LONDON, Feb 25 (IFR) - Royal Bank of Scotland will announce
on Thursday that it is looking to issue contingent convertible
(CoCo) notes in the future, a person close to the situation told
IFR on Monday.
"RBS is looking to sell a mixture of CoCos and Lower Tier 2
notes to increase its capital buffers in the coming years," said
CoCos convert into equity, or lose value, if the issuer's
capital holdings fall below a predetermined level - and thus are
much riskier than traditional bonds and bank debt capital.
RBS looks to follow Barclays, whose new chief executive
Antony Jenkins said earlier this month that his bank would build
contingent capital "over the next few years" and that he expects
loss-absorbing capital instruments to cover about 2% of its
risk-weighted assets (RWAs).
RBS has refrained from issuing CoCos and has instead focused
its funding efforts on raising capital through the subordinated
bond markets. The bank declined to comment on the matter.