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Pricing Supplement dated December 18, 2012
(To Prospectus dated August 31, 2010 and
the Prospectus Supplement dated May 27,
2011)
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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-169119
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US$1,000,000
CAPPED FIXED-TO-FLOATING RATE NOTES DUE DECEMBER 21, 2022
Principal Amount: US$1,000,000 Issuer: Barclays Bank PLC
Issue Price: Variable Price Re-Offer Series: Global Medium-Term Notes, Series A
Return at Maturity: If you hold the Notes to maturity, you will receive at least 100% of your principal, subject to the creditworthiness of Barclays Bank PLC. The Notes are not, either
directly or indirectly, an obligation of any third party, and any payment to be made on the Notes, including any principal protection provided at maturity, depends on the ability of Barclays Bank PLC to satisfy its obligations as they come due.
Original Issue Date: December 21, 2012
Original Trade Date: December 18, 2012 Maturity Date: December 21, 2022
CUSIP: 06741TKV8 Denominations: Minimum denominations of US$1,000 and integral multiples of US$1,000
thereafter.
ISIN: US06741TKV88
Interest Rate Type: Day Count Convention:
Regular
Floating Rate
Inverse Floating Rate (see page S-41 of the prospectus supplement for a description of inverse
floating rate Notes) Actual/360
30/360
Actual/Actual
Actual/365 NL/365
30/365
Actual/366
Actual/252 or Business Days/252
Reference
Asset/Reference Rate:
CD Rate
CMS Rate
CMT Rate (Reuters Screen FRBCMT Page)
Commercial Paper Rate
Eleventh District Cost of Funds Rate Federal Funds (Effective) Rate
Federal Funds (Open) Rate
EURIBOR
LIBOR
Designated LIBOR Page: Reuters: LIBOR01 Prime Rate
Treasury Rate
Other (see description in this pricing supplement)
Index Maturity: 3-month
Interest Rate: For each Interest Period commencing on or after the Original Issue Date, to but excluding December 21, 2013: the Initial Interest Rate
For each Interest Period commencing on or after December 21, 2013, the interest rate per annum will be equal to Reference
Rate plus the Spread, subject to the applicable Maximum Interest Rate set forth below.
Initial Interest Rate:
4.50% per annum
Spread: 0.75% per annum
Maximum Interest Rate: From and including December 21, 2013, to but excluding December 21, 2017: 5.00% per annum
From and including December 21, 2017, to but excluding the Maturity Date: 6.00% per annum
Business Day: New York
London Euro Other (_________________) Business Day Convention: Following
Modified Following Preceding Adjusted or Unadjusted
Interest Payment Dates: Monthly, Quarterly, Semi-Annually, Annually,
payable in arrears on the 21st day of each March, June, September and December, commencing on March 21, 2013 and ending on
the Maturity Date.
Interest Period: The initial Interest Period will begin on, and include, the Original Issue
Date and end on, but exclude, the first Interest Payment Date. Each subsequent Interest Period will begin on, and include, the Interest Payment Date for the immediately preceding Interest Period and end on, but exclude, the next following Interest
Payment Date. The final Interest Period will end on, but exclude, the Maturity Date.
Barclays Capital Inc. has agreed to purchase the Notes from us at 100% of the principal amount minus a commission
equal to $22.50 per $1,000 principal amount, or 2.25%, resulting in aggregate proceeds to Barclays Bank PLC of $975,000. Barclays Capital Inc. proposes to offer the Notes from time to time for sale in negotiated transactions, or otherwise, at
varying prices to be determined at the time of each sale. Barclays Capital Inc. may also use all or a portion of its commissions on the Notes to pay selling concessions or fees to other dealers.
The Notes will not be listed on any U.S. securities exchange or quotation system. Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or determined that this pricing supplement is truthful or complete. Any representation to the contrary is a criminal offense.
We may use this pricing supplement in the initial sale of Notes. In addition, Barclays Capital Inc. or another of our affiliates may use this pricing
supplement in market resale transactions in any Notes after their initial sale. Unless we or our agent informs you otherwise in the confirmation of sale, this pricing supplement is being used in a market resale transaction.
