SECURITIESTable ANDof EXCHANGE COMMISSION Contents

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~FORM~~Washington, ~~6-K~~D.C. 20549

~~Report~~FORM of6-K ~~Foreign Issuer~~

~~Pursuant~~Report toof ~~Rule 13a-16~~Foreign orIssuer ~~15d-16 of~~

~~Securities~~Pursuant ~~Exchange~~to ~~Act~~Rule 13a-16 ofor ~~1934~~15d-16 of

~~For~~Securities ~~the~~Exchange ~~month~~Act of ~~August~~1934 ~~2014~~

~~ABBEY~~For ~~NATIONAL~~the ~~TREASURY SERVICES~~month ~~PLC~~of August 2015

~~(Translation~~ABBEY ofNATIONAL ~~registrant’s~~TREASURY SERVICES ~~name~~PLC ~~into English)~~

2(Translation ~~Triton~~of ~~Square, Regent~~registrant’s name into English)

~~Place, London~~2 ~~NW1~~Triton ~~3AN~~Square, ~~England~~Regent’s

~~(Address~~Place, London ofNW1 ~~principal~~3AN, ~~executive~~England ~~offices)~~

~~Indicate~~(Address byof ~~check~~principal ~~mark~~executive ~~whether~~offices) ~~the registrant files or will file annual reports under cover Form 20-F or Form 40-F.~~

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F x or Form 40-F ¨.

~~Indicate by check mark whether the registrant by furnishing the information contained in this~~ Form ~~is also~~ ~~thereby~~20-F x Form ~~furnishing the information to the Commission pursuant to Rule 12g3~~40-~~2(b)~~F ¨ ~~under the Securities Exchange Act of 1934.~~

~~Yes ¨ No x~~Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

~~The~~Yes ¨ No x Registrant hereby incorporates all parts of this Report on Form 6-K by reference in Registration Statement no. 333-190509-01 filed by the Registrant with the Securities and Exchange Commission on Form F-3ASR under the Securities Act of 1933.

~~2014~~THE ~~Half~~REGISTRANT ~~Yearly~~HEREBY ~~Financial~~INCORPORATES ~~Report~~ALL PARTS OF THIS REPORT ON FORM 6-K BY REFERENCE IN REGISTRATION STATEMENT NO. 333-190509-01 FILED BY THE REGISTRANT WITH THE SECURITIES AND EXCHANGE COMMISSION ON FORM F-3ASR UNDER THE SECURITIES ACT OF 1933.

AbbeyTable Nationalof Treasury Services plc Contents

~~PART~~2015 OFHalf ~~THE~~Yearly ~~SANTANDER~~Financial ~~GROUP~~Report

~~This~~Abbey ~~page~~National ~~intentionally left~~Treasury ~~blank~~Services plc

~~Abbey~~PART ~~National~~OF ~~Treasury~~THE ~~Services~~SANTANDER ~~plc~~GROUP

2014Table Halfof Yearly Financial Report Contents

~~Index~~This page intentionally left blank

About us
Our Business and our Corporate Purpose			2
Our Strategy			3
Detailed Business Review
Group and Divisional Results			4
Balance Sheet Review			9
Risk Management Report			14
Governance
Directors			39
Financial Statements
Primary Financial Statements			42
Notes to the Financial Statements			45
Shareholder Information
Risk Factors			66
Contact Information			66
Forward-looking Statements			67
Other Information for US Investors			68

Abbey National Treasury Services plc ~~2014 Half Yearly Financial Report 1~~

~~About~~2015 usHalf Yearly Financial Report

~~Our~~Index ~~Business and our Corporate Purpose~~

Our heritage


About us
Our Business and our Corporate Purpose			2
Our Strategy			2

Financial review
Income statement review			4
Balance sheet review			9
Cash flows			12

Risk review
Risk governance			14
Credit risk			15
Market risk			29
Balance sheet management risk			29
Other important risks			34
Areas of focus and other items			35

Governance
Directors			40

Financial statements
Primary Financial Statements			43
Notes to the Financial Statements			46

Shareholder information
Risk Factors			65
Contact and Other Information			65
Guarantees			66

Forward-looking statements			70
Other information for US investors			71

~~Abbey~~This ~~National~~Half ~~Treasury~~Yearly ~~Services~~Financial ~~plc~~Report ~~(the~~contains ~~‘Company’)~~forward-looking ~~and~~statements ~~its~~that ~~subsidiaries~~involve ~~(collectively,~~inherent ~~‘ANTS’~~risks ~~or the ‘ANTS~~and ~~group’)~~uncertainties. ~~was~~Actual ~~established~~results inmay ~~1989~~differ ~~for~~materially ~~the~~from ~~purpose~~those ofcontained ~~managing~~in ~~the~~such ~~liquidity,~~forward-looking ~~risk~~statements. ~~management~~See ~~and wholesale banking needs of Abbey National plc (subsequently renamed Santander UK plc) and its subsidiaries (collectively,~~ ‘~~Santander~~Forward-looking UKstatements’ ~~or the~~on ~~‘Santander~~page ~~UK group’)~~70.

~~In 1997,~~ Abbey National ~~plc~~Treasury ~~acquired~~Services ~~the business and assets of Cater Allen Holdings~~ plc ~~(“CAH”)~~2015 ~~for~~Half ~~£195m.~~Yearly ~~The~~Financial ~~synergies~~Report between the ANTS group and the CAH business provided ANTS with opportunities for growth in strategically important markets comprising money markets, sharedealing, and onshore and offshore retail banking. 1

InTable 2010, all of the business and assets of Cater Allen International Limited, a subsidiary of CAH, and a significant participant in the repo and wholesale money markets, were transferred to the Company. The principal purpose of the transfer was to increase the efficiency of the ANTS group and the Santander UK group. No gain or loss was recognised on the transfer. Contents

OnAbout ~~12 November~~us 2004, Banco Santander, S.A., a company incorporated in Spain, completed the acquisition of the entire issued ordinary share capital of the parent company of ANTS, Santander UK plc, at which point the Company became an indirect subsidiary of Banco Santander, S.A..

~~The~~Our ~~structural~~Business ~~relationship of ANTS~~ and ~~Santander~~our UKCorporate ~~with~~Purpose ~~the Banco Santander group~~

~~The~~Our ~~Banco~~heritage Santander group operates a ‘subsidiary model’. This model involves autonomous units, such as the Santander UK group (of which ANTS is a significant part) operating in core markets with each unit being responsible for its own liquidity, funding and capital management on an ongoing basis. The model is designed to minimise the risk to the Banco Santander group and all its units from problems arising elsewhere in the Banco Santander group.

~~The~~Abbey ~~subsidiary~~National ~~model~~Treasury ~~gives~~Services ~~both~~plc ~~ANTS and~~(the ~~Santander~~‘Company’) UKand ~~considerable~~its ~~financial~~subsidiaries ~~flexibility~~(collectively, ~~yet~~‘ANTS’ ~~enables~~or ~~them~~the to‘ANTS group’) ~~continue~~was toestablished ~~take~~in ~~advantage~~1989 offor the ~~significant~~purpose ~~synergies~~of ~~and~~managing ~~strengths~~the ~~that~~liquidity, ~~come~~risk ~~from~~management ~~being~~and ~~part~~wholesale ofbanking ~~the~~needs ~~global~~of ~~Banco~~Abbey ~~Santander~~National ~~group,~~plc in(subsequently ~~brand,~~renamed ~~products,~~Santander ~~systems,~~UK ~~platforms, development~~plc) ~~capacity~~ and ~~management~~its ~~capability.~~subsidiaries In(together ~~the~~with ~~subsidiary~~its ~~model~~subsidiaries, ~~the Banco~~ ‘Santander ~~group~~UK’ ~~facilitates~~or the ~~sharing~~‘Santander ofUK ~~best~~group’). ~~practice~~An ~~and~~overview ~~provides common technology, operations and support services to all~~ of ~~its~~significant ~~subsidiaries~~developments ~~via~~in ~~independent operating entities, themselves established by~~ the ~~Banco~~Company’s ~~Santander~~history ~~group~~since sothat asdate tois beset ~~able~~out toon ~~continue~~page ~~operating~~2 asof ~~viable~~the ~~standalone~~2014 ~~businesses~~Annual Report.

OnANTS ~~10 January~~today 2014, Santander UK Group Holdings Limited became the holding company of Santander UK plc following its acquisition of Santander UK plc from Banco Santander S.A.. The acquisition was satisfied by the issue of shares in Santander UK Group Holdings Limited. The new holding company was put in place in light of UK regulatory developments relating to Banking Reform and Resolution and Recovery planning under which having a holding company above the operating banking companies is considered preferable.

~~For~~ANTS ~~more~~is ~~information,~~regulated in ~~see~~the UK by the ~~Directors~~ Prudential Regulation Authority (‘PRA’) ~~Report~~and onthe ~~page~~Financial 99Conduct Authority (‘FCA’). The Company is part of the ~~Annual~~Santander ~~Report~~UK ~~and~~group, ~~Accounts~~with ~~for~~Santander UK Group Holdings plc as its intermediate UK holding company. The Santander UK group is in turn, part of the ~~year~~Banco ~~ended~~Santander, ~~31 December~~S.A. ~~2013~~group (comprising Banco Santander, S.A. and its subsidiaries, the ‘~~2013~~Banco ~~Annual~~Santander ~~Report~~group’). Banco Santander, S.A. is incorporated in Spain and is the ultimate parent company of ANTS.

~~(1)~~Corporate ~~From~~purpose ~~10 January 2014.~~

2ANTS ~~Abbey~~provides ~~National~~treasury, ~~Treasury~~corporate ~~Services~~and ~~plc~~wholesale ~~2014~~banking ~~Half~~services. ~~Yearly~~ANTS ~~Financial~~provides ~~Report~~these services to UK clients and also to the wider Santander UK group, of which ANTS is a significant part. ANTS is also the treasury support function for the Santander UK group. In this regard, ANTS’s role is to provide access to financial markets and central bank facilities in order to meet the Santander UK group’s liquidity, funding, capital and balance sheet management requirements. As such, ANTS is one of the main debt issuance vehicles in the Santander UK group.

~~About~~ANTS uscontains part of a number of Santander UK’s business segments. Whether transactions are booked in ANTS or another Santander UK group entity is for historic or operational reasons and does not necessarily reflect any particular business split.

~~Our~~The ~~Strategy~~Company has given a full and unconditional guarantee in respect of the unsubordinated liabilities of Santander UK plc incurred prior to 30 June 2017 under a deed poll guarantee entered into by the Company on 8 May 2015. Santander UK plc has given a reciprocal guarantee in respect of the unsubordinated liabilities of the Company incurred prior to 30 June 2017.

As a result of these guarantees, the results and creditworthiness of ANTS ~~today~~should not be viewed in isolation. Account should also be taken of the position of the Santander UK group into which the assets and liabilities of ANTS are fully consolidated.

ANTS ishas ~~regulated~~also byentered ~~the~~into UKagreements ~~Prudential~~to ~~Regulation~~provide ~~Authority~~capital ~~(‘PRA’)~~ and/or ~~the~~liquidity ~~Financial~~to ~~Conduct~~Santander ~~Authority~~UK ~~(‘FCA’)~~plc and ~~is part~~other members of the Santander UK group ~~which is~~, in ~~turn,~~accordance ~~part~~with ofUK ~~the~~regulatory ~~Banco Santander, S~~requirements.A. ~~group~~For ~~(comprising Banco Santander~~further details, ~~S.A.~~see ~~and~~Note ~~its~~34 ~~subsidiaries,~~to the ~~‘Banco~~Consolidated ~~Santander~~Financial ~~group’).~~Statements ~~Banco Santander, S.A. is incorporated~~ in ~~Spain and is~~ the ~~ultimate~~ ~~parent~~2014 ~~company~~Annual ~~of ANTS~~Report.

~~Corporate~~Beginning ~~purpose~~in 2014, and as part of the banking reform programme, the intercompany funding arrangements between the Company and its immediate parent Santander UK plc were amended so that only the net funding requirement of the commercial bank is passed between Santander UK plc and the Company rather than the gross funding requirements as previously. This rationalisation is ongoing.

ANTS provides treasury, corporate and wholesale banking services. ANTS provides these services to the wider Santander UK group, of which ANTS is a significant part, and also to UK clients. ANTS is alsoOur ~~the~~businesses treasury support function for the Santander UK group. In this regard, ANTS’s role is to provide access to financial markets and central bank facilities in order to meet the Santander UK group’s liquidity, funding, capital and balance sheet management requirements. As such, ANTS is one of the main debt issuance vehicles in the Santander UK group.

ANTS ~~contains~~is ~~part~~headed ofby aMarcelo ~~number~~Castro ofZappa, ~~Santander~~Chief ~~UK’s~~Executive ~~business~~Officer, ~~segments. Whether transactions are booked in ANTS or another Santander UK group entity reflects historic or operational reasons~~ and ~~does~~operates ~~not necessarily~~three ~~reflect any particular~~ business ~~split.~~divisions as follows:

The Company has given a full and unconditional guarantee in respect of the unsubordinated liabilities of Santander UK plc incurred prior to 30 June 2015 under a deed poll guarantee entered into by the Company on 10 May 2012. Santander UK plc has given a reciprocal guarantee in respect of the unsubordinated liabilities of the Company incurred prior to 30 June 2015.


Business division		About
Commercial Banking		Provides banking services to companies with a turnover of between £250,000 and £500m per annum through our enhanced platform, distribution capability and product suite through a network of regional business centres and through telephony and e-commerce channels, and commercial real estate and Social Housing. Commercial Banking products and services include loans and treasury services.

Corporate & Institutional Banking		A financial markets business focused on providing value added financial services to large corporates, with an annual turnover above £500m, and financial institutions, where they can be best serviced in terms of their more specialised and tailored product needs, and benefit from the Banco Santander group’s global capability. It also serves the rest of Santander UK’s business (including the Retail Banking and Commercial Banking divisions) from a product perspective. It is structured into five main product areas: Rates, Foreign exchange and money markets, Equity, Credit and Transaction Banking. In addition, large and complex clients are covered by teams organised along industry lines. Rates covers sales and trading activity for fixed income products. Foreign exchange offers a range of foreign exchange products and money markets runs securities lending/borrowing and repo businesses. Equity covers equity derivatives and property derivatives. Equity derivatives activities include the manufacture of structured products sold to retail and corporate customers of both Santander UK and of other financial institutions who sell them on to their customers. Credit originates loan and bond transactions in primary markets as well as their intermediation in secondary markets. Transaction Banking provides lending and cash management services, including deposit taking and trade finance.

Corporate Centre		Consists of Financial Management & Investor Relations (‘FMIR’) and the non-core portfolios of Social Housing loans and structured credit assets. FMIR is responsible for managing capital and funding, balance sheet composition, structural market risk and strategic liquidity risk for the rest of the Santander UK group. The non-core portfolios are being run-down and/or managed for value.

AsOur astrategy result of these guarantees, the results and creditworthiness of ANTS should not be viewed in isolation. Account should also be taken of the position of the Santander UK group into which the assets and liabilities of ANTS are fully consolidated.

ANTS’s ~~has~~strategy ~~also~~is ~~entered~~to ~~into~~continue ~~agreements~~ to provide ~~capital~~treasury ~~and/or~~support ~~liquidity~~functions tofor ~~Santander UK plc and other members of~~ the Santander UK group, inand ~~accordance~~continue ~~with~~to UKprovide ~~regulatory~~treasury, ~~requirements.~~corporate ~~For~~and ~~further~~wholesale ~~details,~~banking ~~see~~services ~~Note 25~~ to ~~the~~UK ~~Condensed~~clients ~~Consolidated~~and ~~Interim~~the ~~Financial~~wider Santander ~~Statements~~UK group.

~~Our~~2 ~~businesses~~Abbey National Treasury Services plc 2015 Half Yearly Financial Report

ANTSTable isof headed by Jacques Ripoll, Chief Executive Officer, and operates three business divisions as follows: Contents

Business division About Commercial Banking Commercial Banking offers a wide range of products and financial services to UK companies. Commercial Banking products and services include loans, bank accounts, deposits, and treasury services. The Large Corporates business offers specialist treasury services in fixed income and foreign exchange, lending, transactional banking services, capital markets and money markets to large multinational corporate customers. Lending includes syndicated loans and structured finance. Transactional banking includes trade finance and cash management. Money market activities include securities lending/borrowing and repos. Markets Markets offers risk management and other services to financial institutions, as well as to other Santander UK divisions. Its main product areas are fixed income and foreign exchange, equity, capital markets and institutional sales. Corporate Centre Corporate Centre consists of Financial ~~Management~~review & Investor Relations (‘FMIR’) and the non-core portfolios of social housing loans and structured credit assets. FMIR is responsible for managing capital and funding, balance sheet composition and structure, and strategic liquidity risk for the Santander UK group. The non-core portfolios are being run-down and/or managed for value.

Our strategy


4		Income statement review
4		Summarised Consolidated Income Statement
5		Profit before tax by segment
6		• Commercial Banking
7		• Corporate & Institutional Banking
8		• Corporate Centre
9		Balance sheet review
9		Summarised Condensed Consolidated Balance Sheet
11		Short-term borrowings
12		Average balance sheet
12		Cash flows

~~ANTS’s~~Abbey ~~strategy~~National isTreasury toServices ~~continue~~plc to2015 ~~provide~~Half ~~treasury~~Yearly ~~support~~Financial ~~functions~~Report ~~for the Santander UK group and to provide treasury, corporate and wholesale banking services to UK clients.~~ 3

AbbeyTable Nationalof Treasury Services plc 2014 Half Yearly Financial Report 3Contents

~~Detailed~~Financial ~~Business~~review ~~Review~~

~~Group~~INCOME ~~and~~STATEMENT ~~Divisional~~REVIEW ~~Results~~

~~GROUP~~KEY ~~SUMMARY~~PERFORMANCE INDICATORS

~~KEY~~Key performance ~~PERFORMANCE~~indicators ~~INDICATORS~~are set at the Santander UK group level, rather than separately for the ANTS group.

