NATIONAL BANK OF ABU DHABI P.J.S.C. (incorporated with limited liability in the Emirate of Abu Dhabi, the United Arab Emirates) U.S.$750,000,000 Perpetual Tier 1 Capital Securities The U.S.$750,000,000 Perpetual Tier 1 Capital Securities (the Capital Securities) shall be issued by National Bank of Abu Dhabi P.J.S.C. (the Issuer or the Bank) on 17 June 2015 (the Issue Date). Interest Payment Amounts (as defined in the Conditions) shall be payable subject to and in accordance with terms and conditions set out in the "Terms and Conditions of the Capital Securities" (the Conditions) on the outstanding principal amount of the Capital Securities from (and including) the Issue Date to (but excluding) 17 June 2020 (the First Call Date) at a rate of 5.250 per cent. per annum. If the Capital Securities are not redeemed in accordance with the Conditions on or prior to the First Call Date, Interest Payment Amounts shall be payable from (and including) the First Call Date subject to and in accordance with the Conditions at a fixed rate, to be reset on the First Call Date and every five years thereafter, equal to the Relevant Five-Year Mid Swap Rate (as defined in the Conditions) plus a margin of 3.350 per cent. per annum. Interest Payment Amounts will (subject to the occurrence of a Non-Payment Event (as defined in, and as more particularly provided in, Condition 6.1 (Interest Cancellation – Non-Payment Event))) be payable semi-annually in arrear on 17 June and 17 December in each year, commencing on 17 December 2015 (each, an Interest Payment Date). Payments on the Capital Securities will be made free and clear of, without withholding or deduction for, or on account of any present or future taxes, duties, assessments or governmental charges of whatever nature, imposed, levied, collected, withheld or assessed by or within the Tax Jurisdiction (as defined in the Conditions) (the Taxes) to the extent described under Condition 12 (Taxation). All payments by the Issuer in respect of the Capital Securities shall be conditional upon satisfaction of the Solvency Conditions (as defined in the Conditions), as more particularly described in Condition 4 (Status and Subordination) (see, in particular, "Risk Factors – Factors which are material for the purpose of assessing the risks associated with the Capital Securities - The Capital Securities are subordinated, conditional and unsecured obligations of the Issuer"). If a Non-Viability Event (as defined in the Conditions) occurs at any time on or after the Effective Date (as defined in the Conditions), a Write-down (as defined in the Conditions) shall occur on the relevant Non-Viability Event Write-down Date (as defined in the Conditions), as more particularly described in Condition 10 (Write-Down at the Point of Non-Viability). In such circumstances, the holders' rights under the Capital Securities shall automatically be deemed to be irrevocably and unconditionally written-down in whole and the Capital Securities shall be cancelled (see "Risk Factors – Factors which are material for the purpose of assessing the risks associated with the Capital Securities - The right to receive repayment of the principal amount of the Capital Securities and the right for any further interest will be fully and permanently written-down upon the occurrence of a Non-Viability Event"). The Issuer may elect, in its sole discretion, and in certain circumstances shall be required, not to pay interest falling due on the Capital Securities. Any Interest Payment Amounts not paid as aforesaid will not accumulate and the holder of a Capital Security shall not have any claim in respect thereof. The Capital Securities are undated and have no final maturity. Unless the Capital Securities have previously been redeemed or purchased and cancelled as provided in the Conditions, the Capital Securities may, at the option of the Issuer, subject to the prior approval of the Central Bank of the United Arab Emirates (the UAE Central Bank), be redeemed at par (in whole but not in part) on the First Call Date or any Interest Payment Date thereafter. In addition, the Capital Securities may, in the event of a Tax Event or Capital Event (each as defined in the Conditions), be redeemed (in whole but not in part), at other times subject to the prior approval of the UAE Central Bank. An investment in the Capital Securities involves certain risks. For a discussion of these risks, see "Risk Factors". The Capital Securities may only be offered, sold or transferred in registered form in minimum principal amounts of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof. Delivery of the Capital Securities in book-entry form will be made on the Issue Date. The Capital Securities will be represented by interests in a global certificate in registered form (the Global Certificate) deposited on or about the Issue Date with, and registered in the name of a nominee for, a common depositary (the Common Depositary) for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg). Interests in the Global Certificate will be shown on, and transfers thereof will be effected only through, records maintained by Euroclear and Clearstream, Luxembourg. Individual Certificates (as defined in the Conditions) evidencing holdings of interests in the Capital Securities will be issued in exchange for interests in the Global Certificate only in certain limited circumstances described herein. This Prospectus has been approved by the United Kingdom Financial Conduct Authority in its capacity as competent authority (the UK Listing Authority). The UK Listing Authority only approves this Prospectus as meeting the requirements imposed under the laws of England and Wales and the European Union pursuant to Directive 2003/71/EC, as amended (which