Any payment on the Notes is subject to the creditworthiness of the Issuer and is not guaranteed by any third party. For a description of risks with
respect to the ability of Barclays Bank PLC to satisfy its obligations as they come due, see Issuer Credit Risk in this pricing supplement.
Investing in the Notes involves a number of risks. See Risk Factors beginning on page S-6 of the prospectus supplement and
Selected Risk Factors
below.
The Notes constitute our direct, unconditional, unsecured and unsubordinated obligations and are not deposit liabilities of Barclays
Bank PLC and are not insured by the U.S. Federal Deposit Insurance Corporation or any other governmental agency of the United States, the United Kingdom or any other jurisdiction.
We urge you to consult your investment, legal, tax, accounting and other advisers and to invest in the Notes only
after you and your advisors have carefully considered the suitability of an investment in the Notes in light of your particular circumstances.
Barclays Bank PLC has filed a registration statement (including a prospectus) with the SEC for the offering to which this pricing supplement relates. Before you invest, you should read the prospectus
dated
August 31, 2010
, the prospectus supplement dated
May 27, 2011,
and other documents Barclays Bank PLC has filed with the SEC for more complete information about Barclays Bank PLC and this offering. Buyers should rely
upon the prospectus, prospectus supplement
and this pricing supplement for complete details. You may get these documents and other documents Barclays Bank PLC has filed for free by visiting EDGAR on the SEC website at
www.sec.gov
, and you may also access the prospectus and prospectus supplement through the links below
:
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Prospectus dated August 31, 2010:
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http://www.sec.gov/Archives/edgar/data/312070/000119312510201448/df3asr.htm
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Prospectus Supplement dated May 27, 2011:
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http://www.sec.gov/Archives/edgar/data/312070/000119312511152766/d424b3.htm
Our Central Index Key, or CIK, on the SEC website is 0000312070.
Alternatively, Barclays Capital Inc. or any agent or dealer participating in this offering will arrange to send you the prospectus, prospectus supplement and this final pricing supplement if you
request it by calling your Barclays Capital Inc. sales representative, such dealer or 1-888-227-2275 (Extension 2-3430). A copy of the prospectus may be obtained from Barclays Capital Inc., 745 Seventh AvenueAttn: US InvSol Support, New York,
NY 10019.
We reserve the right to change the terms of,
or reject any offer to purchase the Notes prior to their issuance. In the event of any changes to the terms of the Notes, we will notify you and you will be asked to accept such changes in connection with your purchase. You may also choose to reject
such changes in which case we may reject your offer to purchase.
As used in this term sheet, the Company, we,
us, or our refers to Barclays Bank PLC.
PS-1
SELECTED RISK FACTORS
An investment in the Notes involves significant risks. You should read the risks summarized below in connection with, and the risks summarized below
are qualified by reference to, the risks described in more detail in the Risk Factors section beginning on page S-6 of the prospectus supplement. We urge you to consult your investment, legal, tax, accounting and other advisers and to
invest in the Notes only after you and your advisors have carefully considered the suitability of an investment in the Notes in light of your particular circumstances.
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Issuer Credit Risk
The Notes are our unsecured debt obligations, and are not, either directly or indirectly, an obligation of any third
party. Any payment to be made on the Notes, including any principal protection provided at maturity, depends on our ability to satisfy our obligations as they come due. As a result, the actual and perceived creditworthiness of Barclays Bank PLC may
affect the market value of the Notes and, in the event we were to default on our obligations, you may not receive the principal protection or any other amounts owed to you under the terms of the Notes.