~~Key~~SUMMARISED ~~performance~~CONSOLIDATED ~~indicators~~INCOME ~~are~~STATEMENT ~~set at the Santander UK group level, rather than separately for the ANTS group.~~

SUMMARISED CONSOLIDATED INCOME STATEMENT


	Six months ended 30 June 2015 £m			Six months ended 30 June 2014 £m
Net interest income/(expense)		177			(50	)
Non-interest income⁽¹⁾		182			240

Total operating income		359			190

Administrative expenses		(127	)		(125	)
Depreciation, amortisation and impairment		(3	)		(1	)

Total operating expenses excluding impairment losses, provisions and charges		(130	)		(126	)

Impairment loss releases on loans and advances		4			—
Provisions for other liabilities and charges		—			—

Total operating impairment losses, provisions and charges		4			—

Profit before tax		233			64
Taxation (charge)/credit		(48	)		1

Profit after tax for the period		185			65

	Six months ended30 June 2014£m			Six months ended30 June 2013£m
Net interest expense		(50	)		(8	)
Non-interest income		240			436
Total operating income		190			428
Administrative expenses		(125	)		(108	)
Depreciation, amortisation and impairment		(1	)		(1	)
Total operating expenses excluding impairment losses		(126	)		(109	)
Impairment losses on loans and advances		—			(18	)
Total operating impairment losses		—			(18	)
Profit before tax		64			301
Taxation credit/(charge)		1			(45	)
Profit for the period		65			256

(1)	Comprised of Net fee and commission income and Net trading and other income

Six months ended 30 June ~~2014~~2015 compared to six months ended 30 June ~~2013~~2014

Profit before tax ~~decreased~~increased by £~~237m~~169m to £~~64m~~233m in the first half of ~~2014~~2015 (~~2013~~2014: £~~301m~~64m). By income statement line, the movements were:

• Net interest ~~expense~~income increased by £~~42m~~227m to £~~50m~~177m in the first half of ~~2014~~2015 (~~2013~~2014: expense of £8m50m) asreflecting ~~the returns on our structural hedge strategy were~~ lower ~~than~~funding costs in ~~the~~Corporate ~~first~~Centre ~~half~~together ofwith ~~2013~~improved ~~following~~margins ~~the maturity of historic contracts that benefited from higher returns. This was partially offset by increased interest income as a result of continued growth~~ in ~~customer~~Commercial ~~loans at improved spreads~~Banking.

• Non-interest income decreased by £~~196m~~58m to £~~240m~~182m in the first half of ~~2014~~2015 (~~2013~~2014: £~~436m~~240m) principally due to ~~reduced~~lower mark-to-market gains on certain derivatives, which are only treated as hedging for Santander UK group purposes. Inin ~~addition,~~Corporate ~~non~~Centre and lower demand in some market-~~interest~~making ~~income~~activities ~~decreased~~in ~~due~~Corporate to& aInstitutional ~~significantly~~Banking, ~~reduced~~partially ~~credit~~offset ~~arising~~by ~~from~~increased ~~the~~revenues ~~debit~~from ~~valuation~~our ~~adjustments~~client onderivative ~~derivatives~~and ~~written~~cash bysales ~~ANTS~~activities.

• Administrative expenses increased by £~~17m~~2m to £~~125m~~127m in the first half of ~~2014~~2015 (~~2013~~2014: £~~108m~~125m). ~~The~~reflecting ~~increase~~investment ~~reflected~~in ~~the~~product ~~continued~~capabilities ~~investment~~ in ~~the~~Corporate ~~Commercial~~& Institutional Banking partially offset by lower regulatory and ~~Markets~~other ~~businesses,~~project ~~partially~~costs ~~offset~~borne bycentrally ~~effective~~in ~~cost~~Corporate ~~control~~Centre.

• Depreciation, amortisation and impairment costs ~~were~~remained ~~unchanged~~broadly stable at £1m3m in the first half of ~~2014~~2015 (~~2013~~2014: £1m).

• Impairment ~~losses~~loss releases on loans and advances ~~decreased~~increased byreflecting ~~£18m~~a tomodest provision release of £~~nil~~4m in the first half of ~~2014~~2015 (~~2013~~2014: £~~18m~~nil) following the full repayment of a loan. Credit quality in the loan books continued to be good, supported by the improving economic environment and our prudent lending policy.

• The taxation charge ~~decreased~~increased by £~~46m~~49m to a ~~credit~~charge of £1m48m in the first half of ~~2014~~2015 (~~2013~~2014: credit of £~~45m~~1m) ~~principally~~largely due to higher ~~reduced~~ profits. ~~The tax charge in both periods was also reduced by the effect of other non-equalised items~~ and lower adjustments inwith respect ofto prior year provisions.

4 Abbey National Treasury Services plc ~~2014~~2015 Half Yearly Financial Report

DetailedTable Businessof Review Contents

~~Group~~Financial ~~and~~review ~~Divisional Results continued~~

Critical factors affecting results

The preparation of our Condensed Consolidated Interim Financial Statements requires management to make estimates and judgements that affect the reported amount of assets and liabilities at the balance sheet date and the reported amount of income and expenses during the reporting period. Management evaluates its estimates and judgements on an ongoing basis. Management bases its estimates and judgements on historical experience and other factors believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. Estimates and judgements that are considered important to the portrayal of our financial condition including, where applicable, quantification of the effects of reasonably possible ranges of such estimates are set out in “‘Critical Accounting Policies” and Areas of Significant Management Judgement’ in Note 1 onto ~~page~~the ~~127~~Consolidated ofFinancial Statements in the ~~2013~~ 2014 Annual Report.

The rest of this section contains a summary of the results, and commentary thereon, by ~~Income~~income ~~Statement~~statement line item for each segment.

Basis of results presentation

The segmental information in this Half Yearly Financial Report reflects the reporting structure in place at the reporting date in accordance with which the segmental information in Note 2 to the Condensed Consolidated Interim Financial Statements has been presented. The Company’s board of directors (the ‘Board’) is the chief operating decision maker for ~~the~~ ANTS ~~group~~. The ~~segment~~segmental information below is presented on the basis used by the Board to evaluate performance and allocate resources. The Board reviews discrete financial information for each segment of the business which follows ~~the~~ ANTS ~~group~~’s normal accounting policies and principles, including measures of operating results, assets and liabilities. As described in Note 2 to the Condensed Consolidated Interim Financial Statements, following a strategic review, the segmental financial information reported to the Board was revised in the fourth quarter of 2014, to designate two distinct customer business segments, which reflect how we now manage and operate the bank: Commercial Banking and Corporate & Institutional Banking; and allocate indirect income, expenses and charges previously held at the Corporate Centre, which can be attributed to the two customer segments. This included a review of the internal transfer pricing policy, which resulted in a further allocation of funding and liquidity costs, central operating expenses and other provisions.

~~PROFIT~~With ~~BEFORE~~the ~~TAX~~allocation BYof ~~SEGMENT~~indirect income, expenses and charges from the Corporate Centre and with the two distinct customer business segments at differing stages of commercial maturity, we are now able to identify better and drive with greater granularity the key drivers of our business performance. This enables a more targeted apportionment of capital and other resources in line with the individual strategies and objectives of each business segment. The segmental analyses for prior periods presented in these Condensed Consolidated Interim Financial Statements have been adjusted to reflect these changes.

30 June 2014	CommercialBanking£m			Markets£m			CorporateCentre£m			Total£m
Net interest income/(expense)		90			1			(141	)		(50	)
Non-interest income		110			57			73			240
Total operating income		200			58			(68	)		190
Administration expenses		(50	)		(56	)		(19	)		(125	)
Depreciation, amortisation and impairment		—			(1	)		—			(1	)
Total operating expenses excluding impairment losses		(50	)		(57	)		(19	)		(126	)
Impairment losses on loans and advances		—			—			—			—
Total operating impairment losses		—			—			—			—
Profit/(loss) before tax		150			1			(87	)		64

Commercial Banking provides banking services to companies with a turnover of between £250,000 and £500m per annum through our enhanced platform, distribution capability and product suite. Large corporates, with an annual turnover above £500m, are now managed in our Corporate & Institutional Banking segment, where they can be best serviced in terms of their more specialised and tailored product needs, and benefit from the Banco Santander group’s global capability. Corporate Centre now predominantly consists of the non-core portfolios of social housing loans and structured credit assets, mark-to-market gains/losses arising from banking book activities and residual term mismatches.

30 June 2013	CommercialBanking£m			Markets£m			CorporateCentre£m			Total£m
Net interest income/(expense)		69			(1	)		(76	)		(8	)
Non-interest income		114			40			282			436
Total operating income		183			39			206			428
Administration expenses		(42	)		(48	)		(18	)		(108	)
Depreciation, amortisation and impairment		—			(1	)		—			(1	)
Total operating expenses excluding impairment losses		(42	)		(49	)		(18	)		(109	)
Impairment losses on loans and advances		(18	)		—			—			(18	)
Total operating impairment losses		(18	)		—			—			(18	)
Profit/(loss) before tax		123			(10	)		188			301

PROFIT BEFORE TAX BY SEGMENT

Abbey National Treasury Services plc 2014 Half Yearly Financial Report 5


30 June 2015	Commercial Banking £m			Corporate & Institutional Banking £m			Corporate Centre £m			Total £m
Net interest income		37			38			102			177
Non-interest income⁽¹⁾		22			138			22			182

Total operating income		59			176			124			359

Administration expenses		(11	)		(99	)		(17	)		(127	)
Depreciation, amortisation and impairment		—			(2	)		(1	)		(3	)

Total operating expenses excluding impairment losses, provisions and charges		(11	)		(101	)		(18	)		(130	)

Impairment loss releases on loans and advances		4			—			—			4
Provisions for other liabilities and charges		—			—			—			—

Total operating impairment losses, provisions and charges		4			—			—			4

Profit before tax		52			75			106			233


30 June 2014
Net interest income/(expense)		35			35			(120	)		(50	)
Non-interest income		16			135			89			240

Total operating income/(expense)		51			170			(31	)		190

Administration expenses		(11	)		(95	)		(19	)		(125	)
Depreciation, amortisation and impairment		—			(1	)		—			(1	)

Total operating expenses excluding impairment losses, provisions and charges		(11	)		(96	)		(19	)		(126	)

Impairment losses on loans and advances		—			—			—			—
Provisions for other liabilities and charges		—			—			—			—

Total operating impairment losses, provisions and charges		—			—			—			—

Profit/(loss) before tax		40			74			(50	)		64

~~Detailed~~(1) ~~Business~~Comprised ~~Review~~of Net fee and commission income and Net trading and other income

~~Group~~Abbey ~~and~~National ~~Divisional~~Treasury ~~Results~~Services ~~continued~~plc 2015 Half Yearly Financial Report 5

COMMERCIALTable BANKINGof Contents

~~Commercial~~Financial ~~Banking~~review offers a wide range of products and financial services to customers through a network of regional CBCs and through telephony and e-commerce channels. Commercial Banking products and services include loans, bank accounts, deposits and treasury services. The management of our customers is organised according to the annual turnover of their business, enabling us to offer a differentiated service to small and medium enterprises (‘SMEs’), mid and large corporate customers.

~~The~~COMMERCIAL ~~SME~~BANKING and mid corporate business principally serves SMEs with an annual turnover of more than £250,000 up to £50m, and other corporate customers with an annual turnover of up to £500m. This also includes real estate lending.

~~The~~Commercial ~~Large~~Banking ~~Corporates~~provides ~~business~~banking ~~offers~~services ~~specialist~~to ~~treasury~~companies ~~services~~with ina ~~fixed~~turnover ~~income~~of between £250,000 and ~~foreign~~£500m per ~~exchange,~~annum ~~lending,~~through ~~transactional~~our ~~banking~~enhanced ~~services~~platform, ~~capital~~distribution ~~markets~~capability and ~~money~~product ~~markets~~suite tothrough ~~large~~a ~~multinational~~network ~~corporate customers with an annual turnover~~ of ~~more~~regional ~~than~~business ~~£500m.~~centres ~~Lending~~and ~~includes~~through ~~syndicated~~telephony ~~loans~~ and ~~structured~~e-commerce ~~finance.~~channels, ~~Transactional~~and ~~banking~~commercial ~~includes trade~~real ~~finance~~estate and ~~cash~~Social ~~management~~Housing. ~~Money~~Commercial ~~market~~Banking ~~activities~~products and services include ~~securities~~loans ~~lending/borrowing~~ and ~~repos~~treasury services.

Summarised income statement

	Six months ended30 June 2014£m			Six months ended30 June 2013£m
	Six months ended30 June 2015£m			Six months ended30 June 2014£m
Net interest income		9037			6935
Non-interest income		~~110~~22			~~114~~16
Total operating income		~~200~~59			~~183~~51
Administration expenses		(5011	)		(4211	)
Depreciation, amortisation and impairment		—			—
Total operating expenses excluding impairment losses		(50	)		(42	)
Total operating expenses excluding impairment losses,provisions and charges		(11	)		(11	)
Impairment losses on loans and advances		—			(18	)
Impairment loss releases on loans and advances		4			—
Total operating impairment losses		—			(18	)
Provisions for other liabilities and charges		—			—
Profit before tax		150			123
Total operating impairment losses, provisions and charges		4			—
Profit before tax		52			40

~~Commercial~~Six ~~Banking~~months ~~profit~~ended ~~before~~30 June ~~tax~~2015 compared to six months ended 30 June 2014

~~Six~~Profit ~~months~~before ~~ended~~tax ~~30 June~~increased ~~2014~~by ~~compared~~£12m to ~~six~~£52m ~~months~~in ~~ended~~the ~~30 June~~first ~~2013~~half of 2015 (2014: £40m). By income statement line, the movements were:

~~Profit~~• ~~before~~Net ~~tax~~interest income increased by £~~27m~~2m to £~~150m~~37m in the first half of ~~2014~~2015 (~~2013~~2014: £~~123m~~35m). Byprincipally ~~income~~as ~~statement~~a ~~line,~~result ~~the movements~~of ~~were:~~continued growth in improved margins on customer loans.

• ~~Net~~ Non-interest income increased by £~~21m~~6m to £~~90m~~22m in the first half of ~~2014~~2015 (~~2013~~2014: £~~69m~~16m), principally as a result of ~~continued~~increased ~~growth~~interest inrate ~~customer~~management ~~loans at improved spreads~~income.

• ~~Non-interest~~Administration ~~income~~expenses ~~decreased~~remained byunchanged ~~£4m~~at to £~~110m~~11m in the first half of ~~2014~~2015 (~~2013~~2014: £~~114m~~11m) reflecting ~~lower~~continued ~~income~~strong ~~from~~cost ~~Large Corporates, primarily as a result of lower demand for interest rate risk~~ management ~~products in a relatively stable, low interest rate environment, partially offset by increased client short-term market activity~~.

• ~~Administration~~Impairment ~~expenses~~loss releases on loans and advances increased byreflecting ~~£8m~~a tomodest provision release of £~~50m~~4m in the first half of ~~2014~~2015 (~~2013~~2014: £~~42m~~nil) following the full repayment of a loan. ~~The~~Credit ~~increase~~quality ~~reflected~~in the loan books continued ~~investment~~to inbe good, supported by the ~~Commercial~~improving ~~Banking~~economic ~~business~~environment and our prudent lending policy.

•6 ~~Depreciation,~~Abbey ~~amortisation~~National ~~and~~Treasury ~~impairment~~Services ~~were~~plc ~~unchanged~~2015 atHalf ~~£nil~~Yearly inFinancial ~~the first half of 2014 (2013: £nil).~~Report

•Table Impairment losses on loans and advances decreased by £18m to £nil in the first half of 2014 (2013: £18m). Credit quality in the loan books continued to be good, supported by the improving economic environment.Contents

~~6 Abbey National Treasury Services plc 2014 Half Yearly~~ Financial ~~Report~~review

~~Detailed~~CORPORATE & ~~Business~~INSTITUTIONAL ~~Review~~BANKING

~~Group~~Corporate & Institutional Banking is a financial markets business focused on providing value added financial services to large corporates, with an annual turnover above £500m, and ~~Divisional~~financial ~~Results~~institutions, ~~continued~~where they can be best serviced in terms of their more specialised and tailored product needs, and benefit from the Banco Santander group’s global capability. It also serves the rest of Santander UK’s business (including the Retail Banking and Commercial Banking divisions) from a product perspective. It is structured into five main product areas: Rates, Foreign exchange and money markets, Equity, Credit and Transaction Banking. In addition, large and complex clients are covered by teams organised along industry lines. Rates covers sales and trading activity for fixed income products. Foreign exchange offers a range of foreign exchange products and money markets runs securities lending/borrowing and repo businesses. Equity covers equity derivatives and property derivatives. Equity derivatives activities include the manufacture of structured products sold to retail and corporate customers of both Santander UK and of other financial institutions who sell them on to their customers. Credit originates loan and bond transactions in primary markets as well as their intermediation in secondary markets. Transaction Banking provides lending and cash management services, including deposit taking and trade finance.

~~MARKETS~~Summarised income statement

Markets offers risk management and other services to financial institutions, as well as to other Santander UK divisions. Its main product areas are fixed income and foreign exchange, equity, capital markets and institutional sales.


	Six months ended 30 June 2015 £m			Six months ended 30 June 2014 £m
Net interest income		38			35
Non-interest income		138			135

Total operating income		176			170

Administration expenses		(99	)		(95	)
Depreciation, amortisation and impairment		(2	)		(1	)

Total operating expenses excluding impairment losses		(101	)		(96	)

Impairment losses on loans and advances		—			—
Provisions for other liabilities and charges		—			—

Total operating impairment losses		—			—

Profit before tax		75			74

~~Summarised~~Six ~~income~~months ~~statement~~ended 30 June 2015 compared to six months ended June 2014

	Six months ended30 June 2014£m			Six months ended30 June 2013£m
Net interest income/(expense)		1			(1	)
Non-interest income		57			40
Total operating income		58			39
Administration expenses		(56	)		(48	)
Depreciation, amortisation and impairment		(1	)		(1	)
Total operating expenses excluding impairment losses		(57	)		(49	)
Impairment losses on loans and advances		—			—
Total operating impairment losses		—			—
Profit/(loss) before tax		1			(10	)

Profit before tax increased by £1m to £75m in the first half of 2015 (2014: £74m). By income statement line, the movements were:

~~Markets~~• ~~profit/~~Net interest income increased by £3m to £38m in the first half of 2015 (~~loss~~2014: £35m) ~~before~~reflecting ~~tax~~continued demand for project and acquisition finance transactions, syndicated loans, transactional services and factoring products.

