January
9, 2009
Relating
to Preliminary Pricing Supplement No. 828 to
Registration
Statement Nos. 333-137691, 333-137691-02
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ABN AMRO Bank
N.V.
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10%
Buffer Notes
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Preliminary
Pricing Sheet – January 9, 2009
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12
MONTH, 10% BUFFER SECURITIES DUE JANUARY 29,
2010
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LINKED TO THE PERFORMANCE OF
THE SPDR
TRUST SERIES
1
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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
A+)
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Lead
Selling Agent:
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ABN AMRO
Incorporated
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Offering:
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12 Month, 10%
Buffer Securities linked to the performance of The SPDR Trust Series 1 due
January 29, 2010 (the “Securities”)
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Underlying
Fund:
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The SPDR Trust
Series 1 (Bloomberg Code: SPY <US><Equity>)
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Coupon:
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None. The
Securities do not pay interest.
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Denominations:
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$1,000
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Issue
Size:
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TBD
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Issue
Price:
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100%
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Payment
at Maturity:
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At maturity,
you will receive for each $1,000 principal amount of Security a cash
amount calculated as follows:
(1) if
the fund return is positive, $1,000 plus the out-performance
amount;
(2) if
the fund return is equal to or less than 0% up to and including -10%,
$1,000; and
(3) if
the fund return is less than -10%, $1,000 plus [(fund return + 10%) x
1.1111 x $1,000].
If
the fund return is less than -10% you could lose up to 100% of your
initial principal investment. In addition, if the
fund return is positive, you will never receive a payment at maturity
greater than the Maximum Redemption amount.
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Fund
Return:
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The fund
return is the percentage change in the price of the Underlying Fund,
calculated as follows:
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Final Price - Initial
Price
Initial
Price
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Initial
Price:
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100% of the
closing price of the Underlying Fund on the Pricing Date, subject to
certain adjustments as described in the preliminary
pricing supplement for the Securities.
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Final
Price:
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The closing
price of the Underlying Fund on the determination date.
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Participation
Rate:
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4.00 (or
400%).
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Out-performance
amount:
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For each
$1,000 principal amount of Securities, an amount in cash equal to the
lesser of: (a) the participation rate times the fund return
times $1,000 and (b) the maximum amount.
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Maximum
Amount:
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$___ per
$1,000 principal amount of Securities. The Maximum Amount will
be set on the pricing date. It will be no less
than 22% and
no more than 28% of $1,000
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Buffer
Level:
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10% buffer. A
fund return equal to or less than 0% up to and including -10% will not
result in the loss of any principal. A fund return of
less than -10% will result in a loss of principal which could be up to
100% of your initial principal investment.
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Maximum
Redemption at Maturity:
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The Maximum
Redemption will be no less than $1,220 and no more than $1,280, which is
equal to $1,000 plus the maximum
amount.
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Indicative
Secondary Pricing:
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• Internet at:
www.s-notes.com
• Bloomberg at:
PIPN <GO>
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Status:
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Unsecured,
unsubordinated obligations of the Issuer
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CUSIP
Number:
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00083G4U5 ISIN
Code: US00083G4U53
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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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January 26,
2009, subject to certain adjustments as described in the preliminary
pricing supplement for the Securities.
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Settlement
Date:
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January 29,
2009
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Determination
Date:
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January 26,
2010, subject to certain adjustments as described in the preliminary
pricing supplement for the Securities
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Maturity
Date:
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January 29,
2010 (12 Months)
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You
may get these documents for free by visiting EDGAR on the SEC website at
www.sec.gov or by visiting ABN AMRO Holding N.V. on the SEC website at
<http://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=abn&filenum=&State=&SIC=&owner=include&action=get
company>. 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.
We
reserve the right to withdraw, cancel or modify any offering and to reject
orders in whole or in part.
**A
credit rating (1) is subject to revision, suspension or withdrawal at any time
by the assigning rating organization, (2) does not take into account market risk
or the performance related risks of investing in the Securities, and (3) is not
a recommendation to buy, sell or hold the Securities.