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Reference Rate / Interest Payment Risk
Because the Interest Rate on the Notes (after the initial periods during which a fixed Initial
Interest Rate is payable) is a floating rate, you will be exposed to risks not associated with a conventional fixed-rate debt instrument. These risks include fluctuation of the applicable Interest Rate and the possibility that, for any given
Interest Period, you may receive a lesser amount of interest than for one or more prior Interest Periods. We have no control over a number of matters that may affect interest rates, including economic, financial and political events that are
important in determining the existence, magnitude and longevity of these risks and their results. In recent years, interest rates have been volatile, and volatility also could be characteristic of the future. In addition, the floating Interest Rate
for the Notes may be less than the floating rate payable on a similar Note or other instrument of the same maturity issued by us or an issuer with the same or a comparable credit rating.
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Maximum Interest Rate
Because a Maximum Interest Rate will apply to the Notes for Interest Periods commencing on or after December 21,
2013, the Interest Rate on the Notes for such Interest Periods will be limited to the specified applicable Maximum Interest Rate. As a result, in the event that the Interest Rate otherwise calculated for any such Interest Period exceeds the
applicable Maximum Interest Rate, your interest payment for the relevant Interest Period will reflect the applicable Maximum Interest Rate, and you will lose the benefit of any interest payment that would have been payable had such Maximum Interest
Rate not been applicable.
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Certain Built-In Costs Are Likely to Adversely Affect the Value of the Notes Prior to Maturity
While the payment at maturity described in
this pricing supplement is based on the full principal amount of your Notes, the original issue price of the Notes includes the agents commission and the cost of hedging our obligations under the Notes through one or more of our affiliates. As
a result, the price, if any, at which Barclays Capital Inc. and other affiliates of Barclays Bank PLC will be willing to purchase Notes from you in secondary market transactions will likely be lower than the price you paid for your Notes, and any
sale prior to the Maturity Date could result in a substantial loss to you.
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Potential Conflicts
We and our affiliates play a variety of roles in connection with the issuance of the Notes, including hedging our
obligations under the Notes. In performing these duties, the economic interests of our affiliates of ours are potentially adverse to your interests as an investor in the Notes.
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In addition, Barclays Wealth, the wealth management division of Barclays Capital Inc., may arrange for the sale of the Notes to certain of
its clients. In doing so, Barclays Wealth will be acting as agent for Barclays Bank PLC and may receive compensation from Barclays Bank PLC in the form of discounts and commissions. The role of Barclays Wealth as a provider of certain services to
such customers and as agent for Barclays Bank PLC in connection with the distribution of the Notes to investors may create a potential conflict of interest, which may be adverse to such clients. Barclays Wealth is not acting as your agent or
investment adviser, and is not representing you in any capacity with respect to any purchase of Notes by you. Barclays Wealth is acting solely as agent for Barclays Bank PLC. If you are considering whether to invest in the Notes through Barclays
Wealth, we strongly urge you to seek independent financial and investment advice to assess the merits of such investment.
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Lack of Liquidity
The Notes will not be listed on any securities exchange. Barclays Capital Inc. and other affiliates of Barclays Bank PLC
intend to make a secondary market for the Notes but are not required to do so,
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PS-2
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and may discontinue any such secondary market making at any time, without notice. Barclays Capital Inc. may at any time hold unsold inventory, which may inhibit the development of a secondary
market for the Notes. Even if there is a secondary market, it may not provide enough liquidity to allow you to trade or sell the Notes easily. Because other dealers are not likely to make a secondary market for the Notes, the price at which you may
be able to trade your Notes is likely to depend on the price, if any, at which Barclays Capital Inc. and other affiliates of Barclays Bank PLC are willing to buy the Notes. The Notes are not designed to be short-term trading instruments.
Accordingly, you should be able and willing to hold your Notes to maturity.
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Many Economic and Market Factors Will Impact the Value of the Notes
The value of the Notes will be affected by a number of economic and
market factors that may either offset or magnify each other, including:
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the time to maturity of the Notes;
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interest and yield rates in the market generally;
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a variety of economic, financial, political, regulatory or judicial events; and
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our creditworthiness, including actual or anticipated downgrades in our credit ratings.