includes the amendments made by Directive 2010/73/EU), and includes any relevant implementing measure in a relevant Member State of the European Economic Area (the Prospectus Directive). Application has been made to the UK Listing Authority for the Capital Securities to be admitted to the official list of the UK Listing Authority (the Official List) and to the London Stock Exchange plc (the London Stock Exchange) for the Capital Securities to be admitted to trading on the London Stock Exchange's regulated market. The London Stock Exchange's regulated market is a regulated market for the purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC) (MiFID). References in this Prospectus to Capital Securities being listed (and all related references) shall mean that such Capital Securities have been admitted to the Official List and have been admitted to trading on the London Stock Exchange's regulated market. The Issuer has been assigned long-term credit ratings of AA- (stable outlook), Aa3 (stable outlook) and AA- (stable outlook) by Fitch Ratings Limited (Fitch), Moody's Investors Services Ltd (Moody's) and Standard & Poor's Credit Market Services Europe Limited (Standard & Poor's), respectively. The Issuer has been assigned short-term credit ratings of F1+, P-1 and A-1+ by Fitch, Moody's and Standard & Poor's, respectively. The Capital Securities have been rated Baa3 by Moody's and BBB- by Standard & Poor's. The Emirate of Abu Dhabi has been assigned ratings of AA by Fitch Ratings Ltd. (Fitch Ltd.), Aa2 by Moody's Investors Service Singapore Pte. Ltd. (Moody's Singapore) and AA by Standard & Poor's, each with stable outlook. Moody's Singapore is not established in the European Union and has not applied for registration under Regulation (EC) No. 1060/2009 (as amended) (the CRA Regulation). Each of Fitch, Fitch Ltd., Moody's and Standard & Poor's is established in the European Union and is registered under the CRA Regulation. As such each of Fitch, Fitch Ltd., Moody's and Standard & Poor's is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website (at http://www.esma.europa.eu/page/List- registered-and-certified-CRAs) in accordance with the CRA Regulation. A rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Prospective investors are referred to the section headed "Restrictions on marketing and sales to retail investors" on page iii of this Prospectus for information regarding certain restrictions on marketing and sales to retail investors. The Capital Securities have not been, nor will be, registered under the United States Securities Act of 1933, as amended (the Securities Act) or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. Persons (as defined in Regulation S under the Securities Act (Regulation S)) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. Accordingly, the Capital Securities may be offered or sold solely to persons who are not U.S. Persons outside the United States in reliance on Regulation S. Each purchaser of the Capital Securities is hereby notified that the offer and sale of Capital Securities to it is being made in reliance on the exemption from the registration requirements of the Securities Act provided by Regulation S. Joint Lead Managers Citigroup HSBC Morgan Stanley National Bank of Abu Dhabi P.J.S.C. Société Générale Corporate & Investment Banking The date of this Prospectus is 15 June 2015 IMPORTANT NOTICE This Prospectus comprises a prospectus for the purposes of the Prospectus Directive and for the purpose of giving information with regard to the Issuer and its subsidiaries (each a Subsidiary) taken as a whole (together, the Group) and the Capital Securities which, according to the particular nature of the Issuer and the Capital Securities, is necessary to enable investors to make an informed assessment of the assets and liabilities, financial position, profit and losses and prospects of the Issuer. The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case), the information contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the import of such information. Certain information under the headings "Risk Factors", "Overview of the UAE and Abu Dhabi" and "The United Arab Emirates Banking Sector and Regulations" has been extracted from information provided by the Organisation of the Petroleum Exporting Countries (in the case of "Risk Factors" and "Overview of the UAE and Abu Dhabi"), Moody's Singapore, Fitch, S&P, publications of the United Arab Emirates (the UAE) and Abu Dhabi governments, including the Statistics Centre of Abu Dhabi (the SCAD) and the UAE National Bureau of Statistics, and the International Monetary Fund (the IMF) (in the case of "Overview of the UAE and Abu Dhabi") and the UAE Central Bank and the IMF (in the case of "The United Arab Emirates Banking Sector and Regulations"). The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by the relevant sources referred to, no facts have been omitted which would render the reproduced information inaccurate or misleading. The Joint Lead Managers have not independently verified the information contained herein. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Joint Lead Managers as to the accuracy or completeness of the information contained or incorporated in this Prospectus or any other information provided by the Issuer in connection with the issuance of the Capital Securities. No Joint Lead Manager accepts any liability in relation to the information contained or incorporated by reference in this Prospectus or any other information provided by the Issuer in connection with the issuance of the Capital Securities. No person is or has been authorised by the Issuer to give any information or to make any representation not contained in or not consistent with this Prospectus or any other information supplied in connection with the issuance of the Capital Securities and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer or any of the Joint Lead Managers. Neither this Prospectus nor any other information supplied in connection with the issuance of the Capital Securities: (a) is intended to provide the basis of any credit or other evaluation; or (b) should be considered as a recommendation by the Issuer or any of the Joint Lead Managers that any recipient of this Prospectus or any other information supplied in connection with the issuance of the Capital Securities should purchase any Capital Securities. Each investor contemplating purchasing any Capital Securities should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Prospectus nor any other information supplied in connection with the issuance of the Capital Securities constitutes an offer or invitation by or on behalf of the Issuer or any of the Joint Lead Managers to any person to subscribe for or to purchase any Capital Securities. Neither the delivery of this Prospectus nor the offering, sale or delivery of any Capital Securities shall in any circumstances imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other information supplied in connection with the issuance of the Capital Securities is correct as of any time subsequent to the date indicated in the document containing the same. The Joint Lead Managers expressly do not undertake to review the financial condition or affairs of the i Issuer during the life of the issuance or to advise any investor in the Capital Securities of any information coming to their attention. Investors should review, inter alia, the information contained or incorporated by reference in this Prospectus when deciding whether or not to purchase any Capital Securities. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy any Capital Securities in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Prospectus and the offer or sale of Capital Securities may be restricted by law in certain jurisdictions. The Issuer and the Joint Lead Managers do not represent that this Prospectus may be lawfully distributed, or that any Capital Securities may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer or the Joint Lead Managers which is intended to permit a public offering of any Capital Securities or distribution of this Prospectus in any jurisdiction where action for that purpose is required. Accordingly, no Capital Securities may be offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Prospectus or any Capital Securities may come must inform themselves about, and observe, any such restrictions on the distribution of this Prospectus and the offering and sale of any Capital Securities. In particular, there are restrictions on the distribution of this Prospectus and the offer or sale of any Capital Securities in, the United States, the United Kingdom, the Kingdom of Bahrain, the State of Qatar (including the Qatar International Financial Centre), the Kingdom of Saudi Arabia, the Dubai International Financial Centre, the UAE (excluding the Dubai International Financial Centre), Hong Kong, Japan and Singapore (see "Subscription and Sale"). This Prospectus includes forward-looking statements. All statements other than statements of historical facts included in this Prospectus may constitute forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as "may", "will", "expect", "intend", "estimate", "anticipate", "believe", "continue" or similar terminology. Although the Issuer believes that the expectations reflected in their forward-looking statements are reasonable at this time, there can be no assurance that these expectations will prove to be correct. The Capital Securities may not be a suitable investment for all investors. Each potential investor in the Capital Securities must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor may wish to consider, either on its own or with the help of its financial and other professional advisers, whether it: (a) has sufficient knowledge and experience to make a meaningful evaluation of the Capital Securities, the merits and risks of investing in the Capital Securities and the information contained or incorporated by reference in this Prospectus or any applicable supplement; (b) has access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Capital Securities and the impact the Capital Securities will have on its overall investment portfolio; (c) has sufficient financial resources and liquidity to bear all of the risks of an investment in the Capital Securities, including Capital Securities with principal or interest payable in one or more currencies, or where the currency for payments of principal or interest is different from the potential investor's currency; ii (d) understands thoroughly the terms of the Capital Securities and is familiar with the behaviour of any relevant indices and financial markets; and (e) is able to evaluate possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. The Capital Securities are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Capital Securities unless it has the expertise (either alone or with a financial adviser) to evaluate how the Capital Securities will perform under changing conditions, the resulting effects on the value of the Capital Securities and the impact this investment will have on the potential investor's overall investment portfolio. Legal investment considerations may restrict certain investments. The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent: (a) the Capital Securities are legal investments for it; (b) the Capital Securities can be used as collateral for various types of borrowing; and (c) other restrictions apply to its purchase or pledge of any Capital Securities. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of Capital Securities under any applicable risk-based capital or similar rules. Restrictions on marketing and sales to retail investors The Capital Securities are complex financial instruments and are not a suitable or appropriate investment for all investors. In some jurisdictions, regulatory authorities have adopted or published laws, regulations or guidance with respect to the offer or sale of securities such as, or with features similar to those of, the Capital Securities to retail investors. By purchasing, or making or accepting an offer to purchase, any Capital Securities from the Issuer and/or the Joint Lead Managers, each prospective investor represents, warrants, agrees with and undertakes to the Issuer and each of the Joint Lead Managers that: (a) it will not sell or offer the Capital Securities to retail clients in the European Economic Area (the EEA) (as defined in article (4)(1)(12) of MiFID) or do anything (including the distribution of the Prospectus) that would or might result in the buying of the Capital Securities or the holding of a beneficial interest in the Capital Securities by a retail client in the EEA, other than in relation to any sale or offer to sell Capital Securities to a retail client in any EEA Member State, where: (i) it has conducted an assessment and concluded that the relevant retail client understands the risks of an investment in the Capital Securities and is able to bear the potential losses involved in an investment in the Capital Securities; and (ii) it has at all times acted in relation to such sale or offer in compliance with MiFID to the extent it applies to it or, to the extent MiFID does not apply to it, in a manner which would be in compliance with MiFID if it were to apply to it; and (b) it has complied and will at all times comply with all applicable laws, regulations and regulatory guidance (whether inside or outside the EEA) relating to the promotion, offering, distribution and/or sale of the Capital Securities, including any such laws, regulations and regulatory guidance relating to determining the appropriateness and/or suitability of an investment in the Capital Securities by investors in any relevant jurisdiction. Where acting as agent on behalf of a disclosed or undisclosed client when purchasing, or making or accepting an offer to purchase, any Capital Securities from the Issuer and/or the Joint Lead Managers, the foregoing representations, warranties, agreements and undertakings will be given by and be binding upon both the agent and its underlying client. iii STABILISATION In connection with the issue of the Capital Securities, a Joint Lead Manager (the Stabilisation Manager) (or persons acting on behalf of the Stabilisation Manager) may over-allot Capital Securities or effect transactions with a view to supporting the market price of the Capital Securities at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilisation Manager (or persons acting on behalf of a Stabilisation Manager) will undertake stabilisation action. Any stabilisation action or over- allotment may begin on or after the date on which adequate public disclosure of the terms of the offer of the Capital Securities is made and, if begun, may be ended at any time, but it must end no later than the earlier of thirty (30) days after the issue date of the Capital Securities and sixty (60) days after the date of the allotment of the Capital Securities. Any stabilisation action or over-allotment must be conducted by the Stabilisation Manager (or persons acting on behalf of any Stabilisation Manager) in accordance with all applicable laws and rules. NOTICE TO THE RESIDENTS OF THE KINGDOM OF SAUDI ARABIA This Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations issued by the Capital Market Authority of the Kingdom of Saudi Arabia (the Capital Market Authority). The Capital Market Authority does not make any representations as to the accuracy or completeness of this Prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Prospectus. Prospective purchasers of the Capital Securities should conduct their own due diligence on the accuracy of the information relating to the Capital Securities. If a prospective purchaser does not understand the contents of this Prospectus they should consult an authorised financial adviser. NOTICE TO THE RESIDENTS OF THE KINGDOM OF BAHRAIN In relation to investors in the Kingdom of Bahrain, Capital Securities issued in connection with this Prospectus and related offering documents may only be offered in registered form to existing accountholders and accredited investors as defined by the Central Bank of Bahrain (the CBB) in the Kingdom of Bahrain where such investors make a minimum investment of at least U.S.$100,000 or any equivalent amount in another currency or such other amount as the CBB may determine. This Prospectus does not constitute an offer of securities in the Kingdom of Bahrain in terms of Article (81) of the Central Bank and Financial Institutions Law 2006 (decree Law No. 64 of 2006). This Prospectus and related offering documents have not been and will not be registered as a prospectus with the CBB. Accordingly, no securities may be offered, sold or made the subject of an invitation for subscription or purchase nor will this Prospectus or any other related document or material be used in connection with any offer, sale or invitation to subscribe or purchase securities, whether directly or indirectly, to persons in the Kingdom of Bahrain, other than to accredited investors for an offer outside the Kingdom of Bahrain. The CBB has not reviewed, approved or registered this Prospectus or related offering documents and it has not in any way