March 26, 2009 / 4:40 PM / 10 years ago

UPDATE 2-RBS $23 bln bond exchange, buyback to boost capital

* RBS offers to exchange, buyback $23 bln worth of bonds

* Second UK bank to offer exchange on subordinated debt

* RBS offers 30 to 70 pct of face value on range of bonds

(Adds price details of exchange, tender offers)

LONDON, March 26 (Reuters) - Royal Bank of Scotland (RBS.L) on Thursday offered to exchange or buy back around $23 billion worth of subordinated debt in a move to boost capital.

RBS said it would exchange 5.75 billion pounds’ ($8.4 billion) worth of Upper Tier 2 and some Tier 1 bonds into senior unsecured debt. It also offered to buy back $750 million and 3.25 billion euros ($4.4 billion) of Tier 1 and Upper Tier 2 bonds.

The part-nationalised bank is offering to pay 40 to 70 percent of face value for early tenders on the exchange and 40 to 50 percent of face value on the tender offer. The deadline for early exchange is April 8.

RBS separately announced a tender on almost $10 billion worth of 10 U.S. dollar-denominated bonds, offering 30 to 45 percent of face value, including an additional payment for early tender.

Lloyds Banking Group (LLOY.L) launched a similar exchange offer on 7.5 billion pounds worth of subordinated debt on Wednesday. Both banks aim to strengthen their core tier 1 capital to improve the quality of their balance sheets.

Lloyds is offering between 45 and 80 percent of face value on a range of bonds, denominated in euros, sterling and U.S. dollars.

Regulators and analysts are increasingly focusing on core Tier 1 capital as the priority for banks, leaving Tier 2 bonds regarded as having little value to the balance sheet.

Senior unsecured bonds rank higher than Upper Tier 2 and Tier 1 bonds in a bank’s capital structure.

(Reporting by Natalie Harrison, Steve Slater and Jane Baird)

($1=.6853 Pound)

$1=.7366 Euro

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below