RBS 2010 Annual Report Download - page 351

27 Subordinated liabilities
Group Company
2010 2009 2008 2010 2009 2008
£m £m £m £m £m£m
Dated loan capital 20,658 24,597 30,162 6,685 6,526 7,421
Undated loan capital 2,552 8,164 11,697 563 574 1,071
Preference shares 1,112 2,000 2,194 800 1,662 1,822
Trust preferred securities 2,731 2,891 5,101 ———
27,053 37,652 49,154 8,048 8,762 10,314
In May 2010, the Group redeemed certain subordinated debt securities
and equity preference shares in exchange for cash or senior debt. The
exchanges involving instruments classified as liabilities all met the criteria
in IFRS for treatment as the extinguishment of the original liability and the
recognition of a new financial liability. Gains on these exchanges and on
the redemption of securities classified as liabilities for cash, totalling £553
million were credited to profit or loss. No amounts have been recognised
in profit or loss in relation to the redemption of securities classified as
equity in the Group financial statements. The difference between the
consideration and the carrying value for these securities amounting to
£651 million has been recorded in equity.
Asimilar series of exchange and tender offers completed in April 2009
and resulted in a gain of £3,790 million and £829 million being recorded
in equity.
The Group has undertaken that, unless otherwise agreed with the
European Commission, neither the company nor any of its direct or
indirect subsidiaries (excluding companies in the RBS Holdings N.V.
Group, which are subject to different restrictions, see below) will pay
external investors any dividends or coupons on existing hybrid capital
instruments (including preference shares, B shares and upper and lower
tier 2 instruments) from 30 April 2010 for a period of two years thereafter
(“the Deferral Period”), or exercise any call rights in relation to these
capital instruments between 24 November 2009 and the end of the
Deferral Period, unless there is a legal obligation to do so. Hybrid capital
instruments issued after 24 November 2009 will generally not be subject
to the restriction on dividend or coupon payments or call options.
The Group has agreed that RBS Holdings N.V. will not pay investors any
coupons on, or exercise any call rights in relation to, specified hybrid
capital instruments for an effective period of two years from 1 April 2011,
unless in any such case there is a legal obligation to do so. RBS Holdings
N.V. and its group companies are also subject to restrictions on the
exercise of call rights in relation to their other hybrid capital instruments.
Certain preference shares issued by the company are classified as
liabilities; these securities remain subject to the capital maintenance rules
of the Companies Act 2006.
349RBS Group 2010
Financial statements