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SYT » Topics » SCHEDULE 3 CALCULATION OF THE MANDATORY COST

This excerpt taken from the SYT 20-F filed Mar 16, 2005.

SCHEDULE 3

CALCULATION OF THE MANDATORY COST

1. General
   
(a) The Mandatory Cost is to compensate a Bank for the cost of compliance with:
 
  (i) the requirements of the Bank of England and/or the Financial Services Authority (or, in either case, any other authority which replaces any of its functions); or
 
  (ii) the requirements of the European Central Bank.
 
(b) The Mandatory Cost is expressed as a percentage rate per annum.
 
(c) The Mandatory Cost is the weighted average (weighted in proportion to the percentage share of each Bank in the relevant Advance) of the rates for the Banks calculated by the Agent in accordance with this Schedule on the first day of a Term (or as soon as possible after then).
 
(d) The Agent must distribute each amount of Mandatory Cost among the Banks on the basis of the rate for each Bank.
 
(e) Any determination by the Facility Agent pursuant to this Schedule will be, in the absence of manifest error, conclusive and binding on all the Parties.
 
2. For a Bank lending from a Facility Office in the U.K.
   
(a) The relevant rate for a Bank lending from a Facility Office in the U.K. is calculated in accordance with the following formulae:
 
  for an Advance in Sterling:
 
  AB + C(B – D) + E x 0.01
 
per cent. per annum
100 – (A + C)  
 
for any other Advance:
 
 
Ex 0.01  
   per cent. per annum
300  
   
where on the day of application of the formula:
     
  A is the percentage of that Bank's eligible liabilities (in excess of any stated minimum) which the Bank of England requires it to hold on a non-interest-bearing deposit account in accordance with its cash ratio requirements;
     
  B is the percentage rate of LIBOR for the relevant Term;
     
  C is the percentage (if any) of that Bank's eligible liabilities which the Bank of England requires it to place as an interest bearing special deposit;
     
  D is the percentage rate per annum payable by the Bank of England on interest bearing special deposits; and
     
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  E is calculated by the Agent as being the average of the rates of charge under the fees rules supplied by the Reference Banks to the Agent under paragraph (d) below and expressed in pounds per £1 million.
     
(b) For the purposes of this paragraph 2:
     
  (i) eligible liabilities and special deposit(s) have the meanings given to them at the time of application of the formula pursuant to the Bank of England Act 1988 or (as appropriate) by the Bank of England;
     
  (ii) fees rules means the then current rules on periodic fees in the Supervision Manual of the FSA Handbook or any other law or regulation as may then be in force for the payment of fees for the acceptance of deposits;
     
  (iii) fee tariffs means the fee tariffs specified in the fees rules under fee-block Category A1 (Deposit acceptors) (ignoring any minimum fee or zero rated fee required pursuant to the fees rules but applying any applicable discount rate); and
     
  (iv) tariff base has the meaning given to it in, and will be calculated in accordance with, the fees rules.
     
(c) (i) In the application of the formulae, A, B, C and D are included as figures and not as percentages, e.g. if A = 0.5% and B = 15%, AB is calculated as 0.5 x 15. A negative result obtained by subtracting D from B is taken as zero.
     
  (ii) Each rate calculated in accordance with a formula is, if necessary, rounded upward to four decimal places.
 
(d) If requested by the Agent, each Reference Bank must, as soon as practicable after publication by the Financial Services Authority, supply to the Agent the rate of charge payable by that Reference Bank to the Financial Services Authority under the fees rules for that financial year of the Financial Services Authority (calculated by that Reference Bank as being the average of the fee tariffs applicable to that Reference Bank for that financial year) and expressed in pounds per £1 million of the tariff base of that Reference Bank.
 
(e) Each Bank must supply to the Agent the information required by it to make a calculation of the rate for that Bank. In particular, each Bank must supply the following information on or prior to the date on which it becomes a Bank:
 
  (i) the jurisdiction of its Facility Office; and
 
  (ii) any other information that the Agent reasonably requires for that purpose.
 
  Each Bank must promptly notify the Agent of any change to the information supplied to it under this paragraph.
 
(f) The percentages of each Bank for the purposes of A and C above and the rates of charge of each Reference Bank for the purpose of E above are determined by the Agent based upon the information supplied to it under paragraphs (d) and (e) above. Unless a Bank notifies the Agent to the contrary, the Agent may assume that the Bank's obligations in respect of cash ratio deposits and special deposits are the same as those of a typical bank from its jurisdiction of incorporation with a Facility Office in the U.K.
 
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(g) The Agent has no liability to any Party if its calculation over or under compensates any Bank. The Agent is entitled to assume that the information provided by any Bank or Reference Bank under this Schedule is true and correct in all respects.
   
3. For a Bank lending from a Facility Office in a Participating Member State
   
(a) The relevant rate for a Bank lending from a Facility Office in a Participating Member State is the percentage rate per annum notified by that Bank to the Agent. This percentage rate per annum must be certified by that Bank in its notice to the Agent as its reasonable determination of the cost (expressed as a percentage of that Bank's share in all Advances made from that Facility Office) of complying with the minimum reserve requirements of the European Central Bank in respect of Advances made from that Facility Office.
   
(b) If a Bank fails to specify a rate under paragraph (a) above, the Agent will assume that the Bank has not incurred any such cost.
   
4. Changes
   
(a) The Agent may, after consultation with the Parent and the Banks, determine and notify all the Parties of any amendment to this Schedule which is required to reflect:
 
  (i) any change in law or regulation; or
 
  (ii) any requirement imposed by the Bank of England, the Financial Services Authority or the European Central Bank (or, in any case, any successor authority).
 
(b) If the Agent, after consultation with the Parent, determines that the Mandatory Cost for a Bank lending from a Facility Office in the U.K. can be calculated by reference to a screen, the Agent may notify all the Parties of any amendment to this Agreement which is required to reflect this.
 
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