~~Six~~• ~~months~~Non-interest ~~ended~~income ~~30 June~~increased ~~2014~~slightly ~~compared~~by £3m to ~~six~~£138m ~~months~~in ~~ended~~the ~~30 June~~first ~~2013~~half of 2015 (2014: £135m) reflecting increased revenues from our client derivative and cash sales activities, partially offset by lower demand in some market-making activities.

~~Profit/(loss)~~• ~~before~~Administration ~~tax~~expenses increased by £~~11m~~4m to £1m99m in the first half of ~~2014~~2015 (~~2013~~2014: ~~loss of~~ £~~10m~~95m)., Byreflecting ~~income~~the ~~statement~~investment ~~line~~in developing transactional, interest rate and fixed income capabilities as well as the ~~movements~~related ~~were:~~controls, systems and processes.

• ~~Net~~Depreciation ~~interest~~and ~~income/(expense)~~amortisation ~~increased~~remained bybroadly ~~£2m~~stable toat £1m2m in the first half of ~~2014~~2015 (~~2013~~2014: ~~expense of~~ £1m)~~, primarily due to a decrease in funding costs~~.

•Abbey ~~Non-interest~~National ~~income~~Treasury ~~increased~~Services byplc ~~£17m~~2015 toHalf ~~£57m~~Yearly inFinancial ~~the~~Report ~~first half of 2014 (2013: £40m). Following a refocusing of the Equity Derivatives and Securities Financing businesses in 2013, non-interest income recovered to more normalised levels.~~7

•Table Administration expenses increased by £8m to £56m in the first half of 2014 (2013: £48m), reflecting investment in developing interest rate and fixed income product capabilities offset by tight cost control.Contents

•Financial ~~Depreciation,~~review ~~amortisation and impairment remained unchanged at £1m in the first half of 2014 (2013: £1m).~~

~~Abbey~~CORPORATE ~~National~~CENTRE ~~Treasury Services plc 2014 Half Yearly Financial Report 7~~

~~Detailed~~Corporate ~~Business~~Centre ~~Review~~consists of Financial Management & Investor Relations (‘FMIR’) and the non-core portfolios of Social Housing loans and structured credit assets. FMIR is responsible for managing capital and funding, balance sheet composition, structural market risk and strategic liquidity risk for the rest of the Santander UK group. The non-core portfolios are being run-down and/or managed for value.

~~Group~~Summarised ~~and~~income ~~Divisional~~statement ~~Results continued~~

CORPORATE CENTRE


	Six months ended 30 June 2015 £m			Six months ended 30 June 2014 £m
Net interest income/(expense)		102			(120	)
Non-interest income		22			89

Total operating income/(expense)		124			(31	)

Administration expenses		(17	)		(19	)
Depreciation, amortisation and impairment		(1	)		—

Total operating expenses excluding impairment losses, provisions and charges		(18	)		(19	)

Provisions for other liabilities and charges		—			—

Total operating impairment losses, provisions and charges		—			—

Profit/(loss) before tax		106			(50	)

~~Corporate~~Six ~~Centre~~months ~~consists~~ended of30 June ~~FMIR~~2015 ~~and~~compared ~~the~~to ~~non-core~~six ~~portfolios~~months ofended ~~social~~June ~~housing~~2014 loans and structured credit assets. FMIR is responsible for managing capital and funding, balance sheet composition and structure, and strategic liquidity risk for the Santander UK group. The non-core portfolios are being run-down and/or managed for value.

~~Summarised~~Profit/(loss) ~~income~~before tax increased by £156m to a profit of £106m in the first half of 2015 (2014: loss of £50m). By income statement line, the movements were:

	Six months ended30 June 2014£m			Six months ended30 June 2013£m
Net interest expense		(141	)		(76	)
Non-interest income		73			282
Total operating (expense)/income		(68	)		206
Administration expenses		(19	)		(18	)
Depreciation, amortisation and impairment		—			—
Total operating expenses excluding impairment losses		(19	)		(18	)
Impairment losses on loans and advances		—			—
Total operating impairment losses		—			—
(Loss)/profit before tax		(87	)		188

•

Net interest income/(expense) increased by £222m to income of £102m in the first half of 2015 (2014: expense of £120m) reflecting lower funding costs and the differing maturity and behavioural profiles between the commercial balance sheet and the re-pricing of debt funding.

~~Corporate~~• ~~Centre~~Non-interest income decreased by £67m to £22m in the first half of 2015 (~~loss~~2014: £89m)~~/profit~~ ~~before~~principally ~~tax~~due to lower mark-to-market gains on certain derivatives which are only treated as hedging for Santander UK group purposes.

~~Six~~• ~~months~~Administration ~~ended~~expenses ~~30 June~~decreased ~~2014~~by ~~compared~~£2m to ~~six~~£17m ~~months~~in ~~ended~~the ~~30 June~~first ~~2013~~half of 2015 (2014: £19m) reflecting increased cost control and lower regulatory and other project costs.

~~(Loss)/profit~~8 ~~before~~Abbey ~~tax~~National ~~decreased~~Treasury byServices ~~£275m~~plc to2015 ~~£(87)m~~Half inYearly ~~the~~Financial ~~first half of 2014 (2013: £188m). By income statement line, the movements were:~~ Report

•Table Net interest expense increased by £65m to £141m in the first half of 2014 (2013: £76m) as the returns on our structural hedge strategy were lower than in the first half of 2013 following the maturity of historic contracts that benefited from higher returns.Contents

•Financial ~~Non-interest~~review income decreased by £209m to income of £73m in the first half of 2014 (2013: £282m) principally due to reduced mark-to-market gains on certain derivatives, which are only treated as hedging for Santander UK group purposes. In addition, non-interest income decreased due to a significantly reduced credit arising from the debit valuation adjustments on derivatives written by ANTS.

•BALANCE ~~Administration~~SHEET ~~expenses~~REVIEW ~~increased by £1m to £19m in the first half of 2014 (2013: £18m) reflecting effective cost control.~~

8This ~~Abbey~~Financial ~~National~~Review ~~Treasury~~describes ~~Services~~ANTS’s ~~plc~~significant ~~2014~~assets ~~Half~~and ~~Yearly~~liabilities ~~Financial~~and ~~Report~~its strategy and reasons for entering into such transactions. In this section, references to UK and non-UK, in the geographical analysis, refer to the location of the office where the transaction is recorded.

~~Detailed~~SUMMARISED ~~Business~~CONDENSED ~~Review~~CONSOLIDATED BALANCE SHEET

Balance Sheet Review


	30 June 2015 £m		31 December 2014 £m
Assets
Cash and balances at central banks		2,187		4,460
Trading assets		25,301		21,373
Derivative financial instruments		23,980		25,792
Financial assets designated at fair value		2,454		2,577
Loans and advances to banks		12,073		11,344
Loans and advances to customers		38,066		38,285
Loans and receivables securities		16		22
Available for sale securities		2,099		2,525
Macro hedge of interest rate risk		728		935
Property, plant and equipment		10		10
Tax, intangibles and other assets		219		146

Total assets		107,133		107,469

Liabilities
Deposits by banks		20,444		17,416
Deposits by customers		2,793		4,523
Trading liabilities		15,490		15,333
Derivative financial instruments		24,781		26,607
Financial liabilities designated at fair value		2,502		2,848
Debt securities in issue		37,131		36,799
Macro hedge of interest rate risk		14		39
Tax, other liabilities and provisions		468		523

Total liabilities		103,623		104,088

Equity
Total shareholders’ equity		3,510		3,381

Total liabilities and equity		107,133		107,469

~~This~~A ~~Balance~~more ~~Sheet~~detailed ~~Review~~consolidated ~~describes~~balance ~~the~~sheet ~~ANTS~~is ~~group’s~~contained ~~significant assets and liabilities and its strategy and reasons for entering into such transactions. Throughout this section, references to UK and non-UK,~~ in the ~~geographic~~Condensed ~~analysis,~~Consolidated ~~refer~~Interim ~~to the location of the office where the transaction is recorded~~Financial Statements.

Index
Summarised condensed consolidated balance sheet		9
Short-term borrowings		11
Liquidity and Funding		12
Average balance sheet		13

30 June 2015 compared to 31 December 2014

~~This~~Assets Balance Sheet Review focuses on those areas that have changed significantly during the first half of 2014, and represents an update to the Balance Sheet Review in the 2013 Annual Report, with which it should be read in conjunction. The Balance Sheet Review in the 2013 Annual Report contains additional disclosures which have not changed significantly during the first half of 2014.

~~SUMMARISED~~Cash ~~CONDENSED~~and ~~CONSOLIDATED~~balances ~~BALANCE~~at ~~SHEET~~central banks

	30 June 2014£m		31 December 2013£m
Assets
Cash and balances at central banks		7,452		4,911
Trading assets		18,307		21,897
Derivative financial instruments		21,379		21,550
Financial assets designated at fair value		2,543		2,534
Loans and advances to banks		110,454		113,649
Loans and advances to customers		38,032		41,108
Loans and receivables securities		96		128
Available for sale securities		2,550		2,962
Macro hedge of interest rate risk		399		379
Property, plant and equipment		7		6
Tax, intangibles and other assets		201		203
Total assets		201,420		209,327
Liabilities
Deposits by banks		118,326		120,698
Deposits by customers		4,824		7,780
Trading liabilities		17,848		21,275
Derivative financial instruments		21,607		21,496
Financial liabilities designated at fair value		3,252		3,407
Debt securities in issue		31,717		30,889
Tax, other liabilities and provisions		549		614
Total liabilities		198,123		206,159
Equity
Total shareholders’ equity		3,297		3,168
Total equity		3,297		3,168
Total liabilities and equity		201,420		209,327

Cash and balances held at central banks decreased by 51% to £2,187m at 30 June 2015 (2014: £4,460m). The decrease was due to lower cash placed with the Federal Reserve Bank of New York as part of normal liquid asset portfolio management activity.

ATrading ~~more detailed consolidated balance sheet is contained in the Condensed Consolidated Interim Financial~~assets ~~Statements.~~

Trading assets increased by 18% to £25,301m at 30 June 2015 (2014: ~~compared~~£21,373m), toreflecting ~~31 December~~changes ~~2013~~in the mix of assets held for liquidity purposes, with higher levels of securities purchased under resale agreements and equities partially offset by decreased holdings of debt securities. Additionally there were higher levels of derivative collateral.

~~Assets~~Derivative financial instruments - assets

~~Cash~~Derivative ~~and~~assets ~~balances~~decreased by 7% to £23,980m at ~~central~~30 June ~~banks~~2015 (2014: £25,792m).The decrease was mainly attributable to decreases in the fair value of interest rate and cross currency derivatives assets principally driven by movements in yield curves and foreign exchange rates.

~~Cash~~Financial ~~and~~assets ~~balances~~designated ~~held~~ at ~~central~~fair ~~banks increased to £7,452m at 30 June 2014 (2013: £4,911m). The increase was due to~~value ~~additional~~through ~~cash~~profit ~~placed~~and ~~with~~loss ~~the Federal Reserve Bank of New York as part of normal liquid asset portfolio management activity.~~

~~Trading~~Financial assets designated at fair value through profit and loss decreased by 5% to £2,454m at 30 June 2015 (2014: £2,577m), mainly driven by the decrease in the valuation of assets and maturities within the portfolio. In accordance with ANTS group policy, new loans are no longer being designated at fair value.

~~Trading~~Loans ~~assets~~and ~~decreased~~advances ~~by 16%~~ to ~~£18,307m at 30 June 2014 (2013: £21,897m) reflecting lower levels of activity relating to securities purchased under resale agreements to both~~ banks ~~and customers partially offset by increased holdings of equity instruments as part of short-term markets trading activity.~~

~~Derivative~~Loans ~~financial~~and ~~instruments~~advances -to ~~assets~~banks increased by 6% to £12,073m at 30 June 2015 (2014: £11,344m). The increase was mainly driven by medium term securities purchased under resale agreements.

~~Derivative~~Loans ~~assets~~and ~~remained~~advances ~~broadly~~to ~~unchanged~~customers ~~at £21,379m at 30 June 2014 (2013: £21,550m).~~

~~Financial~~Loans ~~assets~~and ~~designated~~advances to customers decreased by 1% to £38,066m at ~~fair~~30 June ~~value~~2015 ~~through~~(2014: ~~profit~~£38,285m). ~~and~~The ~~loss~~decrease reflected lower balances with Santander UK group companies.

~~Financial assets~~Abbey ~~designated~~National atTreasury ~~fair~~Services ~~value~~plc ~~through~~2015 ~~profit~~Half ~~and~~Yearly ~~loss~~Financial ~~remained~~Report ~~broadly unchanged at £2,543m at 30 June 2014 (2013: £2,534m).~~ 9

AbbeyTable Nationalof Treasury Services plc 2014 Half Yearly Financial Report 9Contents

~~Business~~Financial ~~Review~~review

~~Balance~~Loans ~~Sheet~~and ~~Review~~receivables ~~continued~~securities

Loans and ~~advances~~receivables securities decreased by 27% to ~~banks~~£16m at 30 June 2015 (2014: £22m). The decrease was attributable to sales and maturities of assets in the legacy Treasury asset portfolio.

~~Loans~~Available ~~and~~for ~~advances~~sale tosecurities ~~banks decreased by 3% at £110,454m at 30 June 2014 (2013: £113,649m). These balances largely consisted of loans to Santander UK to support its retail and commercial banking activities.~~

~~Loans~~Available ~~and~~for ~~advances~~sale securities decreased by 17% to ~~customers~~£2,099m at 30 June 2015 (2014: £2,525m) largely due to the sale of UK Government bonds as part of normal liquid asset portfolio management activity.

~~Loans~~Macro ~~and~~hedge ~~advances~~of tointerest ~~customers~~rate ~~decreased~~risk ~~by 7% to £38,032m at 30 June 2014 (2013: £41,108m) due to reduced on~~-~~lending~~ ofassets ~~covered bond issuances.~~

~~Available~~The ~~for~~macro ~~sale~~(or ~~securities~~portfolio) hedge of interest rate risk decreased by 22% to £728m at 30 June 2015 (2014: £935m) mainly driven by movements in yield curves.

~~Available for sale securities decreased to £2~~Tax,~~550m~~ atintangibles ~~30 June~~and ~~2014~~other ~~(2013:~~assets ~~£2,962m) as part of normal liquid asset portfolio management activity.~~

~~Loans~~Tax, intangibles and ~~receivables~~other ~~securities~~assets increased by 50% to £219m at 30 June 2015 (2014: £146m). The increase was primarily driven by an increase in prepayments.

~~Loans~~Liabilities ~~and receivables securities decreased by 25% to £96m at 30 June 2014 (2013: £128m). The decrease principally reflected the continuing run-down of the Treasury asset portfolio.~~

~~Tax,~~Deposits ~~intangibles~~by ~~and other assets~~ banks

~~Tax,~~Deposits ~~intangibles~~by ~~and~~banks ~~other~~increased ~~assets~~by ~~remained~~17% ~~broadly~~to ~~unchanged at~~ £~~201m~~20,444m at 30 June ~~2014~~2015 (~~2013~~2014: £~~203m~~17,416m) reflecting higher balances with Santander UK group companies.

~~Liabilities~~Deposits by customers

Deposits by ~~banks~~customers decreased by 38% to £2,793m at 30 June 2015 (2014: £4,523m). The decrease was attributable to lower levels of deposits from both third party customers and Santander UK group companies.

~~Deposits~~Trading byliabilities ~~banks were relatively stable at £118,326m at 30 June 2014 (2013: £120,698m). This largely consisted of deposits by Santander UK representing on-lending to ANTS of retail and commercial deposits.~~

~~Deposits~~Trading liabilities increased by ~~customers~~1% to £15,490m at 30 June 2015 (2014: £15,333m) as a result of an increase in short positions as part of normal trading activities, partially offset by a reduction in short-term deposits taken and collateral held.

~~Deposits~~Derivative byfinancial ~~customers~~instruments ~~decreased~~- byliabilities ~~38% to £4,824m at 30 June 2014 (2013: £7,780m). The decrease was attributable to lower levels of deposits as part of a plan for the management of our less relationship driven deposit base.~~

~~Trading~~Derivative liabilities decreased by 7% to £24,781m at 30 June 2015 (2014: £26,607m). The decrease was mainly attributable to decreases in the fair value of interest rate and cross currency derivatives liabilities mainly driven by movements in yield curves and foreign exchange rates.

~~Trading~~Financial liabilities ~~decreased~~designated ~~by 16% to £17,848m~~ at ~~30 June~~fair ~~2014~~value ~~(2013:~~through ~~£21,275m).~~profit ~~A decrease in securities sold under repurchase activities~~ and ~~the~~loss ~~cash collateral received as part of normal trading activity were offset by an increase in short-term deposits and short positions in securities.~~

~~Derivative~~Financial liabilities ~~financial~~designated ~~instruments~~at -fair value through profit and loss decreased by 12% to £2,502m at 30 June 2015 (2014: £2,848m). The decrease principally reflected reduced issuances in financial liabilities designated at fair value through profit or loss.

~~Derivative~~Debt ~~liabilities~~securities ~~were broadly~~in ~~unchanged~~issue ~~at £21,607m at 30 June 2014 (2013: £21,496m).~~

~~Financial~~Debt ~~liabilities~~securities ~~designated~~in issue increased by 1% to £37,131m at ~~fair~~30 June ~~value~~2015 (2014: £36,799m), was driven by new issuances in medium-term funding programmes partially offset by maturities in the period.

~~Financial~~Macro ~~liabilities~~hedge ~~designated~~of atinterest ~~fair~~rate ~~value~~risk ~~decreased~~- byliabilities ~~5% to £3,252m at 30 June 2014 (2013: £3,407m). The decrease principally reflected a slight reduction in issuances of structured notes.~~

~~Debt~~Macro ~~securities~~hedge of interest rate risk decreased by 64% to £14m at 30 June 2015 (2014: £39m) mainly driven by movements in ~~issue~~yield curves.

~~Debt securities in issue increased by 3% to £31~~Tax,~~717m~~ atother ~~30 June~~liabilities ~~2014~~and ~~(2013:~~provisions ~~£30,889m) with increases in issuance of certificates of deposit, partially offset by maturities under the covered bond programme.~~

~~Equity~~Tax, other liabilities and provisions decreased by 11% to £468m at 30 June 2015 (2014: £523m). The decrease principally reflected the resolution of legacy issues.

