Australia and New Zealand Banking : ANZ CPS3 (ANZPC) - Amendments to terms

For release: 16 August 2017

ANZ today announced that it has amended the terms of the convertible preference shares issued by ANZ in September 2011 (CPS3). The amendments have been made to facilitate the Buy-Back Facility for ANZ Capital Notes 5 under which Eligible CPS3 Holders may apply to sell some or all of their CPS3 and reinvest the proceeds in ANZ Capital Notes 5 or receive cash.

Specifically, the changes permit the payment of a Pro Rata Dividend to all CPS3 Holders, including Eligible CPS3 Holders who elect to have some or all of their CPS3 bought-back under the Buy-Back Facility. Payment of the Pro Rata Dividend will be on the day that the buy-back of the CPS3 under the Buy-Back Facility settles, subject to the payment conditions in the CPS3 terms (including that the Board resolves to pay the relevant dividend).

Further details about the offer of ANZ Capital Notes 5, the Buy-Back Facility and the Pro Rata Dividend are set out in a prospectus that was lodged with the ASX and the Australian Securities and Investments Commission today (Prospectus).

The amendments to the CPS3 terms are highlighted in the attachment and take effect from today. The amendments have been approved by the Australian Prudential Regulation Authority.

Defined terms referred to in this announcement have the meaning given to them in the Prospectus.

For investor enquiries about the amendments to the CPS3 terms, ANZ Capital Notes 5 and the Buy-Back Facility please call the ANZ Information Line on 1800 113 399 (Australia) or +61 3 9415 4010 (international) Monday to Friday - 8.30am - 5.30pm AET.

For media enquiries only contact: Stephen Ries, +61-409-655 551

Australia and New Zealand Banking Group Limited ABN 11 005 357 522 29389268_3

CPS3 TERMS

1. CPS3

2. CPS3

   CPS3 are fully paid mandatorily convertible preference shares in the capital of ANZ (CPS3). They are issued, and may be Redeemed or Converted, according to these CPS3 Terms. The CPS3 are designated the "September 2011 CPS3" for identification purposes.

   CPS3 are not deposit liabilities of ANZ, are not protected accounts for the purposes of the depositor protection provisions in Division 2 of Part II of the Banking Act or of the Financial Claims Scheme established under Division 2AA of Part II of the Banking Act and are not guaranteed or insured by any government, government agency or compensation scheme of Australia or any other jurisdiction.

3. ISSUE PRICE

   The issue price of each CPS3 (Issue Price) is $100.

4. TITLE AND TRANSFER

5. TITLE

   Title to a CPS3 passes when details of the transfer are entered in the Register.

6. REGISTER CONCLUSIVE AS TO OWNERSHIP

   Entries in the Register in relation to a CPS3 constitute conclusive evidence that the person so entered is the absolute owner of the CPS3 subject to correction for fraud or error.

7. NON-RECOGNITION OF INTERESTS

   Except as required by law and as provided in this clause 2.3, ANZ must treat the person whose name is entered in the Register as the CPS3 Holder in respect of a CPS3 as the absolute owner of that CPS3.

   No notice of any trust, Encumbrance or other interest in, or claim to, any CPS3 will be entered in the Register. Neither ANZ nor the Registrar need take notice of any trust, Encumbrance or other interest in, or claim to, any CPS3, except as ordered by a court of competent jurisdiction or required by law, and no trust, Encumbrance or other interest in, or claim to, any CPS3 will in any way affect any provision of these CPS3 Terms.

   This clause 2.3 applies whether or not a payment has been made when scheduled on a CPS3 and despite any notice of ownership, trust or interest in the CPS3.

8. DEALINGS IN WHOLE

   At all times, the CPS3 may be held or transferred only in whole CPS3.

9. TRANSFER IN ACCORDANCE WITH CONSTITUTION

   The Constitution contains provisions relating to the transfer of shares and the relevant provisions apply with all necessary modifications to a transfer of CPS3.