considered the merits of the Capital Securities to be offered for investment, whether in or outside the Kingdom of Bahrain. Therefore the CBB assumes no responsibility for the accuracy and completeness of the statements and information contained in this Prospectus and each expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the contents of this Prospectus. No offer of the Capital Securities will be made to the public in the Kingdom of Bahrain and this Prospectus must be read by the addressee only and must not be issued, passed to, or made available to the public generally. iv NOTICE TO RESIDENTS OF THE STATE OF QATAR This Prospectus does not and is not intended to constitute an offer, sale or delivery of bonds or other debt financing instruments under the laws of the State of Qatar. The Capital Securities have not been and will not be authorised by the Qatar Financial Markets Authority, the Qatar Financial Centre Regulatory Authority or the Qatar Central Bank in accordance with their regulations or any other regulations in the State of Qatar. The Capital Securities are not and will not be traded on the Qatar Exchange. PRESENTATION OF FINANCIAL INFORMATION Certain figures and percentages included in this Prospectus have been subject to rounding adjustments. Accordingly, figures shown in the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. All references in this document to "U.S. dollars", "U.S.$" and "$" refer to United States dollars, to "dirham" and "AED" refer to UAE dirham and to "euro" and "€" refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the European Union, as amended. The exchange rate between the AED and the United States dollar has been fixed since 22 November 1980 at U.S.$1.00 = AED 3.6725. Such translation should not be construed as representing that United Arab Emirates dirham amounts have been or could have been converted into United States dollars at this or any other rate of exchange. All references to "UAE" are to the United Arab Emirates. v CONTENTS Page RISK FACTORS ................................................................................................................................................ 1 OVERVIEW OF THE ISSUANCE ................................................................................................................. 17 DOCUMENTS INCORPORATED BY REFERENCE ................................................................................... 22 TERMS AND CONDITIONS OF THE CAPITAL SECURITIES ................................................................. 23 USE OF PROCEEDS ....................................................................................................................................... 47 NATIONAL BANK OF ABU DHABI P.J.S.C. .............................................................................................. 48 OVERVIEW OF THE UAE AND ABU DHABI ............................................................................................ 89 THE UNITED ARAB EMIRATES BANKING SECTOR AND REGULATIONS ....................................... 96 TAXATION ................................................................................................................................................... 105 SUBSCRIPTION AND SALE ....................................................................................................................... 108 GENERAL INFORMATION ........................................................................................................................ 112 vi RISK FACTORS The Issuer believes that the following factors may affect its ability to fulfil its obligations under the Capital Securities. All of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. In addition, factors which are material for the purpose of assessing the market risks associated with the Capital Securities are also described below. The Issuer believes that the factors described below represent the principal risks inherent in investing in the Capital Securities, but the inability of the Issuer to pay interest, principal or other amounts on or in connection with any Capital Securities may occur for other reasons and the Issuer makes no representation that the statements below regarding the risks of holding any Capital Securities are exhaustive. Prospective investors should also read the detailed information set out elsewhere in this Prospectus and reach their own views prior to making any investment decision. Words and expressions defined in "Terms and Conditions of the Capital Securities" shall have the same meanings in this section. Factors that may affect the Issuer's ability to fulfil its obligations under or in connection with the Capital Securities The Group's financial performance is affected by general economic conditions Risks arising from changes in credit quality and the recoverability of amounts due from borrowers and counterparties are inherent in banking businesses. Adverse changes in global economic conditions, or arising from systemic risks in the financial systems, could affect the recovery and value of the Group's assets and require an increase in the Group's provisions. The Group uses different hedging strategies to minimise risk, including securities, collateral and insurance that reduce the credit risk level to be within the Group's strategy and risk appetite. However, there can be no guarantee that such measures will eliminate or reduce such risks. Non-Performing loans As at 31 March 2015, the Issuer had AED 5,955 million of impaired loans and as at 31 March 2015, carried impairment allowances of AED 6,639 million to cover potential loan losses. For further detail on the historic trends with respect to the level of the Issuer's impaired loans, please refer to the section