~~Total~~Equity shareholders equity increased by 4% to £3,297m at 30 June 2014 (2013: £3,168m). The increase was principally attributable to retained profit for the period and an increase in the cash flow hedging reserve.

10Total shareholders’ ~~Abbey~~equity ~~National~~increased ~~Treasury~~by ~~Services~~3.8% ~~plc~~to £3,510m at 30 June 2015 (2014: ~~Half~~£3,381m). ~~Yearly~~The ~~Financial~~increase ~~Report~~was principally attributable to the valuation of cash flow hedges and profit for the period of £185m.

~~Business~~10 ~~Review~~Abbey National Treasury Services plc 2015 Half Yearly Financial Report

BalanceTable Sheetof Review continued Contents

~~SHORT-TERM~~Financial ~~BORROWINGS~~review

~~The ANTS group includes short~~SHORT-~~term~~TERM ~~borrowings~~BORROWINGS within deposits by banks, trading liabilities, financial liabilities designated at fair value and debt securities in issue and does not show short-term borrowings separately on the balance sheet. Short-term borrowings are defined by the US Securities and Exchange Commission (the ‘SEC’) as amounts payable for short-term obligations that are US Federal funds purchased and securities sold under repurchase agreements, commercial paper, borrowings from banks, borrowings from factors or other financial institutions and any other short-term borrowings reflected on the ANTS group’s balance sheet. The ANTS group’s only significant short-term borrowings are securities sold under repurchase agreements, commercial paper, borrowings from banks, negotiable certificates of deposit, and certain other debt securities in issue. Additional information on short-term borrowings is provided in the table below for each of the six months ended 30 June 2014 and 30 June 2013.

	Six months ended30 June 2014£m			Six months ended30 June 2013£m
Securities sold under repurchase agreements
- Period end balance		13,217			23,664
- Period-end interest rate		0.63	%		0.35	%
- Average balance(1)		22,872			19,607
- Average interest rate(1)		0.44	%		0.39	%
- Maximum balance(1)		25,927			23,664
Commercial paper
- Period-end balance		3,862			4,687
- Period-end interest rate		0.61	%		0.47	%
- Average balance(1)		4,043			4,223
- Average interest rate(1)		0.39	%		0.53	%
- Maximum balance(1)		4,610			4,687
Borrowings from banks (Deposits by banks)
- Period-end balance		602			223
- Period-end interest rate		0.50	%		0.45	%
- Average balance(1)		467			563
- Average interest rate(1)		1.27	%		0.27	%
- Maximum balance(1)		602			1,149
Negotiable certificates of deposit
- Period-end balance		4,119			2,336
- Period-end interest rate		2.00	%		1.96	%
- Average balance(1)		3,588			2,299
- Average interest rate(1)		2.51	%		1.77	%
- Maximum balance(1)		4,119			2,724
Other debt securities in issue
- Period-end balance		4,793			4,661
- Period-end interest rate		2.87	%		2.92	%
- Average balance(1)		4,922			6,211
- Average interest rate(1)		3.11	%		2.95	%
- Maximum balance(1)		5,938			7,888

ANTS includes short-term borrowings within deposits by banks, trading liabilities, financial liabilities designated at fair value and debt securities in issue and does not show short-term borrowings separately on the balance sheet. Short-term borrowings are defined by the US Securities and Exchange Commission (the ‘SEC’) as amounts payable for short-term obligations that are US Federal funds purchased and securities sold under repurchase agreements, commercial paper, borrowings from banks, borrowings from factors or other financial institutions and any other short-term borrowings reflected on the ANTS group’s balance sheet. The ANTS group’s only significant short-term borrowings are securities sold under repurchase agreements, commercial paper, borrowings from banks, negotiable certificates of deposit, and certain other debt securities in issue. Additional information on short-term borrowings is provided in the table below for the six months ended 30 June 2015 and 2014.

(1) Calculated using monthly data.


	Six months ended 30 June 2015 £m			Six months ended 30 June 2014 £m
Securities sold under repurchase agreements
- Period-end balance		10,747			13,217
- Period-end interest rate		0.47	%		0.44	%
- Average balance⁽¹⁾		17,135			22,872
- Average interest rate⁽¹⁾		0.42	%		0.46	%
- Maximum balance⁽¹⁾		23,678			25,927
Commercial paper
- Period-end balance		3,901			3,862
- Period-end interest rate		0.32	%		0.61	%
- Average balance⁽¹⁾		3,973			4,043
- Average interest rate⁽¹⁾		0.31	%		0.39	%
- Maximum balance⁽¹⁾		5,066			4,610
Borrowings from banks (Deposits by banks)
- Period-end balance		280			602
- Period-end interest rate		0.20	%		0.50	%
- Average balance⁽¹⁾		274			467
- Average interest rate⁽¹⁾		1.24	%		1.27	%
- Maximum balance⁽¹⁾		508			602
Negotiable certificates of deposit
- Period-end balance		4,204			4,119
- Period-end interest rate		0.44	%		0.38	%
- Average balance⁽¹⁾		4,310			3,588
- Average interest rate⁽¹⁾		0.39	%		0.42	%
- Maximum balance⁽¹⁾		4,431			4,119
Other debt securities in issue
- Period-end balance		2,131			4,793
- Period-end interest rate		2.73	%		2.87	%
- Average balance⁽¹⁾		3,813			4,922
- Average interest rate⁽¹⁾		2.85	%		3.11	%
- Maximum balance⁽¹⁾		4,604			5,938

~~The~~(1) ~~ANTS~~Calculated ~~group~~using ~~issues~~monthly ~~commercial~~weighted ~~paper~~average ~~generally in denominations of not less than US$50,000, with maturities of up to 365 days~~data. ~~Commercial paper is issued by the Company and its subsidiary Abbey National North America LLC.~~

Commercial paper is issued by ANTS and Abbey National North America LLC, a subsidiary of ANTS. Abbey National Treasury Services plc ~~2014~~issues ~~Half~~commercial ~~Yearly~~paper ~~Financial~~with ~~Report~~a 11minimum issuance amount of Euro 100,000 with a maximum maturity of 364 days. Abbey National North America LLC and Abbey National Treasury Services plc, US Branch issue commercial paper with minimum denominations of US$100,000 and US$250,000, respectively, with maturity of up to 270 days from the date of issue.

~~Business~~Abbey ~~Review~~National Treasury Services plc 2015 Half Yearly Financial Report 11

BalanceTable Sheetof Review continued Contents

~~LIQUIDITY~~Financial ~~AND~~review ~~FUNDING~~

~~Sources~~AVERAGE ~~and~~BALANCE ~~uses~~SHEET ~~of liquidity and funding~~

~~ANTS~~As isperiod-end ~~the~~statements ~~treasury~~may ~~support~~not ~~function~~be ~~for~~representative ~~the~~of ~~Santander~~activity UKthroughout ~~group.~~the ~~In this regard~~period, ~~ANTS’s~~average ~~role~~balance issheets toare ~~provide~~presented ~~access~~below. toThe ~~financial~~average balance ~~markets~~sheets ~~and~~summarise ~~central~~the ~~bank~~significant ~~facilities~~categories inof ~~order~~assets toand ~~meet the Santander UK group’s liquidity~~liabilities, ~~funding,~~together ~~capital~~with ~~and~~average ~~balance~~interest ~~sheet management requirements~~rates.


	Six months ended 30 June 2015								Six months ended 30 June 2014
	Average Balance⁽¹⁾ £m			Interest⁽⁴⁾⁽⁵⁾ £m			Average rate %		Average balance⁽¹⁾ £m			Interest⁽⁴⁾⁽⁵⁾ £m			Average rate %
Assets
Loans and advances to banks:
- UK		12,518			183			2.92		102,469			628			1.23
- Non-UK		9,472			7			0.15		13,380			15			0.22
Loans and advances to customers:⁽³⁾
- UK		39,384			560			2.84		40,195			523			2.60
- Non-UK		22			—			—		—			—			—
Other interest-earning financial assets
- UK		2,428			5			0.41		2,717			18			1.32

Total average interest-earning assets, interest income⁽²⁾		63,824			755			2.37		158,761			1,184			1.49

Impairment loss allowances		(77	)		—			—		(56	)		—			—
Trading business		21,030			—			—		18,930			—			—
Assets designated at FVTPL		2,559			—			—		2,605			—			—
Other non-interest-earning assets		30,864			—			—		28,840			—			—

Total average assets		118,200			—			—		209,080			—			—

Non-UK assets as a % of total		8.03	%		—			—		6.40	%		—			—

Liabilities
Deposits by banks:
- UK		(17,108	)		(77	)		0.90		(113,290	)		(666	)		1.18
- Non-UK		(48	)		—			—		(9	)		—			—
Deposits by customers – wholesale:
- UK		(3,088	)		(16	)		1.04		(6,341	)		(72	)		2.27
- Non-UK		(665	)		(1	)		0.30		—			—			—
Bonds and medium-term notes:
- UK		(34,092	)		(476	)		2.79		(28,451	)		(491	)		3.45
- Non-UK		(5,097	)		(8	)		0.31		(4,287	)		(5	)		0.23

Total average interest-bearing liabilities, interest expense⁽²⁾		(60,098	)		(578	)		1.92		(152,378	)		(1,234	)		1.62

Trading business		(21,265	)		—			—		(25,891	)		—			—
Liabilities designated at FVTPL		(2,614	)		—			—		(4,085	)		—			—
Non-interest-bearing liabilities:
- Other		(30,742	)		—			—		(23,486	)		—			—
- Shareholders’ funds		(3,481	)		—			—		(3,240	)		—			—

Total average liabilities and shareholders’ funds		(118,200	)		—			—		(209,080	)		—			—

Non-UK liabilities as a % of total		4.92	%		—			—		2.05	%		—			—

Liquidity and funding risk is managed on a Santander UK group basis and it is not therefore appropriate to consider these risks separately at an ANTS group level. In addition, under the PRA’s regulatory liquidity regime, Santander UK and ANTS together with Cater Allen Limited, a fellow subsidiary of Santander UK plc, form the Santander UK Defined Liquidity Group (~~‘DLG’~~1). ~~Under~~Average ~~these~~balances ~~arrangements,~~are ~~each~~based ~~member~~upon ofmonthly ~~the DLG is liable to support each other in terms of transferring or receiving surplus liquidity in times of stress~~data. ~~In considering the liquidity resources available to the ANTS group, both its own liquid assets and also those of the rest of the Santander UK group are separately presented.~~

In addition, the Company, Santander UK plc, and Cater Allen Limited, which are the three PRA-regulated entities within the Santander UK group, are party to a capital support deed dated 14 December 2012 (~~the “Capital Support Deed”~~2) ~~with certain~~The ~~other~~ratio ~~non-regulated subsidiaries~~ of ~~Santander~~average UKinterest-earning ~~plc.~~assets ~~The parties~~ to ~~the~~interest-bearing ~~Capital~~liabilities ~~Support Deed constitute a core UK group~~ for the ~~purposes~~six ofmonths ~~the~~ended ~~large~~30 ~~exposures~~June ~~provisions~~2015 ofwas ~~CRD IV~~106.2% ~~Under article 4001~~(f)six ofmonths ~~the~~ended ~~Capital~~30 ~~Requirements Regulations,~~June ~~exposures~~2014: ~~of each of the three regulated entities to other members of the core UK group are exempt from large exposure limits that would otherwise apply~~104. The purpose of the Capital Support Deed is to facilitate the prompt transfer of available capital resources from, or repayment of liabilities by, the non-regulated parties to any of the regulated parties in the event that one of the regulated parties has breached or is at risk of breaching its capital resources requirements or risk concentrations requirements19%).

~~Santander~~(3) UKLoans ~~primarily generates funding~~ and ~~liquidity~~advances ~~through UK retail and corporate deposits, as well as in the financial markets through its own debt programmes and facilities~~ to ~~support~~customers ~~its~~include ~~business~~non-performing ~~activities and liquidity requirements~~loans. ItSee ~~does~~the ~~this~~‘Credit inrisk’ ~~reliance~~section onof the ~~strength~~Risk ~~of its balance sheet and profitability and its own network of investors~~review.

~~Liquidity~~(4) ~~and~~The ~~funding~~net ~~risks~~interest ~~are~~margin ~~identified~~for ~~and~~the ~~encompassed~~six ~~within~~months ~~Santander UK’s~~ended ~~Risk~~30 ~~Framework~~June ~~and~~2015 ~~subject~~was to0.56% ~~Santander~~(six ~~UK’s~~months ~~three-tier~~ended ~~risk~~30 ~~governance~~June ~~framework~~2014: (0.06)%). Net interest margin is calculated as net interest income divided by average interest-earning assets.

(5) The ~~debt issuance~~interest ~~programmes~~spread ~~managed~~for bythe ~~ANTS~~six ~~are~~months ~~set~~ended ~~out~~30 inJune ~~Notes~~2015 was 0.45% (six months ended 30 ~~and~~June 312014: to(0.13)%). Interest spread is the ~~Consolidated~~difference ~~Financial~~between ~~Statements~~the inrate of interest earned on average interest-earning assets and the ~~2013~~rate ~~Annual~~of ~~Report.~~interest paid on average interest-bearing liabilities.

~~Further~~The ~~information~~continuing isrationalisation ~~set~~of ~~out~~the inlegal ~~“Liquidity~~agreements ~~and~~for intercompany funding ~~risk”~~arrangements between the Company and Santander UK plc commenced in the ~~Risk~~second ~~Management~~half ~~Report~~of 2014. The effect of this change on the ANTS group was to reduce intercompany balances, including loans and advances to banks and deposits by banks. As a result, the averages of these balances for the six months ended 30 June 2015 decreased significantly compared with the averages of these balances for the six months ended 30 June 2014.

~~Cash~~CASH ~~flows~~FLOWS

	Six months ended30 June 2014£m		Six months ended30 June 2013£m
	Six months ended30 June 2015£m		Six months ended30 June 2014£m
Net cash inflow/(outflow) from operating activities		11,450		(1,771	)
Net cash inflow from operating activities		2,200		11,450
Net cash inflow from investing activities		~~381~~401		~~843~~381
Net cash inflow/(outflow) from financing activities		405		(3,596	)
Net cash inflow from financing activities		2,154		405
Increase/(decrease) in cash and cash equivalents		12,236		(4,524	)
Increase in cash and cash equivalents		4,755		12,236

The major activities and transactions that affected the ANTS group’s cash flows during the first six months ~~of 2014~~ were as follows:

InThe net cash inflow from operating activities of £2,200m reduced primarily due to the ~~six~~continued ~~months~~rationalisation ~~ended~~of ~~30 June~~the legal agreements for intercompany funding arrangements between the Company and Santander UK plc which commenced in 2014. The effect of this change on the ANTS group was to reduce intercompany balances, including intercompany loans that qualified as cash equivalents, thereby reducing the ~~net~~cash and cash ~~inflow~~equivalents balance, as well as loans and advances to banks and deposits by banks and hence cash flows from operating activities. The net cash inflow from investing activities of £~~11,450m~~401m ~~resulted~~principally reflected the sale of available-for-sale securities. The net cash inflow from ~~decreased~~financing ~~loans~~activities ~~and~~of ~~advances~~£2,154m toreflected ~~banks~~new ~~and~~issues ~~customers~~of debt securities of £6,556m offset by repayments of debt securities maturing in the period of £4,402m.

In12 ~~the~~Abbey ~~six months~~National ~~ended 30 June 2014, the net cash inflow from investing activities of £381m resulted primarily from the net proceeds of acquisitions and disposals of UK~~ Treasury ~~bills~~Services ~~and~~plc ~~other~~2015 ~~government~~Half ~~securities.~~Yearly Financial Report

InTable the six months ended 30 June 2014, the net cash inflow from financing activities of £405m reflected new issues of debt securities of £9,977m, partially offset by repayments of debt securities maturing in the period of £9,572m. Contents

InRisk ~~the~~review six months ended 30 June 2014, cash and cash equivalents increased by £11,657m resulted principally from an increase in short-term loans and advances to banks, and an increase in cash and balances at central banks.

1214 ~~Abbey~~Risk ~~National~~governance ~~Treasury~~15 ~~Services~~Credit ~~plc~~risk ~~2014~~15 ~~Half~~• ~~Yearly~~Credit ~~Financial~~risk ~~Report~~review 15 • ANTS group exposure 19 • Commercial Banking 25 • Corporate & Institutional Banking 27 • Corporate Centre 29 Market risk 29 • Trading market risk 29 Balance sheet management risk 29 • Banking market risk 30 • Liquidity risk 33 • Capital risk 34 Other important risks 34 • Operational risk 34 • Conduct risk 34 • Regulatory risk 34 • Legal risk 34 • Strategic risk 34 • Reputational risk 34 • Model risk 35 Areas of focus and other items 35 • Country risk exposure

~~Business~~Abbey ~~Review~~National Treasury Services plc 2015 Half Yearly Financial Report 13

BalanceTable Sheetof Review continued Contents

~~AVERAGE~~Risk ~~BALANCE~~review ~~SHEET~~

AsThis ~~period-end~~Risk ~~statements~~review ~~may~~contains ~~not~~information bethat ~~representative~~forms ofan ~~the~~integral ~~ANTS~~part ~~group’s~~of ~~activity throughout~~ the ~~period,~~Condensed ~~average~~Consolidated ~~balance~~Interim ~~sheets~~Financial ~~for the ANTS group are presented below~~Statements. ~~The average balance sheets summarise the significant categories of assets and liabilities, together with average interest rates.~~

	Six months ended 30 June 2014								Six months ended 30 June 2013
	AverageBalance(1)£m			Interest(4) (5)£m			Averagerate%		Averagebalance(1)£m			Interest(4) (5)£m			Averagerate%
Assets
Loans and advances to banks:
- UK		102,469			628			1.23		110,903			1,021			1.84
- Non-UK		13,380			15			0.22		5,634			9			0.32
Loans and advances to customers:(3)
- UK		40,195			523			2.60		41,078			542			2.64
Other interest-earning financial assets
- UK		2,717			18			1.32		4,464			20			0.90
- Non-UK		—			—			—		289			1			0.69
Total average interest-earning assets, interest income(2)		158,761			1,184			1.49		162,368			1,593			1.96
Impairment loss allowances		(56	)		—			—		(114	)		—			—
Trading business		18,930			—			—		26,320			—			—
Assets designated at FVTPL		2,605			—			—		3,236			—			—
Other non-interest-earning assets		28,840			—			—		37,147			—			—
Total average assets		209,080			—			—		228,957			—			—
Non-UK assets as a % of total		6.40	%		—			—		2.59	%		—			—
Liabilities
Deposits by banks:
- UK		(113,290	)		(666	)		1.18		(117,862	)		(998	)		1.69
- Non-UK		(9	)		—			—		(2	)		—			—
Deposits by customers – wholesale:
- UK		(6,341	)		(72	)		2.27		(5,665	)		(67	)		2.37
- Non-UK		—			—			—		—			—			—
Bonds and medium-term notes:
- UK		(28,451	)		(491	)		3.45		(27,099	)		(525	)		3.87
- Non-UK		(4,287	)		(5	)		0.23		(4,357	)		(11	)		0.50
Dated and undated loan capital and other subordinated liabilities:
- UK		—			—			—		—			—			—
Total average interest-bearing liabilities, interest expense(2)		(152,378	)		(1,234	)		1.62		(154,985	)		(1,601	)		2.07
Trading business		(25,891	)		—			—		(31,233	)		—			—
Liabilities designated at FVTPL		(4,085	)		—			—		(4,902	)		—			—
Non-interest-bearing liabilities:
- Other		(23,486	)		—			—		(33,935	)		—			—
- Shareholders’ funds		(3,240	)		—			—		(3,902	)		—			—
Total average liabilities and shareholders’ funds		(209,080	)		—			—		(228,957	)		—			—
Non-UK liabilities as a % of total		2.05	%		—			—		1.90	%		—			—

The ANTS group provides treasury, corporate and wholesale banking services to UK clients and also to the wider Santander UK group, of which ANTS is a significant part. ANTS is also the treasury support function for the Santander UK group. In this regard, ANTS’s role is to provide access to financial markets and central bank facilities in order to meet the Santander UK group’s liquidity, funding, capital and balance sheet management requirements. As such, ANTS is one of the main debt issuance vehicles in the Santander UK group.

