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The Royal Bank of Scotland Group plc Message Board

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  • rexobXIP rexobXIP Sep 4, 2009 9:08 AM Flag

    RBS prefs Vs regulatory pressure

    Spoke to RBS Investor relations yet again -- they announced that they were not doing early redemption on these bonds because that is what is called for in the prospectus.
    Just as the preferred prospectus calls for announcing the divis, the bonds prospectus calls for declaring an early redemption.

    RBS IR still sticks to their mantra, which is -- we have paid the coupons on all debt when it is due. Thhere was no announcement to defer interest/coupon payments on these bonds, so until announced otherwise, the presumption is that they intend to pay.

    As the prospectus for the bonds does not call for announcements re: divis, I requested of IR when the next bond coupon was due and will call back on that date to verify that it was paid.

    IR insists there has ben no change in their position towards the Prefered dividends.

    Perhaps, as new capital is more expensive than old capital, it makes sense for them not to do early redemption of these bonds. They can keep paying coupons and save the cost of oferings, plus the savings on the coupon/interest rate spread.

    I guess I would call this good, but tenuous news.

    IR insists the bank is sensitive to the situation preferred shareholders are in and insists our interests are aligned: we want them to keep paying, they want to keep paying, and they say this is their intent... no promises though.

    You would think regulators would understand that fixed income investments pay the highest rate of taxes, and the income generally gets funnelled back into the economy having a stimulative effect.

    I am cautiously optimistic

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