LONDON, April 26 State-backed Royal Bank of
Scotland said it would ask shareholders for approval to
issue debt that converts into equity if the bank hits trouble.
The bank said on Friday that in response to UK regulatory
requirements for banks to hold more capital and to allow it "to
manage its capital in the optimal way" it would seek approval to
issue loss-absorbing capital instruments in the form of equity
convertible notes (ECNs), also known as "CoCos".
CoCos are bonds that convert into new shares if an event
occurs, such as if a bank's capital ratio fell below 7 percent.
RBS needs shareholder approval as issuing new shares could
dilute existing shareholders.
Other UK banks are also considering issuing CoCos and
Barclays' shareholders gave approval for it to issue ECNs on