~~(1)~~ANTS ~~Average~~contains ~~balances~~part of a number of Santander UK’s business segments. Specifically, ANTS consists of part of the Santander UK group’s Commercial Banking, Corporate & Institutional Banking, and Corporate Centre business segments. Whether transactions are ~~based~~booked ~~upon~~in ~~monthly~~ANTS ~~data~~or another Santander UK group entity reflects historical or operational reasons and does not necessarily reflect any particular business split.

~~(2)~~Santander UK plc has given a full and unconditional guarantee in respect of the unsubordinated liabilities of ANTS incurred up to 30 June 2017. The ~~ratio~~Company has given a reciprocal guarantee in respect of ~~average~~the ~~interest-earning~~unsubordinated ~~assets~~liabilities of Santander UK plc incurred up to ~~interest-bearing~~30 June 2017. As a consequence of the reciprocal guarantee given by the Company in respect of the unsubordinated liabilities ~~for~~of Santander UK plc, the ~~six~~Company ~~months~~is ~~ended~~exposed 30to ~~June~~the ~~2014~~same ~~was~~risks ~~104.19%~~as ~~(Six~~the ~~months~~Santander ~~ended~~UK 30group, ~~June~~of ~~2013:~~which ~~104~~the Company and the ANTS group are part.~~76%).~~

~~(3)~~As ~~Loans~~a subsidiary of Santander UK plc, ANTS has adopted the Santander UK Risk Framework. As a consequence, the ANTS group’s risks are managed at a Santander UK group level in accordance with the Santander UK group’s Risk Framework. The Risk Review describes the Santander UK group’s Risk Framework and ~~advances~~includes more detail on the key risks (on a segmental basis or aggregated where relevant) to ~~customers~~which ~~include~~the ~~non-performing~~ANTS ~~loans~~group is directly exposed. ~~See~~In addition, as a consequence of the ~~“Credit~~guarantee ~~Risk”~~given ~~section~~by the ANTS group in respect of the ~~Risk~~unsubordinated ~~Management~~liabilities ~~Report~~of Santander UK plc, the ANTS group is indirectly exposed to risks that arise in parts of the Santander UK group that are wholly outside the ANTS group. Those risks consist of retail credit risk and pension obligations risk.

~~(4)~~Throughout ~~The~~the ~~net~~Risk ~~interest~~review, ~~margin~~except ~~for~~where ~~the~~stated ~~six~~otherwise, ~~months~~references ~~ended~~to 30Santander ~~June~~UK ~~2014~~should ~~was~~be ~~(0.06)%~~taken to include the ANTS group (~~Six~~reflecting ~~months~~both ~~ended~~the 30risks ~~June~~that ~~2013:~~ANTS ~~(0.01)%).~~is ~~Net~~directly ~~interest~~exposed ~~margin~~to through its own activities and the risks arising elsewhere in the Santander UK group that ANTS is ~~calculated~~indirectly asexposed ~~net~~to ~~interest~~due ~~income~~to ~~divided~~the byexistence ~~average~~of ~~interest-earning~~the ~~assets~~cross guarantees described above).

~~(5)~~RISK ~~The~~GOVERNANCE interest spread for the six months ended 30 June 2014 was (0.13)% (Six months ended 30 June 2013: (0.1)%). Interest spread is the difference between the rate of interest earned on average interest-earning assets and the rate of interest paid on average interest-bearing liabilities.

~~Abbey~~As ~~National~~a ~~Treasury~~significant ~~Services~~financial ~~plc~~services ~~2014~~provider, ~~Half~~risk ~~Yearly~~is ~~Financial~~at ~~Report~~the 13core of Santander UK’s day-to-day activities. The understanding and control of risk on an enterprise-wide basis is critical for the effective management of the business. Santander UK aims to employ a prudent approach and advanced risk management techniques to facilitate the delivery of robust financial performance, and ultimately build sustainable value for all our stakeholders.

~~Detailed~~Santander ~~Business~~UK ~~Review~~aims to maintain a predictable medium-low risk profile, consistent with its business model, which is key to the successful achievement of its strategic objectives.

~~Risk~~RISK ~~Management~~FRAMEWORK ~~Report~~

Index
Risk Management		15
Introduction		16
Risk Framework		16
Credit Risk		17
• Credit Risk Review		17
• ANTS group exposure		17
• Commercial Banking		19
• Markets		26
• Corporate Centre		27
Market Risk		29
• Traded Market risk		29
Balance Sheet Management Risk		31
• Banking Market risk		31
• Liquidity and Funding risk		32
• Capital risk		34
Operational Risk		34
Conduct Risk		34
Regulatory Risk		34
Legal Risk		34
Areas of focus and other items		35
• Country Risk exposure		35

The Santander UK Risk Framework in place at 30 June 2015 was based upon the following key components:

~~This~~• Risk ~~Management Report contains information that forms an integral part of the Condensed Consolidated Interim Financial Statements.~~ definition;

~~This~~• Risk ~~Management~~culture, ~~Report~~overriding ~~focuses~~principles ~~on those areas that have changed significantly during the first half of 2014,~~ and ~~represents~~minimum an update to the Risk Management Report in the 2013 Annual Report, with which it should be read in conjunction. The Risk Management Report in the 2013 Annual Report contains additional disclosures which have not changed significantly during the first half of 2014. standards;

14• ~~Abbey~~Governance, ~~National~~roles ~~Treasury~~and ~~Services~~responsibilities; ~~plc 2014 Half Yearly Financial Report~~and

~~Detailed~~• ~~Business~~Internal ~~Review~~control system.

As a subsidiary of Santander UK plc, ANTS has adopted this Risk ~~Management~~Framework. ~~Report~~During ~~continued~~the first half of 2015, there have been no significant changes to the Risk Framework or the risk governance arrangements as described in the ‘Risk governance’ section in the 2014 Annual Report.

~~RISK~~Risk ~~MANAGEMENT~~culture, ~~REPORT~~overriding principles and minimum standards

~~This~~Risk culture plays an important role in our aim to be the best bank for our people, customers, shareholders and communities. Having a strong unified culture is critical to success. Risk ~~Management~~culture ~~Report~~is ~~contains~~embedded ~~information~~into ~~that~~all ~~forms~~business anunits ~~integral~~through ~~part~~the implementation of the ~~Condensed~~Santander ~~Consolidated~~UK ~~Interim~~Risk ~~Financial~~Framework ~~Statements~~(including Risk Attestations) and a programme of initiatives aligned to our Risk Culture Statement.

~~The~~During ~~ANTS~~the ~~group~~first ~~provides~~half ~~treasury,~~of ~~corporate~~2015 ~~and~~we ~~wholesale~~continued ~~banking~~our ~~services~~programme of initiatives to UKhelp ~~clients~~strengthen and ~~also~~embed to the ~~wider~~risk ~~Santander~~management ~~UK group,~~culture ofacross ~~which ANTS is a significant part. ANTS is also the treasury support function for the~~ Santander UK ~~group~~. InBuilding ~~this~~on ~~regard,~~the ~~ANTS’s~~progress ~~role~~made isin toRetail ~~provide access to financial markets~~ and ~~central~~Commercial ~~bank~~Banking, ~~facilities~~we inare ~~order~~extending toour ~~meet~~focus ~~the~~across ~~Santander UK~~other ~~group’s liquidity~~segments, ~~funding,~~including ~~capital~~Corporate & ~~and balance sheet management requirements~~Institutional Banking. AsThe ~~such,~~main ~~ANTS~~aims ~~is one~~ of ~~the~~this ~~main~~programme ~~debt~~are ~~issuance~~to: ~~vehicles in the Santander UK group.~~

~~ANTS~~• ~~contains~~Help ~~part~~embed ~~of a number of Santander UK’s business segments. Specifically, ANTS consists of part of~~ the ~~Santander~~ UKRisk ~~group’s~~Framework ~~Commercial~~through ~~Banking~~ensuring ~~and~~personal ~~Corporate~~accountability ~~Centre~~for business segments and its entire Markets business segment. Whether transactions are booked in ANTS or another Santander UK group entity reflects historical or operational reasons and does not necessarily reflect any particular business split. risk;

~~Santander~~• UKReinforce ~~plc has given a full and unconditional guarantee in respect of~~ the ~~liabilities~~importance of ~~ANTS~~identification, ~~incurred~~assessment, upmanagement, toand ~~30 June~~reporting ~~2015. The Company has given a reciprocal guarantee in respect~~ of ~~the~~all ~~unsubordinated liabilities of Santander UK plc incurred up to 30 June 2015~~risks. AsThis ~~a consequence of the reciprocal guarantee given by the Company in respect of the unsubordinated liabilities of Santander UK plc, the Company~~ is ~~exposed~~achieved tothrough ~~the same risks as the Santander UK group~~communication, ofeducation ~~which~~and ~~ANTS~~training isat aall ~~significant part.~~ levels;

As• aEnhance subsidiary of Santander UK plc, ANTS has adopted the Santander UK Risk Framework. As a consequence, the ANTS group’s risks are managed at a Santander UK group level in accordance with the Santander UK group’s Risk Framework. The Risk Management Report describes the Santander UK group’s Risk Framework and ~~includes~~embed ~~more~~risk ~~detail~~management onacross the ~~key~~whole ~~risks (on~~employee alife-cycle ~~segmental~~including ~~basis or aggregated where relevant) to which the ANTS group is directly exposed. In addition~~recruitment, asperformance ~~a consequence of the guarantee given by the ANTS group in respect of the liabilities of Santander UK plc~~management, ~~the ANTS group is indirectly exposed to risks that arise in parts of the Santander UK group that are wholly outside the ANTS group. Those risks consist of retail credit risk~~ and ~~pension obligations risk.~~ reward;

~~Throughout~~• ~~the~~Measure ~~Risk~~behavioural ~~Management~~change ~~Report, except where stated otherwise, references to Santander UK should be taken to include the ANTS group (reflecting both the risks that ANTS is directly exposed to~~ through ~~its~~‘speaking ~~own~~up’ ~~activities~~campaigns and ~~the~~surveys; ~~risks arising elsewhere in the Santander UK group that ANTS is indirectly exposed to due to the existence of the cross guarantees described above).~~ and

~~Abbey~~• ~~National~~Improve ~~Treasury~~the ~~Services~~identification ~~plc~~and ~~2014~~management ~~Half~~of ~~Yearly~~risk ~~Financial~~in ~~Report~~planning 15and change projects

~~Detailed~~Mandatory ~~Business~~risk ~~Review~~management training was undertaken throughout the period to promote the understanding of Santander UK’s values and risk culture.

~~Risk~~14 ~~Management~~Abbey ~~Report~~National ~~continued~~Treasury Services plc 2015 Half Yearly Financial Report

RISKTable MANAGEMENTof Contents

~~INTRODUCTION~~Risk review

AsCREDIT aRISK ~~significant financial services~~REVIEW provider, risk is at the core of Santander UK’s day-to-day activities. The understanding and control of risk is critical for the effective management of the business. Santander UK aims to employ a prudent approach and advanced risk management techniques to facilitate the delivery of robust financial performance, and ultimately build sustainable value for all our stakeholders, including our people, customers, shareholders and the communities in which we operate. Santander UK aims to maintain a predictable medium-low risk profile.

~~RISK~~During ~~FRAMEWORK~~the first half of 2015, there have been no significant changes to the ANTS group’s credit risk management policies, as described in the ‘Credit risk management’ section in the 2014 Annual Report.

~~The~~ANTS ~~Risk~~GROUP EXPOSURE ~~Framework in place at 30 June 2014 was based upon the following key components:~~

•Maximum ~~Risk~~exposure ~~definition~~to ~~and~~credit ~~structure;~~risk

•The ~~Risk~~tables ~~Culture~~below set out the ANTS group’s maximum exposure to credit risk. The tables present only those financial assets subject to credit risk. For balance sheet assets, ~~overriding~~the ~~principles~~maximum exposure to credit risk represents the carrying value after allowance for impairment. Off-balance sheet exposures comprise guarantees, formal standby facilities, credit lines and ~~minimum~~other ~~standards;~~commitments. For off-balance sheet guarantees, the maximum exposure is the maximum amount that ANTS would have to pay if the guarantees were to be called upon. For formal standby facilities, credit lines and other commitments that are irrevocable over the life of the respective facilities, the maximum exposure is the full amount of the committed facilities.

• Governance, roles and responsibilities; and


	30 June 2015									31 December 2014
	Maximum exposure									Maximum exposure
	Balance sheet asset									Balance sheet asset
	Gross amounts £bn		Loan loss allowance £bn			Net amounts £bn		Off-balance sheet⁽¹⁾ £bn		Gross amounts £bn		Loan loss allowance £bn			Net amounts £bn		Off-balance sheet⁽¹⁾ £bn
Cash and balances at central banks		2.2		—			2.2		—		4.5		—			4.5		—
Trading assets		18.6		—			18.6		—		16.9		—			16.9		—
Financial assets designated at fair value		2.4		—			2.4		0.2		2.6		—			2.6		0.2
Available-for-sale debt securities		2.1		—			2.1		—		2.5		—			2.5		—
Derivative financial instruments		24.0		—			24.0		—		25.8		—			25.8		—
Loans and advances to banks		12.1		—			12.1		163.7		11.3		—			11.3		157.2
Loans and advances to customers		38.2		(0.1	)		38.1		12.8		38.4		(0.1	)		38.3		12.4
Loans and receivables securities		—		—			—		—		—		—			—		—

Total		99.6		(0.1	)		99.5		176.7		102.0		(0.1	)		101.9		169.8

•(1) ~~System~~Off balance sheet exposure includes the cross guarantee of ~~internal~~the ~~control~~liabilities ~~for~~of ~~risk~~Santander UK plc, as set out in Note 19 to the Condensed Consolidated Interim Financial Statements.

InCredit ~~December~~quality 2013, the Board of Santander UK plc (the “Santander UK Board”) approved an updated Risk Framework, which operated throughout the first half of 2014. As a subsidiary group of Santander UK, ANTS has adopted this Risk Framework. The key risk types were simplified and the lines of defence model streamlined. There was no change to the overriding principles. The main changes were:

•ANTS ~~With~~uses ~~respect~~a single rating scale to ~~risk~~provide ~~definition~~a ~~and~~consistent ~~structure,~~approach for reporting default risk across all the ~~key~~credit risk ~~types~~portfolios. ~~were~~The ~~reorganised~~scale ~~as:~~is ~~Credit,~~comprised ~~Traded~~of ~~Market,~~eight ~~Balance~~grades ~~Sheet~~for ~~Management~~non-defaulted exposures numbered from 9 (~~previously~~lowest ~~known~~risk) asto ~~Structural~~2 (highest risk). ~~including~~Each ~~Banking~~grade ~~Market~~is ~~(previously~~defined ~~known~~by asan ~~Non-traded~~upper ~~Market~~and lower probability of default (‘PD’), ~~Operational~~value and is scaled so that the default risk increases by a factor of 10 for every 2 step reduction in the grade number. For example, ~~Conduct~~risk grade 9 equates to an average PD of 0.01%, ~~Regulatory~~and risk grade 7 equates to an average PD of 0.1%. Defaulted exposures are assigned to grade 1 and ~~Legal,~~a asPD ~~set~~value ~~out~~of ~~diagrammatically~~100%. ~~below;~~An approximation to the equivalent credit rating grade used by Standard and Poor’s Ratings Services (‘S&P’) is shown in the final column of the table.

• The additional classification of financial / non-financial risks was removed;


	PD range
ANTS risk grade	Mid %		Lower %		Upper %		S&P equivalent
9		0.010		0.000		0.021		AAA to AA-
8		0.032		0.021		0.066		A+ to A
7		0.100		0.066		0.208		A- to BBB+
6		0.316		0.208		0.658		BBB to BBB-
5		1.000		0.658		2.081		BB+ to BB-
4		3.162		2.081		6.581		B+ to B
3		10.000		6.581		20.811		B- to CCC
2		31.623		20.811		99.999		CC TO C
1 Default		100.000		100.000		100.000		D

•Abbey ~~With~~National ~~respect~~Treasury toServices ~~governance,~~plc ~~roles~~2015 ~~and~~Half ~~responsibilities,~~Yearly aFinancial ~~Conduct~~Report ~~& Regulatory Risk Committee was created which reports to the Executive Risk Committee; and~~15

•Table Aof Risk Culture statement was included.Contents

Risk ~~definition~~review ~~and structure~~

16The ~~Abbey~~tables ~~National~~below ~~Treasury~~set ~~Services~~out ~~plc~~the ~~2014~~distribution ~~Half~~across ~~Yearly~~the ~~Financial~~credit ~~Report~~rating master scale for those financial assets subject to credit risk. For further detail and commentary on the credit rating profiles of key portfolios, see the Commercial Banking, Corporate & Institutional Banking and Corporate Centre sections.

