RBS 2011 Annual Report Download - page 385

RBS Group 2011 383
25 Subordinated liabilities
2011 2010 2009
£m £m £m
Dated loan capital 19,654 20,658 24,597
Undated loan capital 2,558 2,552 8,164
Preference shares 1,116 1,112 2,000
Trust preferred securities 2,991 2,731 2,891
26,319 27,053 37,652
In a series of exchange and tender offers in April 2009 and 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.
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.