
Price:
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USD 33.41 (100% of the Closing
Price per Underlying Share on the Trade Date)
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Stock Redemption
Amount:
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29.931 shares of the Underlying
Stock per $1,000 principal amount of Securities (Denomination divided by
the Initial Price)
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Knock-In
Level:
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USD 23.39 (70% of the Initial
Price)
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Indicative Secondary
Pricing:
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• Internet at: www.s-notes.com Bloomberg
at: REXS2
<GO>
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Status:
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Unsecured, unsubordinated
obligations of the Issuer
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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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Settlement:
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DTC, Book Entry,
Transferable
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Selling
Restrictions:
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Sales in the European Union must
comply with the Prospectus
Directive
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Pricing
Date:
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July 31, 2008 subject to certain
adjustments as described in the related pricing
supplement
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Settlement
Date:
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August 5,
2008
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Determination
Date:
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October 31, 2008 subject to
certain adjustments as described in the related pricing
supplement
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Maturity
Date:
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November 5, 2008 (Three
Month)
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ABN
AMRO 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 ABN AMRO has filed with the SEC
for more complete information about ABN AMRO 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, ABN AMRO, any underwriter or any dealer
participating in the offering will arrange to send you the Prospectus and
Prospectus Supplement if you request it by calling toll free (888)
644-2048.
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 in Cuba, Sudan, Iran or Myanmar; or (iv) to Cuban
Nationals, wherever located.
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 related Pricing Supplement and in its accompanying
Prospectus and Prospectus Supplement. You should carefully consider, among other
things, the matters set forth in “Risk Factors” in the related Pricing
Supplement, which are summarized on page 5 of this document. 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 interest paying, non-principal protected securities issued by us,
ABN AMRO Bank N.V., and are fully and unconditionally guaranteed by our parent
company, ABN AMRO Holding N.V. The Securities are senior notes of ABN AMRO Bank
N.V. These Securities combine certain features of debt and equity by offering a
fixed interest rate on the principal amount while the payment at maturity is
determined based on the performance of the Underlying Stock to which it is
linked.
What
will I receive at maturity of the Securities?
The
payment at maturity of each Security will depend on (i) whether or not the
closing price of the Underlying Stock to which such Security is linked fell
below the knock-in level on any trading day during the Knock-in Period, and if
so, (ii) the closing price of the applicable Underlying Stock on the
determination date. To determine closing prices, we look at the
prices quoted by the relevant exchange.
• If
the closing price of the applicable Underlying Stock on the relevant exchange
has not fallen below the applicable knock-in level on any trading day during the
Knock-in Period, we will pay you the principal amount of each Security in
cash.
• If the closing price
of the applicable Underlying Stock on the relevant exchange has fallen below the
applicable knock-in level on any trading day during the Knock-in Period, we will
either:
• deliver
to you the applicable stock redemption amount, in exchange for each Security, in
the event that the closing price of the applicable Underlying Stock is below the
applicable initial price on the determination date; or
• pay
you the principal amount of each Security in cash, in the event that the closing
price of the applicable Underlying Stock is at or above the applicable initial
price on the determination date.
If
due to events beyond our reasonable control, as determined by us in our sole
discretion, shares of the Underlying Stock are not available for delivery at
maturity we may pay you, in lieu of the Stock Redemption Amount, the cash value
of the Stock Redemption Amount, determined by multiplying the Stock Redemption
Amount by the Closing Price of the Underlying Stock on the Determination
Date.
Why
is the interest rate on the Securities higher than the interest rate payable on
your conventional debt securities with the same maturity?
The
Securities offer a higher interest rate than the yield that would be payable on
a conventional debt security with the same maturity issued by us or an issuer
with a comparable credit rating. This is because you, the investor in the
Securities, indirectly sell a put option to us on the shares of the applicable
Underlying Stock. The premium due to you for this put option is combined with a
market interest rate on our senior debt to produce the higher interest rate on
the Securities.
What
are the consequences of the indirect put option that I have sold
you?
The put option you
indirectly sell to us creates the feature of exchangeability. If the closing
price of the applicable Underlying Stock on the relevant exchange falls below
the applicable Knock-In Level on any trading day during the Knock-In Period, and
on the Determination Date the closing price of the applicable Underlying Stock
is less than the applicable Initial Price, you will receive the applicable Stock
Redemption Amount. The market value
of the shares of such Underlying Stock at the time you receive those shares will
be less than the principal amount of the Securities and could be zero. Therefore
you are not guaranteed to receive any return of principal at
maturity.