Detailed Business Review


	ANTS rating guide
	9		8		7		6		5		4		1 to 3
	(AAA to AA-)		(A+ to A)		(A- to BBB+)		(BBB to BBB-)		(BB+ to BB-)		(B+ to B)		(B- to D)		Other		Total
30 June 2015	£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn
Cash and balances at central banks		2.2		—		—		—		—		—		—		—		2.2

Trading assets:
- Loans and advances to banks		0.2		2.4		4.4		0.1		—		—		—		—		7.1
- Loans and advances to customers		0.7		4.6		0.3		—		—		—		—		—		5.6
- Debt securities		2.0		2.9		0.5		0.5		—		—		—		—		5.9

Total Trading assets		2.9		9.9		5.2		0.6		—		—		—		—		18.6

Financial assets designated at fair value:
- Loans and advances to customers		0.7		0.7		0.6		—		—		—		—		0.1		2.1
- Debt securities		—		0.2		0.1		—		—		—		—		—		0.3

Total Financial assets designated at fair value		0.7		0.9		0.7		—		—		—		—		0.1		2.4

Available-for-sale debt securities		2.1		—		—		—		—		—		—		—		2.1

Derivative financial instruments		0.4		11.2		10.0		1.5		0.5		—		—		0.4		24.0

Loans and advances to banks		—		11.9		0.1		0.1		—		—		—		—		12.1

Loans and advances to customers⁽¹⁾:
- Corporate loans		2.6		3.2		2.7		3.3		2.3		0.1		0.1		—		14.3
- Amounts due from Santander UK group undertakings		—		—		23.8		—		—		—		—		—		23.8
- Amounts due from Banco Santander group undertakings		—		—		—		—		—		—		—		0.1		0.1

Total Loans and advances to customers		2.6		3.2		26.5		3.3		2.3		0.1		0.1		0.1		38.2

Loans and receivables securities⁽¹⁾		—		—		—		—		—		—		—		—		—

		10.9		37.1		42.5		5.5		2.8		0.1		0.1		0.6		99.6

Loan loss allowance																		(0.1	)

Total																		99.5


Of which:
Neither past due nor impaired:
- Cash and balances at central banks		2.2		—		—		—		—		—		—		—		2.2
- Trading assets		2.9		9.9		5.2		0.6		—		—		—		—		18.6
- Financial assets designated at fair value		0.7		0.9		0.7		—		—		—		—		0.1		2.4
- Available-for-sale debt securities		2.1		—		—		—		—		—		—		—		2.1
- Derivative financial instruments		0.4		11.2		10.0		1.5		0.5		—		—		0.4		24.0
- Loans and advances to banks		—		11.9		0.1		0.1		—		—		—		—		12.1
- Loans and advances to customers		2.6		3.2		26.5		3.3		2.3		0.1		—		0.1		38.1
- Loans and receivables securities		—		—		—		—		—		—		—		—		—

Total neither past due nor impaired		10.9		37.1		42.5		5.5		2.8		0.1		—		0.6		99.5

Past due but not impaired		—		—		—		—		—		—		—		—		—

Impaired⁽²⁾		—		—		—		—		—		—		0.1		—		0.1

		10.9		37.1		42.5		5.5		2.8		0.1		0.1		0.6		99.6

Loan loss allowance																		(0.1	)

Total																		99.5

~~Risk~~(1) ~~Management~~Loans ~~Report~~and ~~continued~~advances to customers and loans and receivables securities include interest charged to the customer’s account and interest accrued but not yet charged to the account.

~~CREDIT~~(2) ~~RISK~~Impaired ~~REVIEW~~loans consists of loans individually assessed for observed impairment loss allowances.

~~ANTS~~16 ~~GROUP~~Abbey ~~EXPOSURE~~National Treasury Services plc 2015 Half Yearly Financial Report

MaximumTable exposureof to credit risk Contents

~~The~~Risk ~~tables~~review below set out the ANTS group’s maximum exposure to credit risk. For balance sheet assets, the maximum exposure to credit risk represents the carrying value after allowance for impairment losses. Off-balance sheet exposures comprise guarantees, formal standby facilities, credit lines and other commitments. For off-balance sheet guarantees, the maximum exposure is the maximum amount that ANTS would have to pay if the guarantees were to be called upon. For formal standby facilities, credit lines and other commitments that are irrevocable over the life of the respective facilities, the maximum exposure is the full amount of the committed facilities.

The table presented below include only those financial assets subject to credit risk, and therefore excludes equity securities.


	ANTS rating guide
	9		8		7		6		5		4		1 to 3
	(AAA to AA-)		(A+ to A)		(A- to BBB+)		(BBB to BBB-)		(BB+ to BB-)		(B+ to B)		(B- to D)		Other		Total
31 December 2014	£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn		£bn
Cash and balances at central banks		4.5		—		—		—		—		—		—		—		4.5

Trading assets:
- Loans and advances to banks		0.1		1.2		4.6		—		—		—		—		—		5.9
- Loans and advances to customers		—		2.1		0.7		0.2		—		—		—		—		3.0
- Debt securities		2.3		4.0		1.1		0.6		—		—		—		—		8.0

Total Trading assets		2.4		7.3		6.4		0.8		—		—		—		—		16.9

Financial assets designated at fair value:
- Loans and advances to customers		0.4		0.8		0.9		0.1		—		—		0.1		—		2.3
- Debt securities		—		0.2		0.1		—		—		—		—		—		0.3

Total Financial assets designated at fair value		0.4		1.0		1.0		0.1		—		—		0.1		—		2.6

Available-for-sale debt securities		2.5		—		—		—		—		—		—		—		2.5

Derivative financial instruments		0.4		10.0		13.4		1.4		0.3		—		—		0.3		25.8

Loans and advances to banks		—		10.4		0.8		0.1		—		—		—		—		11.3

Loans and advances to customers⁽¹⁾:
- Corporate loans		2.2		3.5		2.2		3.4		1.9		0.1		0.1		—		13.4
- Amounts due from Santander UK group undertakings		—		—		24.9		—		—		—		—		—		24.9
- Amounts due from Banco Santander group undertakings		—		—		—		—		0.1		—		—		—		0.1

Total Loans and advances to customers		2.2		3.5		27.1		3.4		2.0		0.1		0.1		—		38.4

Loans and receivables securities⁽¹⁾		—		—		—		—		—		—		—		—		—

		12.4		32.2		48.7		5.8		2.3		0.1		0.2		0.3		102.0

Loan loss allowance																		(0.1	)

Total																		101.9


Of which:
Neither past due nor impaired:
- Cash and balances at central banks		4.5		—		—		—		—		—		—		—		4.5
- Trading assets		2.4		7.3		6.4		0.8		—		—		—		—		16.9
- Financial assets designated at fair value		0.4		1.0		1.0		0.1		—		—		0.1		—		2.6
- Available-for-sale debt securities		2.5		—		—		—		—		—		—		—		2.5
- Derivative financial instruments		0.4		10.0		13.4		1.4		0.3		—		—		0.3		25.8
- Loans and advances to banks		—		10.4		0.8		0.1		—		—		—		—		11.3
- Loans and advances to customers		2.2		3.5		27.1		3.4		2.0		0.1		—		—		38.3
- Loans and receivables securities		—		—		—		—		—		—		—		—		—

Total neither past due nor impaired		12.4		32.2		48.7		5.8		2.3		0.1		0.1		0.3		101.9

Past due but not impaired		—		—		—		—		—		—		—		—		—

Impaired⁽²⁾		—		—		—		—		—		—		0.1		—		0.1

		12.4		32.2		48.7		5.8		2.3		0.1		0.2		0.3		102.0

Loan loss allowance																		(0.1	)

Total																		101.9

	30 June 2014				31 December 2013
	Maximum exposure				Maximum exposure
	Balancesheet asset£bn		Off-balancesheet(1) £bn		Balancesheet asset£bn		Off-balancesheet(1) £bn
Cash and balances at central banks		7.5		—		4.9		—
Trading assets		15.5		—		21.6		—
Financial assets designated at fair value		2.5		0.2		2.5		0.2
Available-for-sale debt securities		2.6		—		3.0		—
Derivative financial instruments		21.4		—		21.6		—
Loans and advances to banks		110.5		155.3		113.6		149.9
Loans and advances to customers		38.0		11.9		41.1		10.7
Loans and receivables securities		0.1		—		0.1		—
Total		198.1		167.4		208.4		160.8

(1)	Loans and advances to customers and loans and receivables securities include interest charged to the customer’s account and interest accrued but not yet charged to the account.

(12) ~~Off~~Impaired ~~balance~~loans ~~sheet~~consists ~~exposure includes the cross guarantee~~ of ~~the~~loans ~~liabilities~~individually ofassessed ~~Santander~~for UKobserved ~~plc,~~impairment asloss ~~set out in Note 20 to the Condensed Consolidated Interim Financial Statements~~allowances.

~~Credit~~Maturity ~~quality~~analysis of loans and advances that are past due but not impaired

~~ANTS~~At ~~uses~~30 June a2015, ~~single~~loans ~~rating~~and ~~scale~~advances ~~to provide a consistent approach for reporting default risk across all the credit risk portfolios. The scale is comprised~~ of ~~eight~~£8m ~~grades for non-defaulted exposures numbered from 9~~ (~~lowest~~2014: ~~risk~~£23m) towere 2past ~~(highest~~due ~~risk).~~but ~~Each~~not ~~grade is defined by an upper and lower probability of default (‘PD’) value and is scaled so that the default risk increases by a factor of 10 for every 2 step reduction in the grade number~~impaired. ~~For~~ ~~example,~~All ~~risk grade 9 equates to an average PD~~ of ~~0.01%,~~these ~~and~~loans ~~risk~~were ~~grade~~due 7after ~~equates~~six ~~to an average PD of 0~~months.~~1%.~~ Defaulted exposures are assigned to grade 1 and a PD value of 100%. An approximation to the equivalent credit rating grade used by Standard and Poor’s Rating Services (‘S&P’) is shown in the final column of the table.

	PD range
ANTS risk grade	Mid%		Lower%		Upper%		S&P equivalent
9		0.010		0.000		0.021		AAA to AA-
8		0.032		0.021		0.066		A+ to A
7		0.100		0.066		0.208		A- to BBB+
6		0.316		0.208		0.658		BBB to BBB-
5		1.000		0.658		2.081		BB+ to BB-
4		3.162		2.081		6.581		B+ to B
3		10.000		6.581		20.811		B- to CCC
2		31.623		20.811		99.999		CC TO C
1 Default		100.000		100.000		100.000		D


Abbey National Treasury Services plc 2015 Half Yearly Financial Report		17

AbbeyTable Nationalof Treasury Services plc 2014 Half Yearly Financial Report 17Contents

~~Detailed~~Risk ~~Business~~review ~~Review~~

~~Risk~~Concentrations ~~Management~~of ~~Report~~credit ~~continued~~risk exposures

~~Non-performing~~The ~~loans~~management of risk concentration is a key part of risk management. ANTS tracks the degree of concentration of its credit risk portfolios using various criteria, including geographical areas and ~~advances~~countries, ~~(1)(2)~~economic sectors, products and groups of customers. Although ANTS’s operations are based mainly in the UK, it has built up exposures to various entities around the world and is therefore exposed to concentrations of risk related to geographical area.

AnGeographical ~~analysis~~concentrations ~~of ANTS’s NPLs is presented below. The information is presented for Commercial Banking only as there are no NPLs in other business divisions.~~

	30 June 2014£m		31 December 2013£m
Loans and advances to customers of which:(2)		6,838		6,317
Commercial Banking Arrears including NPLs(3)		130		94
Commercial Banking NPLs - impaired(3) (4) (5)		130		94
Commercial Banking NPLs - not impaired(3) (4)		—		—
Commercial Banking NPLs		130		94
Impairment loan loss allowances		50		63
		%		%
Arrears ratio(6)		1.90		1.49
NPLs ratio(7)		1.90		1.49
Coverage ratio(8)		38		67

As part of its approach credit risk management and risk appetite, ANTS sets exposure limits to countries and certain geographical areas. These limits are set with reference to the country limits set by Banco Santander, S.A. These are determined according to the classification of the country (whether it is a developed OECD country or not), the rating of the country, its gross domestic product and the type of business activities and products the Banco Santander group wishes to engage in within that country. For additional geographical information, see ‘Country Risk Exposure’.

~~(1)~~Credit ~~Loans~~risk ~~and~~exposures ~~advances~~by ~~are~~industry ~~classified as non-performing typically when the counterparty fails to make payments when contractually due for three months or where it is deemed probable that this will occur in the near future.~~

~~(2)~~As ~~All~~part ~~Commercial~~of ~~Banking~~its ~~NPL~~approach ~~balances~~to ~~are~~credit UKrisk management and ~~continue~~risk ~~accruing interest. For the data presented~~appetite, ~~the~~ANTS ~~balances~~sets ~~include~~exposure ~~interest~~limits ~~charged~~ to ~~the~~certain ~~customer’s~~key ~~account,~~industry ~~but~~sectors. ~~exclude~~For ~~interest~~additional ~~accrued~~industry ~~but~~information, ~~not~~see ~~yet~~‘Country ~~charged~~Risk ~~to the account~~Exposure’.

~~(3)~~Forbearance ~~Commercial~~summary ~~Banking loans and advances to customers include finance leases.~~

~~(4)~~Commercial ~~All~~Banking is the ~~Non-Performing~~only ~~Loans~~business division that has undertaken forbearance activities. Discussion and analysis of forbearance activities in Commercial Banking are ~~impaired~~set ~~for~~out ~~purposes~~in the ‘Commercial Banking loans – forbearance’ section of ~~provisioning~~the Risk Review.

~~(5)~~NON-PERFORMING ~~NPLs~~LOANS ~~against~~AND ~~which~~ADVANCES(1) ~~an impairment loss allowance has been established.~~

~~(6)~~An ~~Commercial~~analysis ~~Banking~~of ~~loans~~ANTS’s ~~and~~NPLs ~~advances~~is topresented ~~customers~~below. inThe ~~arrears~~information asis apresented ~~percentage~~for of Commercial Banking ~~loans~~only ~~and~~as ~~advances~~there toare ~~customers~~no NPLs in other business divisions.

(7) Commercial Banking NPLs as a percentage of Commercial Banking loans and advances to customers.


	30 June 2015 £m		31 December 2014 £m
Loans and advances to customers of which:		3,760		3,534
NPLs⁽²⁾		100		131

Total impairment loan loss allowances		48		52

		%		%

NPLs ratio⁽³⁾		2.66		3.70
Coverage ratio⁽⁴⁾		48		40

(81) ~~Impairment~~Loans ~~loan~~and ~~loss~~advances ~~allowances~~are classified as anon-performing ~~percentage~~in ofaccordance ~~NPLs~~with the definitions provided in the ‘Credit risk management’ section in the 2014 Annual Report.

~~Concentrations~~(2) ofAll ~~credit~~NPL ~~risk~~balances ~~exposures~~are UK based and continue accruing interest. For the data presented, the balances include interest charged to the customer’s account, but exclude interest accrued but not yet charged to the account.

~~The~~(3) ~~management~~NPLs ofas ~~risk concentration is~~ a ~~key~~percentage ~~part~~ of ~~risk~~loans ~~management. ANTS tracks the degree of concentration of its credit risk portfolios using various criteria, including geographic areas~~ and ~~countries,~~advances ~~economic~~to ~~sectors, products and groups of~~ customers. ~~Although ANTS’s operations are based mainly in the UK, it has built up exposures to various entities around the world and is therefore exposed to concentrations of risk related to geographic area.~~

~~Geographic~~(4) ~~concentrations~~Impairment loan loss allowances as a percentage of NPLs.

As18 ~~part~~Abbey ofNational ~~its~~Treasury ~~approach~~Services toplc ~~credit~~2015 ~~risk~~Half ~~management~~Yearly ~~and risk~~Financial appetite, ANTS sets exposure limits to countries and certain geographic areas. These limits are set with reference to the country limits set by Banco Santander, S.A. These are determined according to the classification of the country (whether it is a developed OECD country or not), the rating of the country, its gross domestic product and the type of business activities and products the Banco Santander group wishes to engage in within that country. For additional geographic information, see “Country Risk Exposure” on pages 35 to 38. Report

CreditTable riskof exposures by industry Contents

~~As part of its approach to credit risk management and risk appetite, ANTS sets exposure limits to certain key industry sectors. For additional industry information, see “Country~~ Risk ~~Exposure”~~review ~~on pages 35 to 38.~~

~~Forbearance~~CREDIT RISK – COMMERCIAL BANKING

In Commercial Banking, iscredit ~~the~~risk ~~only~~arises ~~business~~on ~~division~~asset ~~that~~balances ~~undertakes~~and ~~forbearance~~off-balance ~~activities.~~sheet ~~Discussion~~transactions ~~and~~such ~~analysis~~as ofcredit ~~forbearance~~facilities ~~activities~~or inguarantees. ~~Commercial~~Consequently, ~~Banking~~committed exposures are ~~set~~typically ~~out~~higher onthan ~~page~~asset 22balances.

18COMMERCIAL ~~Abbey~~BANKING ~~National~~- ~~Treasury~~COMMITTED ~~Services~~EXPOSURES ~~plc 2014 Half Yearly Financial Report~~

~~Detailed~~Rating ~~Business~~distribution ~~Review~~

~~Risk~~The ~~Management~~rating distribution ~~Report~~tables ~~continued~~show the credit risk exposure by ANTS’s internal rating scale (see the ‘Credit quality’ section) for each portfolio. Within this scale, the higher the rating, the better the quality of the counterparty.