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HYPOTHETICAL INTEREST RATE AND INTEREST PAYMENT CALCULATIONS
As described above, after the initial Interest Periods for which the Initial Interest Rate is payable, the effective per annum Interest Rate Notes payable on the Notes on each Interest Payment Date will
be a floating rate calculated as described under Interest Rate above. The following illustrates the process by which the Interest Rate and interest payment amount are determined for a particular Interest Period.
While the steps described below would be followed for any Notes issued hereunder, the examples provided below are for illustrative purposes only and do
not, and do not purport to, describe all interest payment possibilities for the Notes
Step 1: Determine the value of the Reference Rate
for the Interest Period.
For each Interest Period for which a floating rate of interest is payable, a per annum value for the
Reference Rate is determined on the relevant Interest Reset Date by observing the applicable Reference Rate on the Interest Determination Date relating to that Interest Reset Date. For further information concerning the interest determination dates
for the various Reference Rates, see Interest MechanicsHow Floating Interest Rates Are Reset in the prospectus supplement.
Step 2: Calculate the per annum Interest Rate for the Interest Period by applying the Spread, while taking into account the applicable Maximum
Interest Rate for that Interest Period.
For each Interest Period for which a floating rate of interest is payable, once the
Calculation Agent has determined the value of the Reference Rate, the Calculation Agent will then determine the per annum Interest Rate for that Interest Period by taking the value of the Reference Rate, adding the Spread, and then assessing that
value relative to the applicable Maximum Interest Rate.
If, for any Interest Period for which a floating rate of interest is payable, the
Interest Rate otherwise determined for such Interest Period is greater than the applicable Maximum Interest Rate, the Interest Rate for that Interest Period will be the applicable Maximum Interest Rate. For each Interest Period commencing on or
after December 21, 2013 to and excluding December 21, 2017, the Maximum Interest Rate will be 5.00% per annum. For each Interest period commencing on or after December 21, 2017, the Maximum Interest Rate will be 6.00% per
annum.
The following examples illustrate how the Interest Rate for a particular Interest Period for which a floating rate of interest applies
would be calculated. The examples assume that the Maximum Interest Rate for such Interest Period is 5.00% per annum.
Example 1: The Interest Rate equals the Reference Rate plus the Spread
Assuming that the Reference Rate for the Interest Period is equal to 3.00%, based on the Spread of 0.75%, the Interest Rate would be 3.75%.
PS-3
Example 2: The Interest Rate equals the Maximum Interest Rate.
Assuming that the Reference Rate for the Interest Period is equal to 4.75%, based on the Spread of 0.75% and the Minimum Interest Rate of 5.00% per
annum, the Interest Rate would be equal to the Maximum Interest Rate of 5.00% per annum.
Step 3: Calculate the interest payment
amount payable for each Interest Payment Date.
For each Interest Period, once the Calculation Agent has determined the applicable per
annum Interest Rate, the Calculation Agent will calculate the effective interest rate for that Interest Period by multiplying the per annum Interest Rate determined for that Interest Period by the applicable day count fraction. The resulting
effective interest rate is then multiplied by the relevant principal amount of the Notes to determine the actual interest amount payable on the related Interest Payment Date.
PS-4
UNITED STATES FEDERAL INCOME TAX TREATMENT
The following discussion (in conjunction with the discussion in the prospectus supplement) summarizes certain of the material U.S. federal income tax
consequences of the purchase, beneficial ownership, and disposition of Notes.
We intend to treat the Notes as variable rate debt instruments
subject to taxation as described under the heading Certain U.S. Federal Income Tax ConsiderationsU.S. Federal Income Tax Treatment of the Notes as Indebtedness for U.S. Federal Income Tax PurposesVariable Rate Debt
Instruments in the prospectus supplement (including the original issue discount provisions described thereunder). Pursuant to the terms of the Notes, you agree to treat the Notes consistent with our treatment for all U.S. federal income tax
purposes.