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 4 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 senior notes 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 linked to performance of the SPDR Trust, Series 1, an exchange
traded fund which we refer to as the Underlying Fund. The Securities have a
maturity of 12 Months. The payment at maturity of the Securities is determined
based on the performance of the Underlying Fund, subject to a cap, as described
below. Unlike ordinary debt securities, the
Securities do not pay interest. If the fund return is zero or up to and
including -10% you will be entitled to receive only the principal amount of
$1,000 per Security at maturity. In such a case, you will receive no return on
your investment and you will not be compensated for any loss in value due to
inflation and other factors relating to the value of money over time. If the
fund return is less than -10% you will suffer a loss and you could lose up to
100% of your initial principal investment. If the fund return is positive you
will never receive more than Maximum Redemption per security at maturity. The
Maximum Redemption will be set on the pricing date.
What
will I receive at maturity of the Securities?
At
maturity you will receive, for each $1,000 principal amount of Securities, a
cash payment calculated as follows:
(1) If
the fund return is positive, $1,000 plus the out-performance amount;
or
(2) If
the fund return is equal to or less than 0% up to and including -10%, $1,000;
or
(3) If
the fund return is less than -10%, then $1,000 plus [(fund return) + 10%) x
1.1111x 1,000].
Accordingly,
if the fund return is less than -10%, at maturity you will receive less than the
principal amount of $1,000 per Security and you could lose up to 100% of your
initial principal investment. If the fund return is positive, you will never
receive a payment at maturity greater than the Maximum Redemption.
What
is the out-performance amount, the participation rate and the maximum amount and
how are they calculated?
The
fund return is the percentage change in the fund price, over the term of the
Securities, calculated as:
Final Price - Initial Price
Initial
Price
where,
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the
initial price is the closing price of the Underlying Fund on the pricing
date; and
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the
final price is the closing price of the Underlying Fund on the
determination date.
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The
out-performance amount is an amount in cash equal to the lesser of: (a) the
participation rate times the fund return times $1,000 and (b) the maximum
amount.
The
maximum amount is between $220.00 and $280.00 (set on the determination date)
per $1,000 principal amount of Securities.
The
participation rate is 4.00 (or 400%).
Will
I receive interest payments on the Securities?
No.
You will not receive any interest payments on the Securities.
Will
I get my principal back at maturity?
You are not guaranteed to receive any
return of principal at maturity. If the fund return is less than -10% over the
term of the Securities, you will lose some or all of your initial principal
investment and you could lose as much as 100% of your initial principal
investment. Subject to the credit of ABN AMRO Bank, N.V. as the
issuer of the Securities and ABN AMRO Holding N.V. as the guarantor of the
issuer’s obligations under the Securities, you will receive at maturity any cash
payment to which you are entitled, under the terms of the
Securities.
However, if you sell the Securities
prior to maturity, you will receive the market price for the Securities, which
could be zero. There may be little or no secondary market for the Securities. Accordingly,
you should be willing to hold your securities until maturity.
Can
you give me examples of the payment I will receive at maturity depending on the
performance of the Underlying Fund?
Example 1: If, for example, in
a hypothetical offering, the initial price is
$140.00, the final price is $160.00, the participation rate is 4.00 (or 400%)
and the maximum amount is $250.00, then the fund return would be calculated as
follows:
Final Price - Initial
Price
Initial
Price
or
$170.00 -
$140.00 =
21.43%
$140.00
In
this hypothetical example, the fund return is positive. Therefore, the payment
at maturity will be calculated as:
$1,000
+ the out performance amount
(a)
the participation rate x fund return x $1,000 and (b) the maximum
amount
or
(a)
400% x 21.43% x $1,000 = $857.20 and (b) $250.00
Therefore, in this
hypothetical example, the out performance amount will be $250 since $250 is less
than $857.20. As a result, you would receive at maturity the principal amount of
$1,000 plus $250.00, for a total payment of $1,250 for each $1,000 principal
amount of Securities. In this hypothetical example, the fund return was 21.43%
but you would have received a return of 25% over the term of the Securities
because the maximum amount is $250.00 or 25.00%.
Example 2: If, for example, in a hypothetical
offering, the initial price is $140.00 and the final
price is $133.00, then the fund return would be calculated as
follows:
Final Price - Initial
Price
Initial
Price
or
$133.00-
$140.00
= -5.00%
$140.00
In this hypothetical
example, the fund return is negative. Since the fund return is less than 0% but
higher than -10% you would receive, at maturity, the principal amount of $1,000
per Security.