entitled "National Bank of Abu Dhabi P.J.S.C. – Non-Performing Loans". As a consequence of adverse market conditions, the Issuer has increasingly focused on restructuring its impaired loans and loans with debtors in financial distress and has provided for impaired loans by way of loan impairment allowances. In accordance with International Financial Reporting Standards (IFRS), the Issuer is required to reflect the impairment calculated as an upfront charge to the income statement. This will be written back to the income statement as and when interest or principal (as appropriate) on the debt is received. However, the actual loan losses could be materially different from the loan impairment allowances. The Issuer's management believes that the levels of impairment allowances for impaired loans and loans under stress as at 31 March 2015 are sufficient to cover the Issuer's potential loan losses as at that date. As at 31 March 2015, impairment allowances (including collective impairment allowances) covered 111 per cent. of the Issuer's impaired loans and advances. If the Issuer fails to restructure appropriately or control the levels of, and adequately provide for, its impaired loans and loans under stress, the Issuer may need to make further impairment charges and its business, results of operations, financial condition and prospects could be materially adversely affected. 1 Liquidity risk may impair the Issuer's ability to fund its business and make timely payments on the Capital Securities Liquidity risk is the risk that the Issuer does not have sufficient funds available at all times to meet its contractual and contingent cash flow obligations. The Issuer seeks to manage its liquidity risk by holding a stock of highly liquid assets which can be readily realised for cash and by focusing on the liquidity profile of its assets and liabilities. However, the Issuer's liquidity may be adversely affected by a number of factors, including significant unforeseen changes in interest rates, ratings downgrades, higher than anticipated losses on investments and disruptions in the financial markets generally. An inability on the Issuer's part to access funds or to access the markets from which it raises funds may put the Issuer's positions in liquid assets at risk and lead it to be unable to finance operations adequately. A dislocated credit environment compounds the risk that the Issuer will not be able to access funds at favourable rates. These and other factors could also lead creditors to form a negative view of the Issuer's liquidity, which could result in less favourable credit ratings, higher borrowing costs and less accessible funds. In addition, because the Issuer receives a significant portion of its funding from deposits, the Issuer is subject to the risk that depositors could withdraw their funds at a rate faster than the rate at which borrowers repay their loans, thus causing liquidity strain. In addition, there are always some timing differences between cash payments the Issuer owes on the Issuer's liabilities and the cash payments due to it on its investments. The Issuer's ability to overcome these cash mismatches and make timely payments on the Capital Securities may be adversely affected if the fixed income markets were to experience significant liquidity problems. Also, under certain market conditions, the Issuer could be unable to sell its portfolio investments in sufficient amounts to raise the cash required to pay amounts in respect of the Capital Securities when due. Furthermore, in circumstances where the Issuer's competitors have ongoing limitations on their access to other sources of funding such as wholesale market derived funding, this also may adversely affect the Issuer's access to funds and the Issuer's cost of funding. All of the abovementioned factors relating to liquidity risk could have an adverse effect on the Issuer's business, financial condition, results of operations or prospects. Like most banks, the Issuer was affected by the decreased availability and increased cost of wholesale funding that was a feature of recent dislocations in global financial markets. The Issuer has continued to perform well in its funding activities during this period. However, until global financial markets return to more normal levels, it is difficult to predict what impact the current markets are likely to have on the Issuer and other participants in the financial sector. The principal shareholder of the Issuer owns 69.93 per cent. of the outstanding share capital and may influence the Group's business significantly As at the date of this Prospectus, the Issuer's principal beneficial shareholder is the Abu Dhabi Investment Council (ADIC, which is wholly-owned by the Government of Abu Dhabi), holding approximately 69.93 per cent. of the Issuer's outstanding share capital and representing the Government of Abu Dhabi. By virtue of such shareholding, ADIC has the ability to influence the Issuer's business significantly through its ability to control and/or block corporate actions or resolutions that require shareholder approval. Accordingly, ADIC could cause the Issuer to pursue transactions, make dividend payments or other distributions or payments to shareholders or undertake other actions which are contrary to the commercial interests of the Issuer. If circumstances were to arise where the interests of ADIC conflicted with the interests of holders of the Capital Securities, the holders of the Capital Securities may be disadvantaged by any such conflict. Competition Generally, the banking market in the UAE has been a relatively protected market with high regulatory and other barriers to entry for foreign financial institutions. However, should some of these barriers be removed 2