ABN
AMRO has filed a registration statement (including a Prospectus and Prospectus
Supplement) with the SEC for the offerings 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
and the related Pricing Supplement for more complete information about ABN AMRO
and the offerings of the Securities.
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 (866) 747 4332. The pricing supplement is also
found at "http://www.us.abnamromarkets.com/pdf/documents/current_offerings/Aug0924MoPPSJES3.pdf"
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.
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 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 S&P 500 Index which we refer to as the Underlying
Index. The Securities have a maturity of 24 Months. The payment at
maturity of the Securities is determined based on the performance of the
Underlying Index, subject to a maximum amount, as described
below. Unlike
ordinary debt securities, the Securities do not pay interest. If the index
return is less than 0% up to and including -20% 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 index return is less than -20% you will
suffer a loss and you could lose up to 80% of your initial principal
investment. If the index return is 0% or positive you will receive
the maximum redemption at maturity per security of $1,160.00 which represents a
return of 16.00% . If the index return is positive, your return on
the Securities will be equal to the digital return of 16.00% regardless of how
much or how little the value of the Underlying Index may appreciate above the
initial index value.
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 index return
is 0% or positive, $1000 plus the digital return; or
(2) If the index return
is less than 0% up to and including -20%, $1,000; or
(3) If the index return
is less than -20%, then $1,000 plus [(index return + 20%) x 1,000].
Accordingly,
if the index return is less than -20%, at maturity you will receive less than
the principal amount of $1,000 per Security and you could lose up to 80% of your
initial principal investment. If the index return is 0% or positive,
you will never receive a payment at maturity greater than the maximum redemption
at maturity of $1,160.00 per $1,000 principal amount of Securities.
What
is the index return, the digital return and the maximum redemption at maturity
and how are they calculated?
The index return is
the percentage change in the index value, over the term of the Securities,
calculated as:
Final Index Value - Initial
Index Value
Initial Index
Value
where,
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the initial
index value is the closing value of the Underlying Index on the pricing
date; and
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the final
index value is the closing value of the Underlying Index on the
determination date.
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The digital return
is $160 (or 16.00%) per $1,000 principal amount of Securities.
The maximum
redemption at maturity is $1,160.00 per $1,000 principal amount of Securities
which is equivalent to a return of 16.00% on your initial principal
investment. The digital return is fixed so that regardless of how
much or how little the index return may appreciate above the initial index
value, you will never receive more than $1,160.00 per $1,000 principal amount of
Securities at maturity. Similarly, if the final index value is equal
to the initial index value you will receive $1,160.00 per $1,000 principal
amount of Securities at maturity.
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?
The Securities are
not fully principal protected. 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 at least
$200 per $1,000 principal amount of Securities, regardless of the closing value
of the Underlying Index on the Determination Date. If the index return is less
than -20% over the term of the Securities, you will lose some of your initial
principal investment and you could lose as much as 80% of your initial principal
investment.
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 Index?
Example 1:
If, for example, in a hypothetical offering, the initial index value is 840, the
final index value is 1,000 and the digital return is $160.00, then the index
return would be calculated as follows:
Final Index Value - Initial
Index Value
Initial Index
Value
or
In
this hypothetical example, the index return is positive. Therefore, the payment
at maturity will be $1000 plus the digital return of $160.00 or a total payment
of $1,160 per $1,000 principal amount of Securities. In
this hypothetical example, the index return was 19.05% but you would have
received a return of 16.00% over the term of the Securities.
Example 2:
If, for example, in a hypothetical offering, the initial index value is
840, the final index value is 850 and the digital return is $160.00, then the
index return would be calculated as follows:
Final Index Value - Initial
Index Value
Initial Index
Value
or
In
this hypothetical example, the index return is positive. Therefore, the payment
at maturity will be $1000 plus the digital return of $160.00 or a total payment
of $1,160 per $1,000 principal amount of Securities.
In
this hypothetical example, the index return was 1.19% but you would have
received a return of 16.00% over the term of the Securities. If the index return
is positive, you will receive the digital return regardless of how much or how
little the index return appreciates over the initial index value. Similarly, if
the index return is 0% you will receive the digital return.
Example 3:
If, for example, in a hypothetical offering, the initial index value is 840 and
the final index value is 714, then the index return would be calculated as
follows:
Final Index Value - Initial
Index Value
Initial Index
Value
or
In
this hypothetical example, the index return is negative. Since the index return
is less than 0% but more than -20% you would receive, at maturity, the principal
amount of $1,000 per Security.
In
this hypothetical example, the index return was -15.00% and you would not have
lost any of your initial principal investment because the index return was
negative but not less than -20%. 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 4:
If, for example, in a hypothetical offering, the initial index value is 840 and
the final index value is 500, then the index return would be calculated as
follows:
Final Index Value - Initial
Index Value
Initial Index
Value
or
In
this hypothetical example, the index return is negative and is less than
-20%. Therefore, payment at maturity will be calculated
as:
$1,000 + [(index
return + 20%) x $1,000]
or
$1,000 + [(-40.48%
+ 20%) x $1,000] = $795.20
Therefore, in this
hypothetical example, you would receive at maturity a total payment of $795.20
for each $1,000 principal amount of Securities. In this hypothetical example,
the index return was -40.48% but you would have lost 20.48% 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 value of the Underlying Index on the determination date or at
any other time during the term of the Securities. The initial index value is
subject to adjustment as set forth in “Description of Securities –Adjustment
Events; –Discontinuance of the Underlying Index; 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 Index is unchanged or
appreciates, the total amount payable at maturity per Security is capped at
$1,160.00. This means that if the final index value is equal to the initial
index value you will receive the digital return. If the Underlying Index
appreciates, no matter how much the Underlying Index may appreciate, your return
on the Securities will never exceed 16.00% .
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.
RISK
FACTORS
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
or guaranteed by the FDIC or any governmental agency.
Market
Risk
The
Securities do not pay interest. The rate of return, if any, will depend on the
performance of the Underlying Index. If the Index Return of the Underlying Index
is negative up to and including -20% 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 Index Return is less than -20% you will suffer a loss and you
could lose up to 80% of your initial principal investment. If the Index Return
is 0% or positive, you will never receive a payment at maturity greater than
$1,160.00 regardless of how much the Underlying Index may appreciate above the
initial index value.
Principal Risk
Return of principal
on the Securities is only guaranteed up to 20%, subject to our credit and the
credit of Holding. If the closing value of the Underlying Index on the
determination date is less than 20% below the initial value of the Underlying
Index, the amount of cash paid to you at maturity will be less than the
principal amount of the Securities and you could lose up to 80% of your initial
principal investment.
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 value the Underlying
Index, 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 Index.
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.