RBS 2012 Annual Report Download - page 436

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Notes on the consolidated accounts continued
24 Subordinated liabilities
2012 2011 2010
£m £m £m
Dated loan capital 20,210 19,654 20,658
Undated loan capital 2,479 2,558 2,552
Preference shares 1,075 1,116 1,112
Trust preferred securities 3,009 2,991 2,731
26,773 26,319 27,053
In a series of exchange and tender offers in May 2010, the Group
redeemed certain subordinated debt securities and equity preference
shares in exchange for cash or senior debt. In March 2012, the Group
exchanged certain subordinated debt securities for new subordinated
debt securities. 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 undertook 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) would 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 was a legal obligation to do so. Hybrid capital
instruments issued after 24 November 2009 were generally not subject to
the restriction on dividend or coupon payments or call options. On 30
April 2012, the Deferral Period for RBS Group instruments ended and in
May 2012, the Group determined that it was in a position to recommence
payments on these instruments. Future coupons and dividends will only
be paid subject to, and in accordance with, the terms of the relevant
instruments.
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.