In this hypothetical
example, the fund return was -5.00% and you would not have lost any of your
initial principal investment because the fund return was between 0% and -10%. In
this hypothetical example you would not have received any return on your initial
principal investment and you would not be compensated for any loss in value due
to inflation and other factors relating to the value of money over
time.
Example 3: If, for example, in
a hypothetical offering, the initial price is $140.00
and the final price is $90.00, then the fund return would be calculated as
follows:
Final Price - Initial
Price
Initial
Price
or
$90.00 -
$140.00
= -35.71%
$140.00
In this hypothetical
example, the fund return is negative and is less than -10%. Therefore, payment
at maturity will be calculated as:
$1,000 + [(fund
return + 10%) x 1.1111 x $1,000]
or
$1,000 + [(-35.71% +
10%) x 1.1111 x $1,000] = $714.34
Therefore, in this
hypothetical example, you would receive at maturity a total payment of $713.34
for each $1,000 principal amount of Securities. In this hypothetical example,
the fund return was -35.71% but you would have lost 28.56% of your initial
principal investment over the term of the Securities.
These
examples are for illustrative purposes only. It is not possible to predict the
final price of the Underlying Fund on the determination date. The initial price
is subject to adjustment as set forth in “Description of Securities –Adjustment
Events; –Discontinuance of the Underlying Fund; Alteration of Method of
Calculation” in the related Pricing Supplement.
Is
there a limit on how much I can earn over the term of the
Securities?
Yes. If the
Securities are held to maturity and the Underlying Fund appreciates, the total
amount payable at maturity per Security is capped. The cap will be set on the
pricing date. It will be no less than $1,220 and no more than
$1,280.
What
if I have more questions?
You should read
“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
You
should carefully consider the risks of the Securities to which this
communication relates and whether these Securities are suited to your particular
circumstances before deciding to purchase them. It is important that prior to
investing in these Securities you 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 you to consult with your 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
Bank N.V.’s parent. As a result, you assume the credit risk of ABN AMRO Bank
N.V. and that of ABN AMRO Holding N.V. in the event that ABN AMRO Bank N.V.
defaults on its obligations under the Securities. Any obligations or Securities
sold, offered, or recommended are not deposits of 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.
Market
Risk
The Securities do
not pay any interest. The rate of return, if any, will depend on the performance
of the Underlying Fund. If the Fund Return of the Underlying Fund is zero or up
to and including -10% you will be entitled to receive only the principal amount
of $1,000 per Security at maturity. In such a case, you will receive no return
on your investment and you will not be compensated for any loss in value due to
inflation and other factors relating to the value of money over time. If the
Fund Return is less than -10% you will suffer a loss and you could lose up to
100% of your initial principal investment. If the Fund Return is positive, you
will never receive a payment at maturity greater than $1,170.00.
Liquidity
Risk
The Securities will
not be listed 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 very limited or non-existent. 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 you
may not receive your 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 Securities, we and every holder of a Security agree (in the absence
of an administrative determination or judicial ruling to the contrary) to
characterize each Security for all U.S. tax purposes as a single financial
contract with respect to the Underlying Fund.
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. In particular, 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.
The notice focuses
in particular on whether to require holders of instruments such as the
Securities to accrue constructive income over the term of their investment in
the Securities. It also asks for comments on a number of related topics,
including how the IRS characterizes income or loss with respect to these
instruments; the relevance to such characterization of factors such as the
exchange-traded status of the instrument and the nature of the underlying
property to which the instrument is linked; and whether these instruments are or
should be subject to the “constructive ownership” regime, which very generally
can operate to recharacterize certain long-term capital gains as ordinary income
that is subject to an interest charge.
While the notice
requests comments on appropriate transition rules and effective dates, Treasury
regulations or other forms of guidance, if any, issued after consideration of
these issues could materially and adversely affect the tax consequences of
ownership and disposition of the Securities, possibly on a retroactive
basis.
Investors should
consult their own tax advisor regarding the notice and its potential
implications for an investment in the Securities.
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 Securities, and it cannot be used
by any investor for the purpose of avoiding penalties that may be asserted by
the investor under the Internal Revenue Code. Investors should seek their own
advice based on their particular circumstances from an independent tax
advisor.