Because Barclays Capital Inc. proposes to offer the Notes at varying prices, the issue price of the Notes for federal
income tax purposes may differ from the amount you pay for the Notes or from their principal amount. You may obtain the issue price of each Note by contacting DirectorStructuring, Investor Solutions Americas at (212) 412-1101. If you
purchase the Notes for an amount that exceeds their issue price, the Notes may have acquisition premium and you may be entitled to reduce your original issue discount inclusions in respect of the Notes. See Certain U.S. Federal Income Tax
ConsiderationsU.S. Federal Income Tax Treatment of the Notes as Indebtedness for U.S. Federal Income Tax PurposesMarket Discount and Premium in the prospectus supplement. Any IRS Form 1099-OID you receive in respect of the Notes
will not reflect any adjustment for acquisition premium, and you should consult your own tax advisor regarding the adjustment.
3.8%
Medicare Tax On Net Investment Income
Beginning in 2013, U.S. holders that are individuals, estates, and certain trusts will
be subject to an additional 3.8% tax on all or a portion of their net investment income, which may include the interest payments, any original issue discount, and any gain realized with respect to the Notes, to the extent of their net
investment income that, when added to their other modified adjusted gross income, exceeds $200,000 for an unmarried individual, $250,000 for a married taxpayer filing a joint return (or a surviving spouse), or $125,000 for a married individual
filing a separate return. U.S. holders should consult their advisors with respect to the 3.8% Medicare tax.
Information Reporting
Holders that are individuals (and, to the extent provided in future regulations, entities) may be required to disclose information about
their Notes on IRS Form 8938Statement of Specified Foreign Financial Assets if the aggregate value of their Notes and their other specified foreign financial assets exceeds $50,000. Significant penalties can apply if a
holder fails to disclose its specified foreign financial assets. We urge you to consult your tax advisor with respect to this and other reporting obligations with respect to your Notes.
Non-U.S. Holders
Barclays currently does not withhold on interest payments to non-U.S.
holders in respect of instruments such as the Notes. However, if Barclays determines that there is a material risk that it will be required to withhold on any such payments, Barclays may withhold on such payments at a 30% rate, unless non-U.S.
holders have provided to Barclays an appropriate and valid Internal Revenue Service Form W-8. In addition, non-U.S. holders will be subject to the general rules regarding information reporting and backup withholding as described under the heading
Certain U.S. Federal Income Tax ConsiderationsInformation Reporting and Backup Withholding in the accompanying prospectus supplement.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES.
PS-5
CERTAIN EMPLOYEE RETIREMENT INCOME SECURITY ACT CONSIDERATIONS
Your purchase of a Note in an Individual Retirement Account (an IRA), will be deemed to be a representation and warranty by you, as a
fiduciary of the IRA and also on behalf of the IRA, that (i) neither the issuer, the placement agent nor any of their respective affiliates has or exercises any discretionary authority or control or acts in a fiduciary capacity with respect to
the IRA assets used to purchase the Note or renders investment advice (within the meaning of Section 3(21)(A)(ii) of the Employee Retirement Income Security Act (ERISA)) with respect to any such IRA assets and (ii) in
connection with the purchase of the Note, the IRA will pay no more than adequate consideration (within the meaning of Section 408(b)(17) of ERISA) and in connection with any redemption of the Note pursuant to its terms will receive
at least adequate consideration, and, in making the foregoing representations and warranties, you have (x) applied sound business principles in determining whether fair market value will be paid, and (y) made such determination acting in
good faith.
For additional ERISA considerations, see Employee Retirement Income Security Act in the prospectus supplement.
SUPPLEMENTAL PLAN OF DISTRIBUTION
We have agreed to sell to Barclays Capital Inc. (the
Agent
), and the Agent has agreed to purchase from us, the principal amount of the Notes, and at the price, specified on the cover of
this pricing supplement. The Agent has committed to take and pay for all of the Notes, if any are taken.
PS-6
US$1,000,000
BARCLAYS BANK PLC
CAPPED FIXED-TO-FLOATING RATE NOTES DUE DECEMBER 21,
2022
GLOBAL MEDIUM-TERM NOTES, SERIES A
(TO PROSPECTUS DATED AUGUST 31, 2010, AND THE
PROSPECTUS SUPPLEMENT DATED MAY 27,
2011)