Commonwealth Bank of Australia : Offer of ASB Subordinated Notes 2

Attached to this announcement is a modified form of the product disclosure statement dated 25 October 2016 ("PDS"). Certain information in the PDS has been redacted to comply with Australian regulatory requirements.

The offer of ASB Subordinated Notes 2 is only made to retail investors in New Zealand and to certain New Zealand and overseas institutional investors, including certain institutional investors in Australia. No disclosure document in relation to ASB Subordinated Notes 2 has been or will be lodged with the Australian Securities and Investments Commission.

Tricia Ho-Hudson

Head of Capital and Regulatory Strategy 02 9118 1319

Commonwealth Bank of Australia | ACN 123 123 124 | 126/2016

The offer of ASB Subordinated Notes 2 is only made to retail investors in New Zealand and to certain New Zealand and overseas institutional

investors, including certain institutional investors in Australia. No disclosure document in relation to ASB Subordinated Notes 2 has been or will be lodged with the Australian Securities and Investments Commission.

Product Disclosure Statement Offer of ASB Subordinated Notes 2

Date:

25 October 2016

Issuer of ASB Subordinated Notes 2: ASB Bank Limited

Issuer of CBA Ordinary Shares if ASB Subordinated Notes 2 are Converted: Commonwealth Bank of Australia

Arrangers:

Commonwealth Bank of Australia Forsyth Barr Limited

Joint Lead Managers: Bank of New Zealand

Commonwealth Bank of Australia Deutsche Craigs Limited

Forsyth Barr Limited Macquarie

This document gives you important information about this investment to help you decide whether you want to invest. There is other useful information about this offer on www.business.govt.nz/disclose.

This investment is riskier than a bank deposit. These ASB Subordinated Notes 2 are complex financial products that are not suitable for many investors. If you do not fully understand how they work or the risks associated with them, you should

not invest in them. You can seek advice from a financial adviser to help you make an investment decision.

ASB Bank Limited has prepared this document in accordance with the Financial Markets Conduct Act 2013.

1. Key information summary

What is this?

This is an offer of subordinated unsecured convertible notes ("ASB Notes 2"). ASB Notes 2 are debt securities issued by ASB Bank Limited ("ASB"). You give ASB money, and in return ASB promises to pay you interest and repay the money at the end of the term. If ASB runs into financial trouble, you might lose some or all of the money you invested.

In certain circumstances, all or some of your ASB Notes 2 will be Converted into ordinary shares ("CBA Ordinary Shares") of Commonwealth Bank of Australia ("CBA"), the ultimate parent company of ASB. These circumstances are if a Non-Viability Trigger Event occurs. A Non-Viability Trigger Event can occur if (among other things) ASB or CBA encounter severe financial difficulty. If your ASB Notes 2 are Converted into CBA Ordinary Shares, you may receive areturn if dividends are paid on CBA Ordinary Shares or if you subsequently sell those CBA Ordinary Shares at a gain.

If for any reason your ASB Notes 2 are not Converted when required following a Non-Viability Trigger Event, then your ASB Notes 2 will be written off completely and you will lose all of your investment.

Warning

These ASB Notes 2 carry similar risks to shares but do not have the same opportunity for growth as shares. If ASB or CBA experiences financial difficulty, ASB Notes 2 can be converted into CBA Ordinary Shares (which may be worth lessthan your investment) or even written off completely. This means you could lose all of your investment.

About the ASB Group

The ASB Group is one of New Zealand's leading providers of integrated financial services including retail, corporate, commercial and rural banking and securities, investment and insurance services. ASB is the main operating entity of the ASB Group and is a registered bank.

Information about ASB and ASB's financial statements are published quarterly in the disclosure statementsASB prepares under the Reserve Bank of New Zealand Act 1989. ASB's disclosure statements are available at www.asb.co.nz/section176.aspx.

About the CBA Group

The CBA Group is one of Australia's leading providers of integrated financial services including retail, business and institutional banking, funds management, superannuation, life insurance, general insurance, broking services and financial company activities. CBA is an authorised deposit-taking institution regulated by APRA and other regulatory bodies.

Purpose of this Offer

The Offer raises Tier 2 Capital to meet ASB's and CBA's regulatory capital requirements and maintain the diversity of ASB's sources and types of funding. The proceeds of the Offer will be used for ASB's general corporate purposes.

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