CPS II

Set out below is a summary of the key terms of CPS II. This information should be read in conjunction with the Terms of Issue.

Issuer	St.George Bank Limited (ABN 92 055 513 070).
Security	Converting Preference Shares II (CPS II). CPS II are non-cumulative unsecured converting preference shares in the capital of St.George. CPS II are similar but not identical to the CPS issued by St.George in December 2006.
Face Value	$100 per CPS II.
Term	CPS II do not have a fixed redemption date. However, CPS II are expected to convert into Ordinary Shares on 20 August 2013 provided that both of the Mandatory Conversion Conditions are satisfied.
Floating rate franked	Dividends are preferred, non-cumulative, based on a floating rate and expected to be fully franked and accordingly Holders are expected to receive cash Dividends and franking credits. Dividends are scheduled to be paid at the end of each quarterly Dividend Period—subject to the Payment Tests.
Dividend Rate	The Dividend Rate for each quarterly Dividend will be calculated using the following formula: Dividend Rate = (Bank Bill Swap Rate + Margin) x (1 – Tax Rate) where: Bank Bill Swap Rate is: for the first Dividend to be paid on 20 February 2008—the Bank Bill Swap Rate applying on the Issue Date; and for all subsequent Dividend Periods—the Bank Bill Swap Rate applying on the first Business Day of the relevant Dividend Period; Margin is 1.60% per annum—the Margin was determined under the Bookbuild; and Tax Rate is the Australian corporate tax rate applicable to St.George’s franking account as at the Issue Date—30% at the date of this Prospectus (expressed as a decimal in the formula, being 0.30).
Dividend Payment Dates	In each year that CPS II are on issue, Dividends are scheduled to be paid at the end of each quarterly Dividend Period on 20 February, 20 May, 20 August and 20 November. The first Dividend Payment Date is scheduled to be 20 February 2008. If any of these dates are not Business Days, then payment will be made the next Business Day.
Franking	St.George expects Dividends to be fully franked. If a Dividend is unfranked or partially franked, then the Dividend will be increased to fully compensate for the unfranked component. If the Australian corporate tax rate that applies to St.George’s franking account differs from the Tax Rate on a Dividend Payment Date, then the Dividend will be adjusted downwards or upwards accordingly.
Payment Tests	For a Dividend to be paid, the Payment Tests must be satisfied. They can be summarised as: the Directors declaring a Dividend to be payable; St.George having sufficient profits available to pay the Dividend; St.George being able to pay the Dividend without St.George (on a Level 1 basis) or the Group (on a Level 2 basis) breaching APRA’s capital adequacy guidelines; the amount of the Dividend not exceeding Distributable Profits; and in the case of an Optional Dividend, APRA giving its prior written approval.
Dividend stopper if Dividends are not paid	If 20 Business Days after a Dividend Payment Date St.George has not declared a Dividend or has not paid a declared Dividend in full, then a dividend stopper applies. This means that St.George must get approval by a special resolution of Holders before it can: pay any dividend or distribution on any Equal Ranking Capital Securities (including CPS, SPS and SAINTS) or on any Junior Ranking Capital Securities (including Ordinary Shares); or make any return of capital on any Junior Ranking Capital Securities. The dividend stopper will be removed if St.George pays 12 months Dividends in full or pays any unpaid Dividends from the last 12 months (an Optional Dividend).
Mandatory Conversion or Transfer	St.George must convert all CPS II on issue at the Mandatory Conversion Date into a variable number of Ordinary Shares. Upon conversion, Holders will receive $101.01 worth of Ordinary Shares per CPS II (based on the VWAP during the 20 Business Days before conversion). The VWAP of Ordinary Shares during the 20 Business Days before conversion that is used to calculate the number of Ordinary Shares you receive on conversion of CPS II may differ from the Ordinary Share price on or after conversion. This means that the value of Ordinary Shares received on conversion of each CPS II into Ordinary Shares may be worth more or less than $101.01 when they are issued. Alternatively, before a possible Mandatory Conversion Date, St.George may choose to arrange that all (but not some only) CPS II on issue be acquired from Holders by a Third Party Purchaser(s) on a possible Mandatory Conversion Date. This process is called Transfer. If Transfer is chosen by St.George, Holders will be notified and on the possible Mandatory Conversion Date they will receive $100 from the Third Party Purchaser(s) for each CPS II that is Transferred rather than a variable number of Ordinary Shares issued by St.George under Mandatory Conversion. Transfer can occur whether or not the Mandatory Conversion Conditions are satisfied.