How
is the Stock Redemption Amount determined?
The
Stock Redemption Amount for each $1,000 principal amount of any Security is
equal to $1,000 divided by the Initial Price of the Underlying Stock linked to
such Security. The value of any fractional shares of such Underlying Stock that
you are entitled to receive, after aggregating your total holdings of the
Securities linked to such Underlying Stock, will be paid in cash based on the
closing price of such Underlying Stock on the Determination Date.
What
interest payments can I expect on the Securities?
The
interest rate is fixed at issue and is payable in cash on each interest payment
date, irrespective of whether the Securities are redeemed at maturity for cash
or shares.
Can
you give me an example of the payment at maturity?
If,
for example, in a hypothetical offering, the interest rate was 10% per annum,
the initial price of a
share
of underlying stock was $45.00 and the knock-in level for such offering was 80%,
then the stock redemption amount would be 22.222 shares of underlying stock, or
$1,000 divided by $45.00, and the knock-in level would be $36.00, or 80% of the
initial price.
If
the closing price of that hypothetical underlying stock fell below the knock-in
level of $36.00 on any trading day during the Knock-in Period, then the payment
at maturity would depend on the closing price of the underlying stock on the
determination date. In this case, if the closing price of the underlying stock
on the determination date is $30.00 per share at maturity, which is below the
initial price level, you would receive 22.222 shares of underlying stock for
each $1,000 principal amount of the securities. (In actuality, because we cannot
deliver fractions of a share, you would receive on the maturity date for each
$1,000 principal amount of the securities 22 shares of underlying stock plus
$6.66 cash in lieu of 0.222 fractional shares, determined by multiplying 0.222
by $30.00, the closing price per shares of underlying stock on the determination
date.) In addition, over the life of the securities you would have received
interest payments at a rate of 10% per annum. In this hypothetical example, the market value of
those 22 shares of underlying stock (including the cash paid in lieu of
fractional shares) that we would deliver to you at maturity for each $1,000
principal amount of security would be $666.66, which is less than the principal
amount of $1,000, and you would have lost a portion of your initial
investment. If, on the other hand, the closing price of
the underlying stock on the determination date is $50.00 per share, which is
above the initial price level, you will receive $1,000 in cash for each $1,000
principal amount of the securities regardless of the knock-in level having been
breached. In addition, over the life of the Securities you would have received
interest payments at a rate of 10% per annum.
Alternatively,
if the closing price of the underlying stock never falls below $36.00, which is
the knock-in level, on any trading day during the Knock-in Period, at maturity
you will receive $1,000 in cash for each security you hold regardless of the
closing price of the underlying stock on the determination date. In addition,
over the life of the securities you would have received interest payments at a
rate of 10% per annum.
This example is for illustrative
purposes only and is based on a hypothetical offering. It is not
possible to predict the closing price of any of the Underlying Stocks on the
determination date or at any time during the life of the Securities.
For
each offering, we will set the Initial Price, Knock-In Level and Stock
Redemption Amount on the Pricing Date.
Do
I benefit from any appreciation in the Underlying Stock over the life of the
Securities?
No.
The amount paid at maturity for each $1,000 principal amount of the Securities
will not exceed $1,000.
What
if I have more questions?
You
should read the “Description of Securities” in the related Pricing Supplement
for a detailed description of the terms of the Securities. ABN AMRO
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 ABN AMRO has filed with the SEC
for more complete information about ABN AMRO 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, ABN AMRO, any underwriter or any
dealer participating in the offering will arrange to send you the Prospectus and
Prospectus Supplement if you request it by calling toll free (888)
644-2048.
RISK
FACTORS
Investors
should carefully consider the risks of the Securities to which this
communication relates and whether these Securities are suited to their
particular circumstances before deciding to purchase them. It is
important that prior to investing in these Securities investors read the Pricing
Supplement related to such Securities and the accompanying Prospectus and
Prospectus Supplement to understand the actual terms of and the risks associated
with the Securities. In addition, we urge investors to consult with
their investment, legal, accounting, tax and other advisors with respect to any
investment in the Securities.