10. REFUSAL TO REGISTER

    The Constitution contains provisions allowing the Directors to refuse to register transfers and the relevant provisions apply with all necessary modifications to refusals to register transfers of CPS3 in those circumstances.

11. TRANSFEROR TO REMAIN HOLDER UNTIL REGISTRATION

    The Constitution contains provisions relating to the effect of registration on a transfer and the relevant provisions apply with all necessary modifications to a transfer of CPS3.

12. TRANSMISSION OF CPS3

    The Constitution contains provisions relating to the transmission of shares in certain circumstances (including without limitation on the death of a holder) and the relevant provisions apply with all necessary modifications to the transmission of CPS3 in those circumstances.

13. DIVIDENDS

14. DIVIDENDS

    Subject to these CPS3 Terms, each CPS3 entitles the CPS3 Holder on a Record Date to receive on the relevant Dividend Payment Date a dividend (Dividend) calculated according to the following formula:

    Dividend = (Issue Price × Dividend Rate × N)

    365

    where:

    Dividend Rate (expressed as a percentage per annum) is calculated according to the following formula: Dividend Rate = (Bank Bill Rate + Margin) × (1 - Tax Rate)

    where:

    Bank Bill Rate (expressed as a percentage per annum) means, for a Dividend Period, the average mid-rate for bills of a term of 180 days which average mid-rate is displayed on Reuters page BBSW (or any page which replaces that page) on the first Business Day of the Dividend Period or if there is a manifest error in the calculation of that average mid-rate or that average mid-rate is not displayed by 10.30am (Melbourne time) on that date, the rate specified in good faith by ANZ at or around that time on that date having regard, to the extent possible, to:

15. the rates otherwise bid and offered for bills of a term of 180 days or for funds of that tenor displayed on Reuters page BBSW (or any page which replaces that page) at that time on that date; or

16. if bid and offer rates for bills of a term of 180 days are not otherwise available, the rates otherwise bid and offered for funds of that tenor at or around that time on that date,

    provided that in the case of the Dividend Period that commences on the Settlement Date, the Bank Bill Rate is the Bank Bill Rate for the Dividend Period commencing on the Dividend Payment Date that precedes the Settlement Date;

    Margin (expressed as a percentage per annum) means the margin determined under the Bookbuild; and

    Tax Rate (expressed as a decimal) means the Australian corporate tax rate applicable to the franking account of ANZ as at the relevant Dividend Payment Date; and

    N means in respect of:

17. the first Dividend Payment Date, the number of days from (and including) the Issue Date until (but not including) the first Dividend Payment Date; and

18. each subsequent Dividend Payment Date, the number of days from (and including) the preceding Dividend Payment Date until (but not including) the relevant Dividend Payment Date.

19. FRANKING ADJUSTMENTS

    If any Dividend is not franked to 100% under Part 3-6 of the Tax Act (or any provisions that revise or replace that Part), the Dividend will be calculated according to the following formula:

    Dividend = D

    (1 - [ Tax Rate × (1 - F)])

    where:

    D means the Dividend calculated under clause 3.1; Tax Rate has the meaning given in clause 3.1; and F means the applicable Franking Rate.

20. PAYMENT OF A DIVIDEND

    Each Dividend is subject to:

    (a) the Directors (or their delegates), at their absolute discretion, resolving to pay that Dividend on the relevant Dividend Payment Date; and

    (b) no APRA Condition existing in respect of the relevant Dividend Payment Date.

21. DIVIDENDS ARE NON-CUMULATIVE

    Dividends are non-cumulative. If all or any part of a Dividend is not paid because of clause 3.3 or because of any applicable law, ANZ has no liability to pay the unpaid amount of the Dividend and CPS3 Holders have no claim

    or entitlement in respect of such non-payment and such non-payment does not constitute an event of default. No interest accrues on any unpaid Dividends and the CPS3 Holders have no claim or entitlement in respect of interest on any unpaid Dividends.