CREDIT RISK – COMMERCIAL BANKING


30 June 2015	Mid Corporate and SME £m		Commercial Real Estate £m		Social Housing £m		Total £m
9		13		—		580		593
8		115		179		623		917
7		344		672		397		1,413
6		608		2,185		60		2,853
5		528		1,362		—		1,890
4		126		114		—		240
1 to 3		13		68		—		81
Other		5		5		—		10

		1,752		4,585		1,660		7,997


31 December 2014
9		22		—		378		400
8		140		247		611		998
7		268		532		234		1,034
6		869		2,101		60		3,030
5		329		1,297		—		1,626
4		88		105		—		193
1 to 3		14		95		—		109
Other		3		1		—		4

		1,733		4,378		1,283		7,394

InGeographical ~~Commercial~~distribution Banking, credit risk arises on asset balances and on committed off-balance sheet transactions such as credit facilities or guarantees. Consequently, committed exposures are typically higher than asset balances. However, in the following committed exposures tables, Sovereigns are presented net of short positions and include Sovereign exposures established for liquidity management purposes managed by Short Term Markets on behalf of Corporate Centre. Large Corporate reverse repos are presented net of repo liabilities and include OTC derivatives. As a result, the committed exposures are smaller than the asset balances recognised on the balance sheet.

~~COMMERCIAL~~The ~~BANKING~~geographical -location ~~COMMITTED~~is ~~EXPOSURES~~classified by country of risk, being the country where each counterparty’s main business activity or assets are located. For clients whose operations are more geographically dispersed, the country of incorporation is applied.

Rating distribution


30 June 2015	Mid Corporate and SME £m		Commercial Real Estate £m		Social Housing £m		Total £m
UK		1,711		4,585		1,660		7,956
Peripheral eurozone		2		—		—		2
Rest of Europe		36		—		—		36
US		—		—		—		—
Rest of world		3		—		—		3

		1,752		4,585		1,660		7,997


31 December 2014
UK		1,660		4,378		1,283		7,321
Peripheral eurozone		17		—		—		17
Rest of Europe		40		—		—		40
US		—		—		—		—
Rest of world		16		—		—		16

		1,733		4,378		1,283		7,394

~~The rating~~30 June ~~distribution~~2015 ~~tables~~compared ~~show~~to ~~the~~31 December ~~credit risk exposure by ANTS’s internal rating scale (see page 17) for each portfolio within Commercial Banking. Within this scale, the higher the rating, the better the quality of the counterparty.~~ 2014

30 June 2014	Sovereign andSupranational(2)£m		LargeCorporate£m		Mid Corporateand SME£m		Commercial RealEstate£m		Social Housing£m		Total£m
9		1,483		3		90		—		339		1,915
8		3,614		1,664		377		259		385		6,299
7		680		2,738		1,655		793		219		6,085
6		—		4,022		2,984		2,580		90		9,676
5		—		1,271		1,400		1,202		—		3,873
4		—		100		125		159		—		384
1 to 3		—		85		115		99		—		299
Other (1)		—		—		3		4		—		7
Total		5,777		9,883		6,749		5,096		1,033		28,538
31 December 2013	Sovereign andSupranational(2)£m		LargeCorporate£m		Mid Corporateand SME£m		Commercial RealEstate£m		Social Housing£m		Total£m
9		1,295		14		139		126		263		1,837
8		3,894		1,242		280		278		359		6,053
7		860		3,122		1,571		1,419		231		7,203
6		—		3,454		2,830		1,797		115		8,196
5		—		1,336		899		1,061		—		3,296
4		—		—		84		200		—		284
1 to 3		—		—		10		112		—		122
Other (1)		—		—		12		1		—		13
Total		6,049		9,168		5,825		4,994		968		27,004

Our lending to customers has grown consistently since 2008, and we continue to operate within our prudent risk appetite parameters. The portfolio is 99% concentrated in UK-based counterparties. During the first half of 2015, committed exposures increased by £0.6bn or 8% to £8.0bn.

~~(1)~~Mid ~~Represents~~Corporate ~~smaller~~and SME exposures ~~predominantly~~grew ~~within~~by 1% to £1.8bn in the ~~commercial~~first ~~mortgages~~half ~~portfolio~~of ~~which~~2015, ~~are~~maintaining ~~subject~~a topositive ~~scorecards~~momentum ~~rather~~despite ~~than~~an aincreasingly ~~rating~~competitive ~~model~~and still contracting market.

~~(2)~~The AnCommercial ~~international~~Real ~~organisation,~~Estate ~~whereby~~portfolio ~~member~~increased ~~states~~by ~~transcend~~5% ~~national boundaries or interests~~ to ~~share~~£4.6bn inwith ~~the~~new ~~decision-making~~business ~~and~~levels ~~vote~~more onthan ~~issues pertaining to the to the geographical focus of the organisation~~offsetting repayments.

~~Geographical~~The ~~distribution~~Social Housing portfolio increased by 29% to £1.7bn driven by refinancing of longer-dated loans previously managed in Corporate Centre onto shorter maturities and on current market terms.

~~The~~Abbey ~~geographic~~National ~~location~~Treasury isServices ~~classified~~plc by2015 ~~country~~Half ofYearly ~~risk,~~Financial ~~being~~Report ~~the country where each counterparty’s main business activity or assets are located. For clients whose operations are more geographically dispersed, the country of incorporation is applied.~~ 19

30 June 2014	Sovereign andSupranational(1)£m		LargeCorporate£m		Mid Corporateand SME£m		Commercial RealEstate£m		Social Housing£m		Total£m
UK		—		7,710		6,477		5,096		1,033		20,316
Peripheral eurozone		680		323		8		—		—		1,011
Rest of Europe		1,191		1,393		237		—		—		2,821
US		—		358		4		—		—		362
Rest of world		3,906		99		23		—		—		4,028
Total		5,777		9,883		6,749		5,096		1,033		28,538
31 December 2013	Sovereign andSupranational(1)£m		LargeCorporate£m		Mid Corporateand SME£m		CommercialReal Estate£m		Social Housing£m		Total£m
UK		—		7,520		5,601		4,994		968		19,083
Peripheral eurozone		860		317		18		—		—		1,195
Rest of Europe		1,029		861		87		—		—		1,977
US		—		284		—		—		—		284
Rest of world		4,160		186		119		—		—		4,465
Total		6,049		9,168		5,825		4,994		968		27,004

~~(1)~~Risk Anreview international organisation, whereby member states transcend national boundaries or interests to share in the decision-making and vote on issues pertaining to the to the geographical focus of the organisation.

~~30 June~~COMMERCIAL ~~2014~~BANKING ~~compared~~- toCREDIT ~~31 December~~RISK ~~2013~~ MITIGATION

~~During~~At ~~the~~30 June ~~first half of 2014~~2015, ~~total~~collateral ~~committed~~held ~~exposures~~against ~~increased~~impaired byloans ~~£1.5bn~~amounted orto 6100% to(2014: ~~£28.5bn principally within the Large Corporate, and Mid Corporate and SME portfolios. Large Corporate exposures increased by 8~~100%) ~~as a result~~ of the ~~development~~carrying ofamount ~~the franchise focused in high-rated multinational companies. Growth was focused on the UK and other European countries with counterparties with good credit quality and primarily reflects the provision~~ of ~~financial~~impaired ~~products~~loan ~~to support the working capital and liquidity needs of our clients~~balances. ~~The Mid Corporate and SME portfolio grew by 16%, reflecting the~~ ~~continued development of the franchise especially in the SME segment. This was reflected in the rise in the mid-range rating bands as this is where counterparties in this segment typically rate.~~

~~Abbey~~COMMERCIAL ~~National~~BANKING ~~Treasury~~– ~~Services~~CREDIT ~~plc~~PERFORMANCE ~~2014 Half Yearly Financial Report 19~~

~~Detailed~~Exposures ~~Business~~exhibiting ~~Review~~potentially higher risk characteristics are subject to risk monitoring under the Watchlist process (described in ‘Risk monitoring’ in the ‘Credit risk management’ section in the 2014 Annual Report). The table below sets out the portfolio showing exposures subject to risk monitoring under the Watchlist process and those classified as non-performing by portfolio at 30 June 2015 and 31 December 2014:

Risk Management Report continued


30 June 2015	Mid Corporate and SME £m		Commercial Real Estate £m		Social Housing £m		Total £m
Total Committed Exposure of which:⁽¹⁾		1,752		4,585		1,660		7,997
-Performing (Non-Watchlist)		1,572		4,427		1,660		7,659
-Watchlist: Enhanced Monitoring		103		55		—		158
-Watchlist: Proactive Management		70		5		—		75
Non-performing exposure⁽²⁾		7		98		—		105

Total impaired exposure of which:		7		98		—		105
-Performing		—		—		—		—
-Non-performing⁽²⁾		7		98		—		105

Total Observed impairment loss allowances of which:		7		35		—		42
-Performing		—		—		—		—
-Non-performing⁽²⁾		7		35		—		42

IBNO⁽³⁾								6
Total impairment loss allowance								48


31 December 2014
Total Committed Exposure of which:⁽¹⁾		1,733		4,378		1,283		7,394
-Performing (Non-Watchlist)		1,555		3,998		1,253		6,806
-Watchlist: Enhanced Monitoring		70		252		30		352
-Watchlist: Proactive Management		102		—		—		102
Non-performing exposure⁽²⁾		6		128		—		134

Total impaired exposure of which:		6		128		—		134
-Performing		—		—		—		—
-Non-performing⁽²⁾		6		128		—		134

Total Observed impairment loss allowances of which:		6		35		—		41
-Performing		—		—		—		—
-Non-performing⁽²⁾		6		35		—		41

IBNO⁽³⁾								11
Total impairment loss allowance								52

~~COMMERCIAL~~(1) ~~BANKING~~Includes -committed ~~CREDIT~~facilities ~~RISK~~and ~~MITIGATION~~derivatives. The terms ‘Enhanced Monitoring’ and ‘Proactive Management’ are defined in the ‘Risk Monitoring’ section of the Risk Review in the 2014 Annual Report.

At(2) ~~30 June~~Non-performing ~~2014,~~exposure ~~collateral~~in ~~held~~the ~~against~~table ~~impaired~~above ~~loans~~include ~~amounted~~committed tofacilities ~~54%~~and ~~(2013:~~derivative ~~61%)~~exposures ofand therefore can be larger than the ~~carrying~~NPLs ~~amount~~in ofthe ~~impaired~~table ~~loan~~below which only include drawn balances.

~~COMMERCIAL~~(3) ~~BANKING~~Allowance –for ~~CREDIT~~incurred ~~PERFORMANCE~~inherent losses (i.e. incurred but not observed (‘IBNO’)) as described in Note 1 to the Consolidated Financial Statements in the 2014 Annual Report.

~~Exposures~~20 ~~exhibiting~~Abbey ~~potentially~~National ~~higher~~Treasury ~~risk~~Services ~~characteristics~~plc ~~are~~2015 ~~subject~~Half toYearly ~~risk~~Financial ~~monitoring under the Watchlist process (described in “The Credit Cycle” section under “Risk monitoring” on page 39 in the 2013 Annual~~ Report). The table below sets out the portfolio showing exposures subject to risk monitoring under the Watchlist process and those classified as non-performing by portfolio at 30 June 2014 and 31 December 2013.

30 June 2014	Sovereign andSupranational(7)£m		LargeCorporate£m		Mid Corporateand SME£m		CommercialReal Estate£m		Social Housing£m		Total£m
Total Committed Exposure of which:(1)		5,777		9,883		6,749		5,096		1,033		28,538
-Watchlist: Enhanced Monitoring		—		99		225		147		30		501
-Watchlist: Proactive Management		—		—		201		104		—		305
-Remaining Performing Exposure		5,777		9,784		6,323		4,713		1,003		27,600
Subtotal Performing Exposure		5,777		9,883		6,749		4,964		1,033		28,406
Non-Performing Exposure(2)		—		—		—		132		—		132
Total Impaired Exposure of which:(3)		—		—		242		383		30		655
-Performing – Watchlist		—		—		242		251		30		523
-Non-Performing Exposure(2)		—		—		—		132		—		132
Total Observed impairment loss allowances of which:(4)		—		—		1		44		—		45
-Performing – Watchlist		—		—		1		15		—		16
-Non-Performing Exposure(2)		—		—		—		29		—		29
IBNO(5)(6)												5
Total Impairment loss allowance												50
31 December 2013	Sovereign andSupranational(7)£m		LargeCorporate£m		Mid Corporateand SME£m		CommercialReal Estate£m		Social Housing£m		Total£m
Total Committed Exposure of which:(1)		6,049		9,168		5,825		4,994		968		27,004
-Watchlist: Enhanced Monitoring		—		111		143		130		35		419
-Watchlist: Proactive Management		—		—		77		193		—		270
-Remaining Performing Exposure		6,049		9,057		5,600		4,582		933		26,221
Subtotal Performing Exposure		6,049		9,168		5,820		4,905		968		26,910
Non-Performing Exposure(2)		—		—		5		89		—		94
Total Impaired Exposure of which:(3)		—		—		225		412		35		672
-Performing – Watchlist		—		—		220		323		35		578
-Non-Performing Exposure(2)		—		—		5		89		—		94
Total Observed impairment loss allowances of which:(4)		—		—		6		55		—		61
-Performing – Watchlist		—		—		1		16		—		17
-Non-Performing Exposure(2)		—		—		5		39		—		44
IBNO(5)(6)												2
Total Impairment loss allowance												63

~~(1)~~Risk ~~Includes~~review ~~committed facilities and derivatives. The terms ‘Enhanced Monitoring’ and ‘Proactive Management’ are defined on page 41 of the 2013 Annual Report.~~

~~(2)~~ Non-~~Performing~~performing ~~Exposure~~loans ~~in the table above include committed facilities~~ and ~~derivative~~advances ~~exposures~~(1) ~~and therefore are larger than the NPLs in the tables on page 21 which only include drawn balances. All the Non-Performing Exposures are impaired for the purposes of provisioning.~~

~~(3)~~An ~~Corporate~~analysis ~~loans are assessed individually or collectively assessed for impairment. Assets reported as impaired represent, for collective assessment, that portion~~ of ~~the~~Commercial ~~loan~~Banking ~~portfolio~~NPLs ~~where it~~ is presented ~~estimated that a loss has been incurred, plus those assets individually impaired~~below.

(4) Excludes IBNO provision.


	30 June 2015 £m		31 December 2014 £m
Loans and advances to customers of which:		3,760		3,534
NPLs⁽²⁾		100		131

Impairment loan loss allowances		48		52

		%		%

NPLs ratio⁽³⁾		2.66		3.70
Coverage ratio⁽⁴⁾		48		40

(51) ~~Allowance~~Loans ~~for~~and ~~incurred~~advances ~~inherent~~are ~~losses~~classified ~~(i.e.~~as ~~incurred~~non-performing ~~but~~in ~~not~~accordance ~~observed~~with ~~(‘IBNO’))~~the asdefinitions ~~described~~provided in ~~Note 1 to~~ the ~~Consolidated~~‘Credit ~~Financial~~risk ~~Statements~~management’ section in the ~~2013~~2014 Annual Report.

(62) ~~There~~All isNPL nobalances ~~impairment~~are ~~allowance~~UK ~~attributable~~based and continue accruing interest. For the data presented, the balances include interest charged to ~~Sovereign~~the ~~and~~customer’s ~~Supranational~~account, ~~Large~~but ~~Corporate~~exclude orinterest ~~Social~~accrued ~~Housing~~but not yet charged to the account.

(73) AnNPLs ~~international~~as ~~organisation,~~a ~~whereby~~percentage ~~member~~of ~~states~~loans ~~transcend national boundaries or interests to share in the decision-making~~ and ~~vote~~advances ~~on issues pertaining~~ to ~~the to the geographical focus of the organisation~~customers.

20(4) ~~Abbey~~Impairment ~~National~~loan ~~Treasury~~loss ~~Services~~allowances ~~plc~~as ~~2014~~a ~~Half~~percentage ~~Yearly~~of ~~Financial Report~~NPLs.

~~Detailed~~An ~~Business~~analysis ~~Review~~of the NPL movements during the first half of 2015 is presented below. ‘Transfers in – Entries’ represent loans which have become classified as NPLs during the period. ‘Exits (including repayments)’ represent loans that have been repaid (in full or in part) plus those returned to performing status. ‘Write-offs’ represent the unrecovered element of a loan where recovery options, including realisation of any collateral, have been exhausted. Forbearance activity does not result in a change in the NPL status.

Risk Management Report continued


	£m
At 1 January 2015		131
Transfers in – Entries		—
Transfers Out:
- Exits (including repayments)		(31	)
- Write-offs		—

At 30 June 2015		100

~~Non-performing~~30 June ~~loans~~2015 ~~and~~compared ~~advances~~to ~~(1)~~31 December ~~(2)~~ 2014

AnDuring ~~analysis~~the first half of ~~Commercial~~2015, ~~Banking~~exposures ~~NPLs~~subject isto ~~presented~~enhanced monitoring and proactive management improved across both the Mid Corporate and ~~below~~SME and Commercial Real Estate portfolios.

	30 June 2014£m		31 December 2013£m
Loans and advances to customers of which:(2)		6,838		6,317
Commercial Banking Arrears including NPLs(3)		130		94
Commercial Banking NPLs - impaired(3)(4)(5)		130		94
Commercial Banking NPLs - not impaired(3)(4)		—		—
Commercial Banking NPLs		130		94
Impairment loss allowances		50		63
		%		%
Arrears ratio(6)		1.90		1.49
NPLs ratio(7)		1.90		1.49
Coverage ratio(8)		38		67

In the Mid Corporate and SME portfolio, a small increase of £33m in enhanced monitoring was offset by a decrease of £32m in proactive management. In the Commercial Real Estate portfolio, exposures subject to enhanced monitoring decreased by £197m driven by successful refinancing and repayments. At 30 June 2015, none of the Social Housing portfolio exposures were subject to enhanced monitoring or proactive management (2014: 2.3% on enhanced monitoring).

~~(1)~~ Loans and advances ~~are~~to ~~classified~~customers asin ~~non-performing~~NPL ~~typically~~decreased ~~when~~to ~~the~~£100m ~~counterparty~~at ~~fails~~30 June to2015 ~~make~~(2014: ~~payments~~£131m), ~~when~~as ~~contractually~~a ~~due~~result ~~for~~of repayments ~~three~~of ~~months~~a orsmall ~~where~~number itof ispre-2009 ~~deemed~~Commercial ~~probable~~Real ~~that~~Estate ~~this~~cases. ~~will~~The ~~occur~~NPL inratio ~~the~~decreased ~~near~~to ~~future~~2.66% at 30 June 2015 (2014: 3.70%) for similar reasons.

~~(2)~~In ~~Commercial~~the ~~Banking~~first ~~loans~~half ~~and~~of ~~advances~~2015, interest income recognised on impaired loans amounted to ~~customers~~£1m ~~include~~(six ~~finance~~months ~~leases~~ended 30 June 2014: £1m).