Mandatory Conversion Date	The Mandatory Conversion Date is 20 August 2013 provided that both of the Mandatory Conversion Conditions are satisfied.
Mandatory Conversion Date may be later	If either of the Mandatory Conversion Conditions is not satisfied on 20 August 2013, then the Mandatory Conversion Date will be the next Dividend Payment Date on which the Mandatory Conversion Conditions are both satisfied.
St.George may redeem, buy-back or cancel	If the first Mandatory Conversion Condition is not satisfied, rather than deferring Mandatory Conversion, St.George may (subject to APRA giving its prior written approval) redeem, buy-back or cancel all the CPS II on issue for $100 each on the Mandatory Conversion Date.
Mandatory Conversion Conditions	The two Mandatory Conversion Conditions relate to the Ordinary Share price at two different dates. The dates and conditions are: First Test: the VWAP of Ordinary Shares (adjusted for the 1.0% Conversion Discount) on the 25th Business Day before a possible Mandatory Conversion Date must be at least 55% of the Issue Share Price; and Second Test: the VWAP of Ordinary Shares (adjusted for the 1.0% Conversion Discount) over the 20 Business Days before a possible Mandatory Conversion Date must be greater than 50% of the Issue Share Price. The Mandatory Conversion Conditions provide protection to Holders from receiving less than $101.01 worth of Ordinary Shares per CPS II on Mandatory Conversion. For those calculations, the Issue Share Price is the VWAP of Ordinary Shares during the 20 Business Days immediately preceding, but not including, the Issue Date.
Maximum Conversion Number	To qualify as Non-innovative Residual Tier 1 Capital, APRA requires that the number of Ordinary Shares that each CPS II converts into does not exceed a certain number defined as the Maximum Conversion Number. The Maximum Conversion Number is calculated at the Issue Date using the following formula: Face Value ($100) 50% x Issue Share Price Since the Issue Share Price is $34.52, the Maximum Conversion Number is 5.7937 Ordinary Shares.
Impact of Mandatory Conversion Conditions	The Maximum Conversion Number will never operate to limit the number of Ordinary Shares that Holders receive on Mandatory Conversion, due to the existence of the Mandatory Conversion Conditions. If the actual Conversion Number calculated on a possible Mandatory Conversion Date is equal to or greater than the Maximum Conversion Number, then the Second Test of the Mandatory Conversion Conditions will prevent Mandatory Conversion from occurring.
Exchange or Transfer by St.George	St.George may choose to Exchange all (but not some only) CPS II on issue after a Tax Event or a Regulatory Event. St.George must choose to Exchange all (but not some only) CPS II on issue after an Acquisition Event. In either case, on Exchange St.George may choose (subject to APRA giving its prior written approval) to: convert each CPS II into a variable number of Ordinary Shares equal to the Conversion Number; redeem, buy-back or cancel CPS II for $100 each; or undertake a combination of the above. Alternatively, St.George may choose to arrange a Transfer to occur on an Exchange Date. In those circumstances, Holders would be notified and on the Exchange Date they will receive $100 from the Third Party Purchaser(s) for each CPS II that was Transferred.
Conversion may not occur under Exchange	St.George must not choose conversion into Ordinary Shares as the mechanism of Exchange if the VWAP of Ordinary Shares (adjusted for the 1.0% Conversion Discount) is less than 55% of the Issue Share Price on the second Business Day before an Exchange Notice is to be issued. If conversion into Ordinary Shares is chosen as the mechanism of Exchange, and on the Exchange Date the actual Conversion Number is equal to or greater than the Maximum Conversion Number, then conversion will not occur at that date and CPS II will remain on issue. In these circumstances, St.George must issue another Exchange Notice (which can include a choice by St.George to redeem, buy-back or cancel all CPS II for $100 each) or arrange a Transfer of all CPS II on issue.
Exchange by holders	Holders have no right to request Exchange.
Conversion Number	Upon conversion of CPS II into Ordinary Shares, the Conversion Number will be calculated by dividing: $100 per CPS II; by the VWAP of Ordinary Shares during the 20 Business Days immediately preceding, but not including, the Exchange Date—with that VWAP reduced by the 1.0% Conversion Discount.
Ranking on winding up	CPS II are not deposit liabilities of St.George. CPS II rank for payment on a winding up of St.George ahead of Ordinary Shares, equal with CPS, SPS and SAINTS, but behind all depositors and creditors of St.George.