22. DIVIDEND PAYMENT DATES

    Subject to this clause 3, Dividends in respect of a CPS3 will be payable in arrears on the following dates (each a Dividend Payment Date):

    (a) each 1 March and 1 September commencing on 1 March 2012 until (but not including) the date on which a Redemption or Conversion of that CPS3 occurs in accordance with these CPS3 Terms; and

    (b) each date on which:

23. a Conversion of that CPS3 occurs; and

24. subject to clause 8.3(a)(iii), a Redemption of that CPS3 occurs,

25. in each case in accordance with these CPS3 Terms; and

26. the Settlement Date, provided that before the Buy-Back Offer is made, the Directors (or their delegates) have declared that Dividend on terms that payment of the Dividend shall be made on the Settlement Date, subject only to clause 3.3(b).

If a Dividend Payment Date is a day which is not a Business Day, then the Dividend Payment Date will be the next day which is a Business Day.

27. RECORD DATES

    A Dividend is only payable on a Dividend Payment Date to those persons registered as CPS3 Holders on the Record Date for that Dividend.

28. DEDUCTIONS

29. ANZ may deduct from any Dividend payable the amount of any withholding or other tax, duty or levy required by law to be deducted in respect of such amount. If any such deduction has been made and the amount of the deduction accounted for by ANZ to the relevant revenue authority and the balance of the Dividend payable has been paid to the relevant CPS3 Holder, then the full amount payable to such CPS3 Holder shall be deemed to have been duly paid and satisfied by ANZ.

30. ANZ shall pay the full amount required to be deducted to the relevant revenue authority within the time allowed for such payment without incurring any penalty under the applicable law and shall, if required by any CPS3 Holder, deliver to that CPS3 Holder a copy of any relevant receipt issued by the revenue authority (to the extent issued) without delay after it is received by ANZ.

31. RESTRICTIONS IN THE CASE OF NON-PAYMENT

    If for any reason a Dividend has not been paid in full on a Dividend Payment Date (the Relevant Dividend Payment Date), ANZ must not, without approval of a Special Resolution, until and including the next Dividend Payment Date:

    (a) declare or pay a dividend or make any distribution on any Ordinary Shares; or

    (b) buy back or reduce capital on any Ordinary Shares;

    unless the Dividend is paid in full within 3 Business Days of the Relevant Dividend Payment Date.

32. EXCLUSIONS FROM RESTRICTIONS IN CASE OF NON-PAYMENT

    The restrictions in clause 3.8 do not apply to:

    (a) repurchases (including buy-backs), or other acquisitions of Ordinary Shares in connection with:

33. any employment contract, employee share scheme, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants of ANZ or any Controlled Entity;

34. a dividend reinvestment or bonus option plan or shareholder share purchase plan; or

35. the issuance of Ordinary Shares, or securities convertible into or exercisable for such shares, as consideration in an acquisition transaction entered into prior to non-payment of the Dividend;

36. (b) an exchange, buy-back or conversion of any Ordinary Shares, or any securities of a Subsidiary or of any other entity whose financial results are required to be consolidated with ANZ's financial statements, for any class or series of ANZ Shares;

37. the purchase of fractional interests in Ordinary Shares under the conversion or exchange provisions of the shares or the security being converted or exchanged;

(d) any payment, distribution or declaration of a dividend in connection with any shareholder's rights plan, or the issuance of rights, shares or other property under any shareholder's rights plan, or the redemption or repurchase of rights pursuant to the plan;

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

(f) a capital raising by way of a rights or entitlement issue made to holders of one or more capital instruments of ANZ.

Nothing in these CPS3 Terms prohibits ANZ or a Controlled Entity from purchasing ANZ Shares (or an interest therein) in connection with transactions for the account of customers of ANZ or customers of entities that ANZ Controls or in connection with the distribution or trading of ANZ Shares in the ordinary course of business. This includes (for the avoidance of doubt and without affecting the foregoing) any acquisition resulting from:

(a) taking security over ANZ Shares in the ordinary course of business; and

(b) acting as trustee for another person where neither ANZ nor any entity it Controls has a beneficial interest in the trust (other than a beneficial interest that arises from a security given for the purposes of a transaction entered into in the ordinary course of business).

38. MANDATORY CONVERSION