~~(3)~~Abbey ~~All~~National ~~Commercial~~Treasury ~~Banking~~Services ~~balances~~plc ~~are~~2015 UKHalf ~~and~~Yearly ~~continue~~Financial ~~accruing~~Report ~~interest. For the data presented, the balances include interest charged to the customer’s account, but exclude interest accrued but not yet charged to the account.~~21

(4)Table All the Non-Performing Loans are impaired for purposes of provisioning.Contents

~~(5)~~Risk ~~NPLs~~review ~~against which an impairment loss allowance has been established.~~

~~(6)~~COMMERCIAL ~~Commercial~~BANKING ~~Banking~~LOANS ~~loans~~- ~~and~~FORBEARANCE ~~advances to customers in arrears as a percentage of Commercial Banking loans and advances to customers.~~

~~(7)~~Forbearance ~~Commercial~~commenced ~~Banking~~during ~~NPLs~~the asperiod(1) ~~a percentage of Commercial Banking loans and advances to customers.~~

~~(8)~~The ~~Impairment~~exposures ~~loss~~that ~~allowances~~entered asforbearance aduring ~~percentage~~the ofsix ~~NPLs.~~months ended 30 June 2015 and the year ended 31 December 2014 were:

Movements in NPLs during the first six months are set out in the table below. ‘Transfers in’ represent loans which have become classified as NPLs during the period. ‘Exits (including repayments)’ represent that element of loans to customers that have been repaid (in full or in part) plus those returned to performing status. ‘Write-offs’ represent the unrecovered element of a loan where recovery options, including realisation of any collateral, have been exhausted. Forbearance activity does not result in a change in the NPL status.


	30 June 2015						31 December 2014
	Mid Corporate and SME £m		Commercial Real Estate £m		Total £m		Mid Corporate and SME £m		Commercial Real Estate £m		Total £m
Term extension		—		—		—		—		51		51
Interest-only		—		—		—		—		—		—
Other payment rescheduling		—		—		—		32		21		53

		—		—		—		32		72		104

	£m
At 1 January 2014		94
Transfers in to NPL:
- Entries		85
Transfers out of NPL:
- Exits (including repayments)		(35	)
- Write-Offs		(14	)
At 30 June 2014		130

(1)	The figures by period reflect the amount of forbearance activity undertaken during the period irrespective of whether any forbearance activity has previously been undertaken on the forborne accounts.

~~30 June~~Forbearance ~~2014~~cumulative ~~compared~~position ~~to 31 December 2013~~

~~During~~At ~~the~~30 June ~~first~~2015, ~~six~~78% ~~months~~ of ~~2014,~~the ~~Watchlist~~forbearance ~~exposures~~related ~~subject~~ to ~~proactive management increased to £305m (2013: £270m), largely driven by an increase in~~ the ~~Mid Corporate and SME portfolio, partially offset by a reduction in~~ Commercial Real Estate. ~~Watchlist~~portfolio exposures subject to enhanced monitoring increased slightly. In the Sovereign and Supranational, Large Corporate, and Social Housing portfolios, there were no exposures subject to proactive management with only 1% (~~2013~~2014: 182%) ~~of these portfolio exposures subject to enhanced monitoring~~.

~~Loans and advances to customers in arrears increased to £130m (2013: £94m~~a) ~~largely~~Performance ~~due~~status towhen aentering ~~single~~forbearance long-standing loan of £65m which moved to non-performance. A successful restructure of this loan is still anticipated and a conservative provision is held against it. Consequently, loans and advances to customers in arrears as a percentage of loans and advances to customers increased to 1.90% (2013: 1.49%).

~~During~~The ~~the~~forborne ~~first~~exposures ~~six~~at ~~months~~30 June of2015 ~~2014,~~and ~~the~~31 December ~~NPLs~~2014 ~~ratio~~when ~~also increased~~they ~~slightly~~originally toentered ~~1.90%~~forbearance, ~~(2013:~~analysed ~~1.49%)~~by ~~due~~their topayment ~~the~~status, ~~same~~were: ~~single long-standing loan noted above.~~

In the first half of 2014, interest income recognised on impaired loans amounted to £1m (six months ended 30 June 2013: £1m).


30 June 2015⁽¹⁾	Term extension £m		Interest-only £m		Other payment rescheduling £m		Total £m		Impairment allowance £m
Forbearance of NPL		16		—		—		16		5
Forbearance of Non-NPL		62		36		31		129		8

		78		36		31		145		13


31 December 2014⁽¹⁾
Forbearance of NPL		37		—		—		37		4
Forbearance of Non-NPL		73		36		32		141		8

		110		36		32		178		12

~~Abbey~~(1) ~~National~~Forbearance ~~Treasury~~type ~~Services~~categorisation ~~plc~~is ~~2014~~based ~~Half~~on ~~Yearly~~the ~~Financial~~first ~~Report~~forbearance 21activity undertaken on the accounts. Tables contain only open accounts at the end of the period.

~~Detailed~~b) ~~Business~~Performance ~~Review~~status at the period-end

~~Risk~~The ~~Management~~current ~~Report~~status ~~continued~~of forborne exposures analysed by their payment status, at 30 June 2015 and 31 December 2014 was:

COMMERCIAL BANKING LOANS - FORBEARANCE


30 June 2015⁽¹⁾	Term extension £m			Interest-only £m			Other payment rescheduling £m			Total £m			Impairment allowance £m
Non-performing		48			—			—			48			13
Performing		30			36			31			97	⁽²⁾		—
		78			36			31			145			13

Proportion of portfolio		1.0	%		0.5	%		0.4	%		1.8	%		0.2	%


31 December 2014⁽¹⁾
Non-performing		73			—			—			73			12
Performing		37			36			32			105	⁽²⁾		—
Total		110			36			32			178			12

Proportion of portfolio		1.5	%		0.5	%		0.4	%		2.4	%		0.2	%

(1) Forbearance ~~commenced~~type ~~during~~categorisation is based on the ~~period/year(1)~~first forbearance activity undertaken on the accounts. Tables contain only open accounts at the end of the period.

No(2) ~~arrangements~~This ~~have~~represents ~~been~~the ~~entered~~carrying ~~into~~amount ~~with respect~~of tofinancial ~~Sovereign~~assets ~~and Supranational, Large Corporate or Social Housing counterparties. The exposures~~ that ~~entered~~would ~~forbearance~~otherwise ~~during~~be ~~the~~past ~~six~~due ~~months~~or ~~period~~impaired ~~ended~~whose ~~30 June~~terms ~~2014~~have ~~and~~been ~~the year ended 31 December 2013 were:~~ forborne.

	Mid Corporateand SME		CommercialReal Estate		Total
30 June 2014	£m		£m		£m
Forbearance of NPL		—		—		—
Forbearance of Non-NPL		7		58		65
		7		58		65

30 June 2015 compared to 31 December 2014

	Mid Corporateand SME		CommercialReal Estate		Total
31 December 2013	£m		£m		£m
Forbearance of NPL		—		31		31
Forbearance of Non-NPL		—		72		72
		—		103		103

There were no incidences of forbearance that commenced in the first half of the year. The cumulative forbearance stock decreased at 30 June 2015, as cases from older vintages in the Commercial Real Estate portfolio continue to work their way through the forbearance process (see ‘Higher risk loans and other segments of particular interest’ on page 23). The proportion of forbearance as a percentage of the portfolio decreased to 1.8% at 30 June 2015 (2014: 2.4%). The majority of initial forbearance occurs prior to default, which at 30 June 2015 represented 89% (2014: 79%) of exposure.

~~(1)~~Forbearance ~~The~~provides ~~figures~~the byopportunity ~~period/year~~for ~~reflect~~businesses ~~the~~to ~~amount~~turn around and, at 30 June 2015, 67% (2014: 59%) of ~~forbearance~~total ~~activity~~forborne ~~undertaken~~exposure ~~during~~was performing in accordance with the ~~period/year~~revised ~~irrespective~~terms ofagreed ~~whether~~under ~~any~~the forbearance ~~activity~~arrangements ~~has~~indicating ~~previously~~that the action had been ~~undertaken~~effective. onThe remaining cases moved to NPL despite the ~~forborne~~forbearance ~~accounts~~granted.

~~Forbearance~~Debt-for-equity ~~cumulative position~~ swaps

AtIn ~~30 June~~addition ~~2014~~to the forbearance activities shown above, ~~97%~~ANTS ~~(2013:~~has ~~98%)~~on occasion entered into a small number of ~~the~~transactions ~~forbearance~~where ~~related~~ANTS agreed to exchange a proportion of the ~~Commercial~~amount ~~Real~~owed ~~Estate~~by ~~portfolio~~the borrower for equity in that borrower.

a)There ~~Performance~~were ~~status~~no ~~when~~debt-for-equity ~~entering~~swaps ~~forbearance~~at 30 June 2015 (2014: £nil).

~~The~~22 ~~status~~Abbey ofNational ~~forborne~~Treasury ~~exposures~~Services atplc ~~30 June~~2015 ~~2014~~Half ~~and~~Yearly ~~31 December~~Financial ~~2013 when they originally entered forbearance, analysed by their payment status, was:~~ Report

30 June 2014	Forbearance of NPL£m		Forbearance of Non-NPL£m		Total£m		Impairment allowance£m
Performing		—		224		224		18
In arrears (inc. NPLs)		16		—		16		2
Total		16		224		240		20
31 December 2013	Forbearance of NPL£m		Forbearance of Non-NPL£m		Total£m		Impairment allowance£m
Performing		—		201		201		13
In arrears (inc. NPLs)		51		—		51		19
Total		51		201		252		32

b)Risk ~~Performance~~review ~~status at the period/year-end~~

~~The~~HIGHER ~~current~~RISK ~~status~~LOANS ofAND ~~forborne~~OTHER ~~exposures~~SEGMENTS ~~analysed~~OF byPARTICULAR ~~their~~INTEREST ~~payment status, at 30 June 2014 and 31 December 2013 was:~~

30 June 2014	Forbearance of NPL£m		Forbearance of Non-NPL£m		Total£m		Impairment allowance£m
Performing		—		139		139		8
In arrears (inc. NPLs)		16		85		101		12
Total		16		224		240		20
31 December 2013	Forbearance of NPL£m		Forbearance of Non-NPL£m		Total£m		Impairment allowance£m
Performing		—		201		201		13
In arrears (inc. NPLs)		51		—		51		19
Total		51		201		252		32

Commercial Real Estate

22The Commercial ~~Abbey~~Real ~~National~~Estate ~~Treasury~~market ~~Services~~has ~~plc~~experienced ~~2014~~a ~~Half~~particularly ~~Yearly~~challenging ~~Financial~~environment ~~Report~~over recent years following the financial crisis and has been prone to regular cyclical downturns.

~~Detailed~~Credit ~~Business~~performance ~~Review~~

~~Risk~~Commercial ~~Management~~Real ~~Report~~Estate ~~continued~~non-performing exposures and weighted average LTVs at 30 June 2015 and 31 December 2014 are further analysed between loans originated pre-2009 and thereafter as they have different profiles:

30 June 2014 compared to 31 December 2013


	30 June 2015									31 December 2014
	Original vintage									Original vintage
	Pre-2009			2009 onwards			Total			Pre-2009			2009 onwards			Total
Total committed exposure	£	440m		£	4,145m		£	4,585m		£	586m		£	3,792m		£	4,378m
Non-performing exposure ratio		22.4	%		—			2.1	%		22.3	%		—			3.0	%
Weighted average LTV		61	%		53	%		54	%		65	%		53	%		55	%

~~The~~30 June ~~incidence~~2015 ~~of forbearance that commenced in the period remained stable~~ compared to ~~2013,~~31 December and related to a small number of Commercial Real Estate exposure originated in the pre-2009 vintage where a further forbearance was required. The volume of forborne exposures decreased as the number of pre-2009 cases continued to work their way through the process. 2014

~~Accounts~~At ~~that~~30 June ~~are~~2015 inand ~~forbearance~~31 December ~~continue~~2014, toall beof ~~closely~~the ~~monitored,~~non-performing toexposures ~~ensure~~related ~~that~~to ~~the~~deals ~~forbearance~~originated ~~arrangements are sustainable~~pre-2009. ~~Not~~The ~~all~~pre-2009 vintage ~~forbearance~~loans ~~will~~were ~~prove~~written ~~effective,~~on ~~and~~terms prevailing in ~~certain~~the ~~circumstances,~~ market ~~conditions~~at ~~may~~that ~~lead~~time ~~either~~which, compared to amore ~~case~~recent ~~remaining~~times, inincluded ~~NPL~~higher ~~even~~original ~~post-forbearance~~LTVs, orlower tointerest ~~the~~coverage ~~need~~and ~~for~~exposure ato ~~second~~development ~~forbearance~~or ~~action~~letting ~~as,~~risk. ~~for~~Following ~~example, in~~ the ~~case~~significant ofdownturn in the Commercial Real Estate ~~where~~market itin ~~remains~~2008 ~~difficult~~and to2009, ~~sell~~some orof ~~refinance~~these ~~certain~~customers ~~properties.~~suffered Atfinancial ~~30 June~~stress ~~2014,~~resulting ~~58%~~in ~~(2013:~~their ~~80%)~~inability ofto ~~forborne~~meet ~~exposure~~the ~~was~~contractual ~~performing~~payment interms, ~~accordance~~comply with ~~the~~covenants, ~~revised~~or ~~terms~~achieve ~~agreed~~refinancing/repayment ~~under~~at ~~the forbearance arrangements~~maturity. ~~This~~As a ~~decrease~~result, ~~is largely due to~~ the ~~aforementioned~~pre-2009 ~~single long~~sub-~~standing~~portfolio ~~loan~~has ofexperienced ~~£65m~~higher ~~which moved to~~ non-~~performance.~~performing Arates ~~successful~~in ~~restructure~~recent ~~of this loan is still anticipated~~years.

~~The~~In ~~level~~light of ~~compliance with revised terms agreed under forbearance arrangements is influenced by~~ the market ~~conditions and~~deterioration, ~~as a~~ANTS’s ~~consequence~~lending ofcriteria ~~the~~were ~~economic~~significantly ~~conditions,~~tightened itfrom is2009 ~~taking longer for cases to return to performing status after forbearance. Those cases where forbearance occurs prior to default~~onwards, ~~which~~with atlower ~~30 June~~LTVs ~~2014~~and ~~represented~~the ~~94%~~avoidance ~~(2013: 80%)~~ of ~~exposure,~~transactions ~~are generally~~with ~~more~~material ~~effective~~letting asor ~~highlighted~~development ~~in the tables above~~risks. ~~Forborne~~As ~~exposures~~a ~~are~~result, ~~assessed~~the ~~for~~sub-portfolio ~~observed~~representing ~~impairment~~loans originating ~~loss~~from ~~allowances.~~2009 ~~The~~onwards ~~greater~~continues ~~probability of a loss when compared~~ to ~~the~~perform ~~performing~~significantly ~~book~~better isthan ~~reflected in~~ the ~~calculation~~pre-2009 ~~of impairment loss allowances~~sub-portfolio. AAt ~~customer’s~~30 June ~~ability~~2015, tothe ~~adhere~~pre-2009 tosub-portfolio ~~any~~represented ~~revised~~10% ~~terms~~(2014: ~~agreed~~13%) ~~is an indicator~~ of the ~~sustainability~~total ofCommercial ~~ANTS’s~~Real ~~forbearance~~Estate ~~arrangements, although the forbearance is unlikely to be successful in all cases~~portfolio.

~~Debt-for-equity~~Further ~~swaps~~detail on the entire Commercial Real Estate portfolio is contained in the following section.

~~Debt-for-equity~~Sector ~~swaps~~analysis ~~amounted to £24m at 30 June 2014 (2013: £34m) and in view of their small size are not included in these analyses.~~

~~Financial~~The Commercial ~~assets~~Real ~~that~~Estate ~~would~~portfolio ~~otherwise~~remained bewell ~~past~~diversified ~~due~~by orsector ~~impaired~~at 30 June 2015 and 31 December 2014, as set out below.

At 30 June 2014, the carrying amount of financial assets that would otherwise be past due or impaired whose terms have been forborne was £nil (2013: £nil).


Sector	30 June 2015 %		31 December 2014 %
Office		24		22
Retail		28		31
Industrial		15		15
Residential		6		6
Mixed use		10		12
Student accommodation		4

SECURITIESTable ANDof EXCHANGE COMMISSION Contents

AbbeyTable Nationalof Treasury Services plc Contents

2014Table Halfof Yearly Financial Report Contents

Table of Contents

ANTSTable isof headed by Jacques Ripoll, Chief Executive Officer, and operates three business divisions as follows: Contents

AbbeyTable Nationalof Treasury Services plc 2014 Half Yearly Financial Report 3Contents

DetailedTable Businessof Review Contents

COMMERCIALTable BANKINGof Contents

•Table Impairment losses on loans and advances decreased by £18m to £nil in the first half of 2014 (2013: £18m). Credit quality in the loan books continued to be good, supported by the improving economic environment.Contents

•Table Administration expenses increased by £8m to £56m in the first half of 2014 (2013: £48m), reflecting investment in developing interest rate and fixed income product capabilities offset by tight cost control.Contents

•Table Net interest expense increased by £65m to £141m in the first half of 2014 (2013: £76m) as the returns on our structural hedge strategy were lower than in the first half of 2013 following the maturity of historic contracts that benefited from higher returns.Contents

AbbeyTable Nationalof Treasury Services plc 2014 Half Yearly Financial Report 9Contents

BalanceTable Sheetof Review continued Contents

BalanceTable Sheetof Review continued Contents

InTable the six months ended 30 June 2014, the net cash inflow from financing activities of £405m reflected new issues of debt securities of £9,977m, partially offset by repayments of debt securities maturing in the period of £9,572m. Contents

BalanceTable Sheetof Review continued Contents

RISKTable MANAGEMENTof Contents

•Table Aof Risk Culture statement was included.Contents

MaximumTable exposureof to credit risk Contents

AbbeyTable Nationalof Treasury Services plc 2014 Half Yearly Financial Report 17Contents

CreditTable riskof exposures by industry Contents

Table of Contents

Table of Contents

(4)Table All the Non-Performing Loans are impaired for purposes of provisioning.Contents

Table of Contents

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