Credit
Risk
The
Securities are issued by ABN AMRO Bank N.V. and guaranteed by ABN AMRO Holding
N.V., ABN AMRO’s
parent. As a result, investors assume the credit risk of ABN AMRO
Bank N.V. and that of ABN AMRO Holding N.V. in the event that ABN AMRO defaults
on its obligations under the Securities. Any obligations or Securities sold,
offered, or recommended are not
deposits on ABN AMRO Bank N.V. and are not endorsed or guaranteed by any bank or
thrift, nor are they insured by the FDIC or any governmental
agency.
Principal
Risk
The
Securities are not ordinary debt securities: they are not principal
protected. In addition,
if the closing price of the applicable Underlying Stock falls below the
applicable Knock-In Level on any trading day during the Knock-In Period,
investors in the Securities will be exposed to any decline in the price of the
applicable Underlying Stock
below the closing price of such Underlying Stock on the date the Securities were
priced. Accordingly,
investors may lose some or all of their initial investment in the
Securities.
Limited
Return
The
amount payable under the Securities will never
exceed the original principal amount of the Securities plus the applicable
aggregate fixed coupon payment investors earn during the term of the
Securities. This means that investors will not benefit from any price
appreciation in the applicable Underlying
Stock, nor will they receive dividends paid on the applicable Underlying Stock,
if any. Accordingly, investors will never receive at maturity an
amount greater than a predetermined amount per Security, regardless of how much
the price of the applicable
Underlying Stock increases during the term of the Securities or on the
Determination Date. The return of a Security may be significantly
less than the return of a direct investment in the Underlying Stock to which the
Security is linked during the term
of the Security.
Liquidity
Risk
ABN
AMRO does not intend to list the Securities 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 limited. 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 investors may not receive their full principal back
if the Securities are sold prior to maturity. Such
factors include, but are not limited to, time to maturity, the price of the
applicable Underlying Stock, volatility and interest
rates.
In
addition, the price, if any, at which we or another party 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, commissions, discounts or mark-ups paid with respect to the
Securities, as well as the cost of hedging our obligations under the
Securities.
Tax
Risk
Pursuant
to the terms of the Knock-in Reverse Exchangeable Securities, we and
every
investor agree to characterize the Securities as consisting of a Put Option and
a Deposit of cash with the issuer. Under this characterization, a
portion of the stated interest payments on each Security is treated as interest
on the Deposit, and the remainder
is treated as attributable to a sale by the investor of the Put Option to ABN
AMRO (referred to as Put Premium). Receipt of the Put Premium will
not be taxable upon receipt.
If
the Put Option expires unexercised (i.e., a cash payment of the principal amount
of the Securities is made to the investor at maturity), the investor will
recognize short-term capital gain equal to the total Put Premium
received. If the Put Option is exercised
(i.e., the final payment on the Securities is paid in the applicable Underlying
Stock), the investor will not recognize any gain or loss in respect of the Put
Option, but the investor’s
tax basis in the applicable Underlying Stock received will be reduced
by the Put Premium received.
Significant
aspects of the U.S. federal income tax treatment of the Securities are
uncertain, and no assurance can be given that the Internal Revenue Service will
accept, or a court will uphold, the tax treatment described
above.
This
summary is limited to the federal tax issues addressed
herein. Additional issues may exist that are not addressed in this
summary and that could affect the federal tax treatment of the
transaction. This tax summary was written in connection
with the promotion or marketing by ABN AMRO Bank
N.V.
and the placement agent of the Knock-in Reverse Exchangeable Securities, and it
cannot be used by any investor for the purpose of avoiding penalties that may be
asserted against the investor under
the Internal Revenue Code.
Investors
should seek their own advice based on their particular circumstances from an
independent tax advisor.
On
December 7, 2007, the U.S. Treasury and the Internal Revenue Service released a
notice requesting comments on the U.S. federal income tax treatment of “prepaid
forward contracts” and similar instruments. While it is not entirely
clear whether the Securities are among the instruments described in the notice,
it is possible that any Treasury regulations or other guidance issued after
consideration of the issues raised in the notice could materially and adversely
affect the tax consequences of ownership and disposition of the Securities,
possibly on a retroactive basis.
The
notice indicates that it is possible the IRS may adopt a new position with
respect to how the IRS characterizes income or loss (including, for example,
whether the option premium might be currently included as ordinary income) on
the Securities for U.S. holders of the Securities.
You
should consult your tax advisor regarding the notice and its potential
implications for an investment in the Securities.
Reverse
Exchangeable is a Service Mark of ABN AMRO Bank N.V.
5